5 ms·

Update from Silicon Valley Bridge Bank CEO

19 points by zhoutong 4y ago

cloudking 4y ago
"The number one thing you can do to support the future of this institution is to help us rebuild our deposit base, both by leaving deposits with Silicon Valley Bridge Bank and transferring back deposits that left over the last several days."
- flatiron 4y ago
  Nah I’m good
  - pablo24602 4y ago
    > depositors have full access to their money and both new and existing deposits are fully protected by the FDIC. This action by FDIC effectively means that deposits held with SVB are among the safest of any bank or institution in the country.
zhoutong 4y ago
Effectively there are two banks (Silicon Valley Bridge Bank, N.A. and Signature Bridge Bank, N.A.) with de facto unlimited FDIC insurance, as there's explicit guarantee for all existing and new deposits.
- jacooper 4y ago
  There is no way this is permanent, right? What's the end goal of this? Rebuild confidence in SVB and then return to normal insurance? I think the first step they have to do if there is any hope of a successful relaunch, is a full rebrand.
  - thebitguru 4y ago
    My guess is they are probably looking for a buyer, who will likely roll everything into their offering. So, the more they can get back, the higher the sale price.
    - paulryanrogers 4y ago
      Which makes for fewer banks and more consolidation. That sounds like it has its own risks, echos of "too big to fail"
  - smcin 4y ago
    Surely this is the ideal time for planning to split SVB into multiple banks, if the actual intent is to diversify risk (well is it?). Why do regulators never split banks up? [0] For people who talk so much about managing risk. Reminiscent of GHW Bush's complaint about eating broccoli. Also, talking about concern about job losses and wider economic impact, compare to in 2020/1 when Congress was fetishizing daily about stimulus packages to save the airline industry, yet long-distance coach companies Greyhound/Boltbus and Megabus were simply quietly allowed to cease business. [0]: https://www.americanbanker.com/news/regulators-willing-to-break-up-repeat-offender-banks-acting-comptroller-says https://www.americanbanker.com/news/regulators-willing-to-br... > 1/17/2023 The Office of the Comptroller of the Currency and other regulators would consider breaking up big banks that repeatedly fail to correct bad behavior, according to acting Comptroller Michael Hsu. > Though financial regulators have long had the power to split up banks for incessant violations, Hsu's remarks at the Brookings Institution on Tuesday were the most explicit warning in recent memory of regulators' willingness to break apart large, chronically delinquent financial institutions.
    - jacooper 4y ago
      I heard that they often split them for sale, so no single bank has to carry the full risk of another bank run because of low customer confidence.
  - dylan604 4y ago
    I think they should reuse some brands that are available again instead of wasting a new name. I could suggest MCI, Charter, Blackwater, etc as all names that would be befitting for these "oops" rebrands.
- smcin 4y ago
  Somewhere between "$250k" and "infinite" would have been less moral hazard. Feels like we've set a dangerous precedent, but only for depositors who are politically connected and can instill panic. When does the de facto unlimited FDIC insurance expire/ When does Silicon Valley Bridge Bank go back to normal? Second: IIUC, any shortfall in making SVB depositors whole will come from a levy on the rest of the banking system (and maybe small (<$400m) clawbacks from execs' share sales). How much will that levy cost the rest of us? Can it be legally or politically challenged? Are any Congressmen challenging it? (Where are the libertarian Republicans on this?)
  - rhaway84773 4y ago
    When was the last time non politically connected depositors lost money from their checking accounts? The only “moral hazard” being created here is encouraging people to deposit money in smaller banks. If the govt hadn’t created the “moral hazard” then people and businesses would simply have chosen to do all their banking with the much safer big banks like Chase and Citibank. The reality is that Americans don’t want all banking to be concentrated in the hands, but smaller banks are significantly more risky and inefficient. Depositing money in the smaller banks and not just the top handful is the “moral hazard” that has been created by government intervention.
    - TMWNN 4y ago
      > When was the last time non politically connected depositors lost money from their checking accounts? Many times. The typical uninsured depositor in bank failures from 2008 to today got about 75 cents on the dollar. Depositors in IndyMac in 2008 got 50 cents on the dollar.
    - Scoundreller 4y ago
      > The only “moral hazard” being created here is encouraging people to deposit money in smaller banks. Or everyone, nationwide, starts moving every penny they have into whichever bank, anywhere, offers the highest interest rates, without regard to how they accomplish that. Let's call it "risk intensification".
  - 4y ago
somethoughts 4y ago
