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I think FRB might be fine but the VCs are trying to start a run to force the fed to get involved in a bigger way at SVB (e.g. backstop guarantee or a bailout).

I think FRB might be fine but the VCs are trying to start a run to force the fed to get involved in a bigger way at SVB (e.g. backstop guarantee or a bailout). I saw two very very prominent VCs both quote retweeted this tweet and added scare to it… both within 3 minutes of each other. Total and complete speculation but just a thought.

paxys 4y ago
Completely agree with this hypothesis. Since early Friday I have seen the entire silicon valley VC class instantly aligned behind a singular message that if the feds don't immediately bail out every customer of SVB – who are not big tech but "small tech", they are quick to add – this will cause a run in every other bank in the country and collapse the economy. I listed to the all-in podcast today and yup, exact same points repeated over and over again by all of them. Coincidentally these VCs are the ones who benefit most from such a bailout. Pull up a list of short sellers of these banks and I wouldn't be surprised if the same names are on it (like the person who sent the Tweet). It's like a bunch of SV billionaires all got in a group chat and decided on a single plan of action to save their asses. And the ironic part is that it was this group chat that caused the bank run in the first place.
- vba616 4y ago
  I am seeing this talk of a bailout everywhere. But why would a bailout be needed? Where are people getting the idea that they don't have more than enough assets for all their customers? What I read last week was that they had a classic bank run, where they couldn't liquidate long term bonds fast enough when everyone panicked. Is there something else going on?
  - chewz 4y ago
    > Is there something else going on? FED's recent higher rates for longer policy is death sentence for VC's and personal wealth of many people... So they are trying to create moral panic in order to reverse FED policy.. They will not succeed.. Rates will stay higher but a discount window will be made available for banks like SVB....
    - vba616 4y ago
      I mean, isn't it obviously true that, in hindsight, every tightening cycle for the last 40 years has ended in the Fed going a little too far, whoops? That's not to say there weren't underlying problems with the economy and financial sector, but the Fed manifestly never knows where to stop. Populist criticism of the Fed cannot identify the point that is "too far", but surely like a stopped clock they eventually have to be right. Isn't an inverted yield curve a warning signal that can't be dismissed as economically illiterate populism?
  - loeg 4y ago
    They were shut down because they were insolvent to the tune of $950M. It's not just that liquidation wasn't fast enough; liquidating assets also meant they needed to mark-to-market their 1.5% debt notes which they could previously account as hold-to-maturity. This transitioned them from kinda insolvent (but not in an accounting sense) to fully insolvent.
deleted 4y ago
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paxys 4y ago

Completely agree with this hypothesis. Since early Friday I have seen the entire silicon valley VC class instantly aligned behind a singular message that if the feds don't immediately bail out every customer of SVB – who are not big tech but "small tech", they are quick to add – this will cause a run in every other bank in the country and collapse the economy. I listed to the all-in podcast today and yup, exact same points repeated over and over again by all of them. Coincidentally these VCs are the ones who benefit most from such a bailout. Pull up a list of short sellers of these banks and I wouldn't be surprised if the same names are on it (like the person who sent the Tweet). It's like a bunch of SV billionaires all got in a group chat and decided on a single plan of action to save their asses. And the ironic part is that it was this group chat that caused the bank run in the first place.

vba616 4y ago
I am seeing this talk of a bailout everywhere. But why would a bailout be needed? Where are people getting the idea that they don't have more than enough assets for all their customers? What I read last week was that they had a classic bank run, where they couldn't liquidate long term bonds fast enough when everyone panicked. Is there something else going on?
- chewz 4y ago
  > Is there something else going on? FED's recent higher rates for longer policy is death sentence for VC's and personal wealth of many people... So they are trying to create moral panic in order to reverse FED policy.. They will not succeed.. Rates will stay higher but a discount window will be made available for banks like SVB....
  - vba616 4y ago
    I mean, isn't it obviously true that, in hindsight, every tightening cycle for the last 40 years has ended in the Fed going a little too far, whoops? That's not to say there weren't underlying problems with the economy and financial sector, but the Fed manifestly never knows where to stop. Populist criticism of the Fed cannot identify the point that is "too far", but surely like a stopped clock they eventually have to be right. Isn't an inverted yield curve a warning signal that can't be dismissed as economically illiterate populism?
- loeg 4y ago
  They were shut down because they were insolvent to the tune of $950M. It's not just that liquidation wasn't fast enough; liquidating assets also meant they needed to mark-to-market their 1.5% debt notes which they could previously account as hold-to-maturity. This transitioned them from kinda insolvent (but not in an accounting sense) to fully insolvent.

deleted 4y ago

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