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Let's be real here. No other bank in the world would've collapsed in similar situation. Did SVB lose money and made bad bets? Yes. Could they have raised back

Let's be real here. No other bank in the world would've collapsed in similar situation. Did SVB lose money and made bad bets? Yes. Could they have raised back money by selling shares and return to solid ground? Also probably yes. What made this completely fatal is their client base. Client base which are supposed to be the biggest risk takers in the economy. Fled away at record speed. The burners of billions of dollars, fled away from quite moderate risk bank (moderate relative to their own risk profiles). That has been there for 40 years. It's not people who are unfamiliar with raising money. It's not your common people who somehow started a bank run. It's a small and connected group, that could communicate exaggerated risk to everyone and flee at record speed. Which is why I don't buy their innocent claims at all. It's actually hilarious that people who were selling sham crypto for billions of dollars got spooked by a bank. As depositors. It's like they projected their own insecurities and grift and fled like they saw their own scam and found themselves in it.

HDThoreaun 4y ago
> Client base which are supposed to be the biggest risk takers in the economy. A huge part of being a successful risk taker is knowing when to get out. Make no mistake, SVB was going to collapse eventually. Too much of their deposits were startup slush funds that will be withdrawn in the next few years as they struggle to raise money.
- machina_ex_deus 4y ago
  See, that's what I started thinking as well. Except banks aren't startups. Banks actually make more money during high interest environment, and they don't need to have increasing deposits to stay alive (that's wrong projection from crypto grifters). If they had cash injection, they could still plan for reduced client deposits. They don't need their deposit base to grow to stay alive. That's startups projections.
  - HDThoreaun 4y ago
    > Banks actually make more money during high interest environment SVB was not in a position to capitalize on raising rates. All their money was stuck in those low rate bonds and mbs's. If they want to get in on those higher rates they would need their deposits to increase, but they have been and will continue to decrease. They tried to raise money, no one gave them any because their book was underwater.
    - machina_ex_deus 4y ago
      Again you're confusing bank and crypto. They wouldn't need to have their deposits increase. They would need to increase their capital. They weren't underwater before the bank run, they were undercapitalized. Which would mean that whoever would enter, would get a big chunk of their stock, but he would still have a good deal. Banks don't need increasing or decreasing deposits. They need stable and predictable deposits. They know how fast you burn cash, so they know what flows to expect from you and how much of your money they get to invest and for what duration. SVB failed to predict the Fed, but there's no way they survived this long without knowing how to plan around cash burning startups, that's their bread and butter. What made finding a buyer impossible is that their deposit base showed their unpredictability. And they have done tremendous damage to startups and banking relations after this. Finding banks is going to be much harder as a startup after this debacle, whether you're part of this bank run or not.
      - theironhammer 4y ago
        Was it Peter Thiel who started the bank run? "The bank run that led to SVB’s collapse was allegedly started by tech tycoon and Republican political donor Peter Thiel. After SVB’s collapse, journalists and critics have shifted their attention to Thiel, accusing him of pressuring companies to stop funding the bank. It is believed that his actions were the first to ignite the bank run, which prompted California regulators to step in." https://lifestyleug.com/peter-thiel-byrne-hobarts-newsletter-svb-collapse/ https://lifestyleug.com/peter-thiel-byrne-hobarts-newsletter...
- deleted 4y ago
  [deleted]
- dyno12345 4y ago
  but the speed is what matters. a bank can handle withdrawal outflows as long as it doesn't happen all at once like that.
BaseballPhysics 4y ago
> Could they have raised back money by selling shares and return to solid ground? Also probably yes. For the record, I believe that's "definitely yes". As far as I'm aware, they were securing additional funding at the time they put out the announcement that ultimately triggered the run. Which makes the whole panic that much more frustrating (even if it is understandable from a game theory perspective), and likely would've been avoidable if the CEO hadn't completely f*ked up the messaging.
equalsione 4y ago
I don't usually, but... https://media.tenor.com/87_Ea43k7O0AAAAd/face-mask-mask.gif https://media.tenor.com/87_Ea43k7O0AAAAd/face-mask-mask.gif
brodouevencode 4y ago
> Fled away at record speed. All while screaming "bank run", which was a clear signal from them to the Fed that they should step in.
dyno12345 4y ago
certain loud voices in the sphere have also revealed their complete ignorance of how the banking system works
rvz 4y ago
> It's actually hilarious that people who were selling sham crypto for billions of dollars got spooked by a bank. As depositors. It's like they projected their own insecurities and grift and fled like they saw their own scam and found themselves in it. I mostly saw VCs, techies and tech bros here and many HNers and especially YC screaming at the government to save their pyramid scheme of funding for unprofitable startups who failed to read the FDIC insurance deposit limit of a failed bank. Quite funny to see the techies here panicking all over Twitter and on HN around the collapse.

