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So, no buyer for the whole bank has been found and they don't anticipate finding one

by mixdup 4y ago

qbasic_forever 4y ago
Yeah this is nothing like the 2008 meltdowns. When WaMu and other banks went kaput it was an eeriely orderly and controlled 'demolition' with almost zero disruption for customers. The banks exploded on a Friday and were back open with the FDIC and giving customers full access to funds that Monday. There was a lot of communication and reassurance from the FDIC that no one would lose anything. Here it seems like they're just shrugging shoulders and saying "I dunno maybe you'll get some of your money back, but no promises". Good luck to anyone that had major uninsured deposits there, I hope it works out in the end but it doesn't seem like any real help is coming.
- creato 4y ago
  I don’t think there’s much real difference, just the twitter (and HN) peanut gallery is so much louder it’s distorting people’s understanding of the situation.
duxup 4y ago
I don’t think anyone wants to eat the losses (that may be not entirely known) and if SBV was a bank that operated differently than others they may not want to adopt their practices/ customer expectations/ ire. And most of all what Bank wants to adopt a bank who had a bank run? That’s scary. I think every bank seriously fears such things.
- bombcar 4y ago
  That’s the more frightening thing. On paper SVB was delicious - assets way above liabilities. And even FDIC leaning as hard as they can and pulling all strings can’t get a bank to eat them.
  - mixdup 4y ago
    Because the issue here was that it was a classic run, it was not insolvent it just was not liquid enough that it could survive well north of 50% of its customer base (I am willing to be in the 70 or higher range) pull out every penny of their deposits. Not even JP Morgan could survive that kind of a run This is both why they failed even though they appeared to be still healthy and also impossible to find a buyer. All the money already ran out the door. The enticement to buy a failed bank is getting all the deposits and new customers, but there's none of that left However, I also think this is why other more general banks are not in as much danger as everyone wants to imply. 10 VCs (or less) called their portfolio companies and told them all to pull their money. A bank with a much more diversified customer base does not have that risk
- justin66 4y ago
  To put things in perspective, merely the difference in assets held between the #1 largest bank in the US (J.P. Morgan Chase, $3.2 Trillion) and the #2 largest bank in the US (BofA, $2.4 Trillion) is something like four times the total assets of SVB at its peak. The question is why one of those banks, or Citigroup or whoever, would take on SVB's accounts if they weren't legally compelled to. SVB's financials probably aren't great and they cater to a customer base whose superpower appears to be well-coordinated bank runs.

So, no buyer for the whole bank has been found and they don't anticipate finding one

by mixdup 4y ago

So, no buyer for the whole bank has been found and they don't anticipate finding one

Yeah this is nothing like the 2008 meltdowns. When WaMu and other banks went kaput it was an eeriely orderly and controlled 'demolition' with almost zero disruption for customers. The banks exploded on a Friday and were back open with the FDIC and giving customers full access to funds that Monday. There was a lot of communication and reassurance from the FDIC that no one would lose anything. Here it seems like they're just shrugging shoulders and saying "I dunno maybe you'll get some of your money back, but no promises". Good luck to anyone that had major uninsured deposits there, I hope it works out in the end but it doesn't seem like any real help is coming.

creato 4y ago
I don’t think there’s much real difference, just the twitter (and HN) peanut gallery is so much louder it’s distorting people’s understanding of the situation.

duxup 4y ago

I don’t think anyone wants to eat the losses (that may be not entirely known) and if SBV was a bank that operated differently than others they may not want to adopt their practices/ customer expectations/ ire. And most of all what Bank wants to adopt a bank who had a bank run? That’s scary. I think every bank seriously fears such things.

bombcar 4y ago
That’s the more frightening thing. On paper SVB was delicious - assets way above liabilities. And even FDIC leaning as hard as they can and pulling all strings can’t get a bank to eat them.
- mixdup 4y ago
  Because the issue here was that it was a classic run, it was not insolvent it just was not liquid enough that it could survive well north of 50% of its customer base (I am willing to be in the 70 or higher range) pull out every penny of their deposits. Not even JP Morgan could survive that kind of a run This is both why they failed even though they appeared to be still healthy and also impossible to find a buyer. All the money already ran out the door. The enticement to buy a failed bank is getting all the deposits and new customers, but there's none of that left However, I also think this is why other more general banks are not in as much danger as everyone wants to imply. 10 VCs (or less) called their portfolio companies and told them all to pull their money. A bank with a much more diversified customer base does not have that risk
justin66 4y ago
To put things in perspective, merely the difference in assets held between the #1 largest bank in the US (J.P. Morgan Chase, $3.2 Trillion) and the #2 largest bank in the US (BofA, $2.4 Trillion) is something like four times the total assets of SVB at its peak. The question is why one of those banks, or Citigroup or whoever, would take on SVB's accounts if they weren't legally compelled to. SVB's financials probably aren't great and they cater to a customer base whose superpower appears to be well-coordinated bank runs.