IMHO, it feels like at minimum the regulators should have required that in exchange for reduced oversight for banks in the $50-$250B range - they should have reduced FDIC coverage for depositors and have been required a form to be filled out by existing and new customers to notify them of this reduction in coverage. [1] https://www.wsj.com/articles/barney-frank-pushed-to-ease-financial-regulations-after-joining-signature-bank-board-e5c8819c https://www.wsj.com/articles/barney-frank-pushed-to-ease-fin...
- tedunangst 4y ago
  The regulators are not the ones who negotiated away oversight.
Alupis 4y ago
Run your bank off a cliff, require every rule be broken to save your bacon, and now ask people to reline your coffers with more deposits. Absolutely stunning... On second thought - SVB is apparently the safest place on the planet to park enormous amounts of cash. Why would you not deposit everything here? The Government will just save you if SVB screws it up again... right? Absolutely zero risk in parking everything with SVB... what a great signal to be sending the public.
- jacooper 4y ago
  It isn't really the same bank nor the same CEO
  - Alupis 4y ago
    The result is the same. SVB has infinity insurance on all deposits, provided courtesy of the tax payer. This is a naked attempt to pump the value of SVB assets, and seek a less-than-fire-sale to another institution.
    - sroussey 4y ago
      Don’t all banks have that right now?
      - Alupis 4y ago
        No, only SVB and Signature enjoy infinity insurance. Everyone else that played by the rules gets a measly $250k max...
        fisherjeff 4y ago
        https://www.federalreserve.gov/monetarypolicy/bank-term-funding-program.htm https://www.federalreserve.gov/monetarypolicy/bank-term-fund...
        4y ago
gjsman-1000 4y ago
In widely underreported news, before anyone blames looser regulations, Barney Frank of the Dodd-Frank Act fame was literally on the board of Signature Bank, which also collapsed. He also has stated the regulation reduction under the last administration has nothing to do with this situation, whatever you make of that.
Overtonwindow 4y ago
I read that there was only one person on the board with experience in banking. Is this normal for the board of a bank?
- dylan604 4y ago
  Does that mean that tech companies should only have tech literate people on their boards?
paxys 4y ago
It's quite an ingenious situation. - FDIC guarantees that every deposit at these banks up to an unlimited amount will be paid out by the US government. - Because of that guarantee, the bank run stops and people leave their money there (and in fact deposit more). - Because of the influx of cash the bank solves its liquidity issues and the government doesn't actually have to spend a single penny. In theory all of this works. But the next question is – how far will this go? Will FDIC do the same for every bank in the country? Can they all just start taking more and more risk? Do customers not need to care about how well their bank is run, because ultimately the US government is everyone's bank? Did we just accidentally invent a fully socialized national banking system?
- gjsman-1000 4y ago
  If I were head of a smaller or regional bank, I’d be running for the lawyers, because I would find it very hard to believe that FDIC would extend their offer in a fair and reasonable manner to smaller banks. If they don’t, it’s arguably a form of extortion, using mandatory fees on small banks to only protect big ones. How would that be legal? To avoid legal hot water, the FDIC may find themselves to equally protect every bank which might quickly turn out regrettable… > Did we just accidentally invent a fully socialized national banking system? According to Kevin O’Leary, YES. He also makes a point about how the management was "idiotic" because if they had just gone to JP Morgan, or Wells Fargo, or another big bank - and said, "hey, we got a short term cash problem with a lot of treasuries," they almost certainly could have come to a very low-interest loan arrangement that would have prevented this outcome.
  - asciii 4y ago
    > He also makes a point about how the management was "idiotic" because if they had just gone to JP Morgan, or Wells Fargo, or another big bank I’ve read a similar sentiment elsewhere about their inability to raise the necessary amount without hitting full panic button. Whether idiotic or not, the CEO sold before this. Maybe there’s a bigger play
- TaylorAlexander 4y ago
  > Did we just accidentally invent a fully socialized national banking system? Not if the profits still go private interests. The standard way of doing big business in the USA for quite some time has been “socialize the costs, privatize the profits”. So on the face of it this doesn’t seem new.
ekianjo 4y ago
> bring back to money to our bank This guy really thinks people are THAT stupid?
- TMWNN 4y ago
  Tim Mayopoulos <https://www.linkedin.com/in/timothy-j-mayopoulos-56972a45/ https://www.linkedin.com/in/timothy-j-mayopoulos-56972a45/> is * a complete outsider to SVB * formerly with FDIC * ran a consumer banking-tech startup until joining SVB * ran Fannie Mae for six years after the 2008 financial crisis * high-level experience at BofA and Deutsche Bank He sounds like about as ideal a person to run the new SVB as imaginable.