HDThoreaun 4y ago

> Client base which are supposed to be the biggest risk takers in the economy. A huge part of being a successful risk taker is knowing when to get out. Make no mistake, SVB was going to collapse eventually. Too much of their deposits were startup slush funds that will be withdrawn in the next few years as they struggle to raise money.

machina_ex_deus 4y ago
See, that's what I started thinking as well. Except banks aren't startups. Banks actually make more money during high interest environment, and they don't need to have increasing deposits to stay alive (that's wrong projection from crypto grifters). If they had cash injection, they could still plan for reduced client deposits. They don't need their deposit base to grow to stay alive. That's startups projections.
- HDThoreaun 4y ago
  > Banks actually make more money during high interest environment SVB was not in a position to capitalize on raising rates. All their money was stuck in those low rate bonds and mbs's. If they want to get in on those higher rates they would need their deposits to increase, but they have been and will continue to decrease. They tried to raise money, no one gave them any because their book was underwater.
  - machina_ex_deus 4y ago
    Again you're confusing bank and crypto. They wouldn't need to have their deposits increase. They would need to increase their capital. They weren't underwater before the bank run, they were undercapitalized. Which would mean that whoever would enter, would get a big chunk of their stock, but he would still have a good deal. Banks don't need increasing or decreasing deposits. They need stable and predictable deposits. They know how fast you burn cash, so they know what flows to expect from you and how much of your money they get to invest and for what duration. SVB failed to predict the Fed, but there's no way they survived this long without knowing how to plan around cash burning startups, that's their bread and butter. What made finding a buyer impossible is that their deposit base showed their unpredictability. And they have done tremendous damage to startups and banking relations after this. Finding banks is going to be much harder as a startup after this debacle, whether you're part of this bank run or not.
    - theironhammer 4y ago
      Was it Peter Thiel who started the bank run? "The bank run that led to SVB’s collapse was allegedly started by tech tycoon and Republican political donor Peter Thiel. After SVB’s collapse, journalists and critics have shifted their attention to Thiel, accusing him of pressuring companies to stop funding the bank. It is believed that his actions were the first to ignite the bank run, which prompted California regulators to step in." https://lifestyleug.com/peter-thiel-byrne-hobarts-newsletter-svb-collapse/ https://lifestyleug.com/peter-thiel-byrne-hobarts-newsletter...
deleted 4y ago
[deleted]
dyno12345 4y ago
but the speed is what matters. a bank can handle withdrawal outflows as long as it doesn't happen all at once like that.

BaseballPhysics 4y ago

> Could they have raised back money by selling shares and return to solid ground? Also probably yes. For the record, I believe that's "definitely yes". As far as I'm aware, they were securing additional funding at the time they put out the announcement that ultimately triggered the run. Which makes the whole panic that much more frustrating (even if it is understandable from a game theory perspective), and likely would've been avoidable if the CEO hadn't completely f*ked up the messaging.

equalsione 4y ago

I don't usually, but... https://media.tenor.com/87_Ea43k7O0AAAAd/face-mask-mask.gif https://media.tenor.com/87_Ea43k7O0AAAAd/face-mask-mask.gif

brodouevencode 4y ago

> Fled away at record speed. All while screaming "bank run", which was a clear signal from them to the Fed that they should step in.

dyno12345 4y ago

certain loud voices in the sphere have also revealed their complete ignorance of how the banking system works

rvz 4y ago

> It's actually hilarious that people who were selling sham crypto for billions of dollars got spooked by a bank. As depositors. It's like they projected their own insecurities and grift and fled like they saw their own scam and found themselves in it. I mostly saw VCs, techies and tech bros here and many HNers and especially YC screaming at the government to save their pyramid scheme of funding for unprofitable startups who failed to read the FDIC insurance deposit limit of a failed bank. Quite funny to see the techies here panicking all over Twitter and on HN around the collapse.