19 points by zhoutong 4y ago

"The number one thing you can do to support the future of this institution is to help us rebuild our deposit base, both by leaving deposits with Silicon Valley Bridge Bank and transferring back deposits that left over the last several days."

flatiron 4y ago
Nah I’m good
- pablo24602 4y ago
  > depositors have full access to their money and both new and existing deposits are fully protected by the FDIC. This action by FDIC effectively means that deposits held with SVB are among the safest of any bank or institution in the country.

zhoutong 4y ago

Effectively there are two banks (Silicon Valley Bridge Bank, N.A. and Signature Bridge Bank, N.A.) with de facto unlimited FDIC insurance, as there's explicit guarantee for all existing and new deposits.

jacooper 4y ago
There is no way this is permanent, right? What's the end goal of this? Rebuild confidence in SVB and then return to normal insurance? I think the first step they have to do if there is any hope of a successful relaunch, is a full rebrand.
- thebitguru 4y ago
  My guess is they are probably looking for a buyer, who will likely roll everything into their offering. So, the more they can get back, the higher the sale price.
  - paulryanrogers 4y ago
    Which makes for fewer banks and more consolidation. That sounds like it has its own risks, echos of "too big to fail"
- smcin 4y ago
  Surely this is the ideal time for planning to split SVB into multiple banks, if the actual intent is to diversify risk (well is it?). Why do regulators never split banks up? [0] For people who talk so much about managing risk. Reminiscent of GHW Bush's complaint about eating broccoli. Also, talking about concern about job losses and wider economic impact, compare to in 2020/1 when Congress was fetishizing daily about stimulus packages to save the airline industry, yet long-distance coach companies Greyhound/Boltbus and Megabus were simply quietly allowed to cease business. [0]: https://www.americanbanker.com/news/regulators-willing-to-break-up-repeat-offender-banks-acting-comptroller-says https://www.americanbanker.com/news/regulators-willing-to-br... > 1/17/2023 The Office of the Comptroller of the Currency and other regulators would consider breaking up big banks that repeatedly fail to correct bad behavior, according to acting Comptroller Michael Hsu. > Though financial regulators have long had the power to split up banks for incessant violations, Hsu's remarks at the Brookings Institution on Tuesday were the most explicit warning in recent memory of regulators' willingness to break apart large, chronically delinquent financial institutions.
  - jacooper 4y ago
    I heard that they often split them for sale, so no single bank has to carry the full risk of another bank run because of low customer confidence.
- dylan604 4y ago
  I think they should reuse some brands that are available again instead of wasting a new name. I could suggest MCI, Charter, Blackwater, etc as all names that would be befitting for these "oops" rebrands.
smcin 4y ago
Somewhere between "$250k" and "infinite" would have been less moral hazard. Feels like we've set a dangerous precedent, but only for depositors who are politically connected and can instill panic. When does the de facto unlimited FDIC insurance expire/ When does Silicon Valley Bridge Bank go back to normal? Second: IIUC, any shortfall in making SVB depositors whole will come from a levy on the rest of the banking system (and maybe small (<$400m) clawbacks from execs' share sales). How much will that levy cost the rest of us? Can it be legally or politically challenged? Are any Congressmen challenging it? (Where are the libertarian Republicans on this?)
- rhaway84773 4y ago
  When was the last time non politically connected depositors lost money from their checking accounts? The only “moral hazard” being created here is encouraging people to deposit money in smaller banks. If the govt hadn’t created the “moral hazard” then people and businesses would simply have chosen to do all their banking with the much safer big banks like Chase and Citibank. The reality is that Americans don’t want all banking to be concentrated in the hands, but smaller banks are significantly more risky and inefficient. Depositing money in the smaller banks and not just the top handful is the “moral hazard” that has been created by government intervention.
  - TMWNN 4y ago
    > When was the last time non politically connected depositors lost money from their checking accounts? Many times. The typical uninsured depositor in bank failures from 2008 to today got about 75 cents on the dollar. Depositors in IndyMac in 2008 got 50 cents on the dollar.
  - Scoundreller 4y ago
    > The only “moral hazard” being created here is encouraging people to deposit money in smaller banks. Or everyone, nationwide, starts moving every penny they have into whichever bank, anywhere, offers the highest interest rates, without regard to how they accomplish that. Let's call it "risk intensification".
- 4y ago

somethoughts 4y ago

IMHO, it feels like at minimum the regulators should have required that in exchange for reduced oversight for banks in the $50-$250B range - they should have reduced FDIC coverage for depositors and have been required a form to be filled out by existing and new customers to notify them of this reduction in coverage. [1] https://www.wsj.com/articles/barney-frank-pushed-to-ease-financial-regulations-after-joining-signature-bank-board-e5c8819c https://www.wsj.com/articles/barney-frank-pushed-to-ease-fin...

tedunangst 4y ago
The regulators are not the ones who negotiated away oversight.

Alupis 4y ago

Run your bank off a cliff, require every rule be broken to save your bacon, and now ask people to reline your coffers with more deposits. Absolutely stunning... On second thought - SVB is apparently the safest place on the planet to park enormous amounts of cash. Why would you not deposit everything here? The Government will just save you if SVB screws it up again... right? Absolutely zero risk in parking everything with SVB... what a great signal to be sending the public.

jacooper 4y ago
It isn't really the same bank nor the same CEO
- Alupis 4y ago
  The result is the same. SVB has infinity insurance on all deposits, provided courtesy of the tax payer. This is a naked attempt to pump the value of SVB assets, and seek a less-than-fire-sale to another institution.
  - sroussey 4y ago
    Don’t all banks have that right now?
    - Alupis 4y ago
      No, only SVB and Signature enjoy infinity insurance. Everyone else that played by the rules gets a measly $250k max...
      - fisherjeff 4y ago
        https://www.federalreserve.gov/monetarypolicy/bank-term-funding-program.htm https://www.federalreserve.gov/monetarypolicy/bank-term-fund...
        4y ago

gjsman-1000 4y ago

In widely underreported news, before anyone blames looser regulations, Barney Frank of the Dodd-Frank Act fame was literally on the board of Signature Bank, which also collapsed. He also has stated the regulation reduction under the last administration has nothing to do with this situation, whatever you make of that.

Overtonwindow 4y ago

I read that there was only one person on the board with experience in banking. Is this normal for the board of a bank?

dylan604 4y ago
Does that mean that tech companies should only have tech literate people on their boards?

paxys 4y ago

It's quite an ingenious situation. - FDIC guarantees that every deposit at these banks up to an unlimited amount will be paid out by the US government. - Because of that guarantee, the bank run stops and people leave their money there (and in fact deposit more). - Because of the influx of cash the bank solves its liquidity issues and the government doesn't actually have to spend a single penny. In theory all of this works. But the next question is – how far will this go? Will FDIC do the same for every bank in the country? Can they all just start taking more and more risk? Do customers not need to care about how well their bank is run, because ultimately the US government is everyone's bank? Did we just accidentally invent a fully socialized national banking system?

gjsman-1000 4y ago
If I were head of a smaller or regional bank, I’d be running for the lawyers, because I would find it very hard to believe that FDIC would extend their offer in a fair and reasonable manner to smaller banks. If they don’t, it’s arguably a form of extortion, using mandatory fees on small banks to only protect big ones. How would that be legal? To avoid legal hot water, the FDIC may find themselves to equally protect every bank which might quickly turn out regrettable… > Did we just accidentally invent a fully socialized national banking system? According to Kevin O’Leary, YES. He also makes a point about how the management was "idiotic" because if they had just gone to JP Morgan, or Wells Fargo, or another big bank - and said, "hey, we got a short term cash problem with a lot of treasuries," they almost certainly could have come to a very low-interest loan arrangement that would have prevented this outcome.
- asciii 4y ago
  > He also makes a point about how the management was "idiotic" because if they had just gone to JP Morgan, or Wells Fargo, or another big bank I’ve read a similar sentiment elsewhere about their inability to raise the necessary amount without hitting full panic button. Whether idiotic or not, the CEO sold before this. Maybe there’s a bigger play
TaylorAlexander 4y ago
> Did we just accidentally invent a fully socialized national banking system? Not if the profits still go private interests. The standard way of doing big business in the USA for quite some time has been “socialize the costs, privatize the profits”. So on the face of it this doesn’t seem new.

ekianjo 4y ago

> bring back to money to our bank This guy really thinks people are THAT stupid?

TMWNN 4y ago
Tim Mayopoulos <https://www.linkedin.com/in/timothy-j-mayopoulos-56972a45/ https://www.linkedin.com/in/timothy-j-mayopoulos-56972a45/> is * a complete outsider to SVB * formerly with FDIC * ran a consumer banking-tech startup until joining SVB * ran Fannie Mae for six years after the 2008 financial crisis * high-level experience at BofA and Deutsche Bank He sounds like about as ideal a person to run the new SVB as imaginable.