Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
I saw an interesting segment on CNBC today. They (Liesman, Santelli, others) were talking about how the banks were treated after they came to the rescue last time (Lehman's) that they may not be in such a hurry to help out now. Implying they got screwed by the government somehow.
They (Liesman, Santelli, others) were talking about how the banks were treated after they came to the rescue last time (Lehman's) that they may not be in such a hurry to help out now. Implying they got screwed by the government somehow.
That is frankly hilarious. It was the government and taxpayers who footed the bill for the banking sector executives' golden parachutes after the 2008-09 crash, and none of them saw any jail time for some of the nonsense they pulled with subprime. This time when they fail the government should say let them eat cake.
Bear Stearns went under in March 2008 and Lehman in September 2008. Lot of pain for the markets lay ahead after those failures. So not trying to be a Pollyanna here but I would think if what occurred the past two days had occurred last year we would have seen a heck of a lot more of decline than now. Also junk bonds didn’t get blown out of the water and even more so bank loan funds - at least yet. The later were huge victims in 2008. Listening to all the pundits today - never a good thing - you would have thought it should have been much more of a bloodbath in the markets today outside of many of the banks.
@lewisbraham. Ya, that was the problem with the bailouts last time. They should have protected and back stopped the depositors and let the banks etc go under. The one's who didn't leverage themselves to kingdom come would have survived and taken over going forward
Of course, the pension funds would have got clobbered and that would have been another issue
Question. What responsibility did the folks who took out loans they couldn't afford bear. The Ninja loans etc. Who approved those? What was the due diligence etc. I believe the government was almost forced to overlook all that. Similar to the ppp loans in the past two years. Oy vey what fraud!!
Friend uncle works at sivb for 15 +++yrs have 300k $$$ in sivb stocks... Not sure why did not diversified 90s% $ gone in 2d Mama had 50k in first republic banks in sjc, matured 2 months ago... Asked her to move $$ to schwab so we bought more bonds... She is extremely lucky today... First republic may belly up next
”Listening to all the pundits today - never a good thing - you would have thought it should have been much more of a bloodbath in the markets today outside of many of the banks.”
Yep. Must get boring repeating the market numbers day after day. I’m sure some can’t wait to get off air and head to happy hour seeing as how it’s Friday. With the Dow over 30,000 even small percentage moves appear large in terms of points to a casual viewer or listener.
Can somebody tell me which industries the govt. will bail out this time around when the Fed wrecking crew finishes work? I’d like to invest in those.
Both Silvergate Bank and Silicon Valley Bank are California state-chartered banks. Is there any reason to think oversight would have been better (or worse) if they had national bank charters?
I have avoided the Big Dogs just on principle, remembering the GFC. BPRN Bank of Princeton (on watch-list) was up on Th. by 0.3% but could not do it again today, Friday: down by the same amount. NYCB was suggested to me just a few days ago, here. Its share price got clobbered, the past couple of days. I wonder if it's simply because of its Gotham exposure?
Do we need to come up with a new category entirely, for the sake of accuracy? I eschew the BIG banks. Then there are mid-sized banks. Regional banks. (Zions, Huntington.) Then small banks. Should there be an "obscure banks" category? Wherever my own "darling" fits, she is down for this past full week by -9.05%. ( BHB but up +0.48% in the after-hours, which never helps the likes of ME.) Price target is 22% higher than its closing price today, Fri. 10th March, '23. (Number there is from Stock Rover.)
BHB has branches all over northern New England. Still no panic here. I see a buying opportunity. Same with BPRN, when it falls a bit further.
Per Circle: "Silicon Valley Bank is one of six banking partners Circle uses for managing the ~25% portion of USDC reserves held in cash. While we await clarity on how the FDIC receivership of SVB will impact its depositors, Circle & USDC continue to operate normally."
[narrator]: "Until it can't...."
The USDC chart since that official tweet has, predictably, fallen off a cliff.
Posting the 'this is fine' meme would've been about as reassuring as their official update tweet, I think.
A new bank, the National Bank of Santa Clara, has been created by the Federal Deposit Insurance Corp. to hold the deposits and assets of Silicon Valley Bank, and it will begin operating by Monday. But only accounts that fall below $250,000 are insured by FDIC; any winery with funds above that will have to wait an undetermined amount of time to find out if the additional amount will be paid back, partially or in full.
Since two of the few subjects that the SF Chronicle seems equipped to cover these days are food and wine, this article naturally focused on problems that the wine industry may face due to the failure of Silicon Valley Bank. The potential problems for safety of deposits in excess of the FDIC 250k coverage limit will apply, of course, to all deposits of that type.
* Having been a reader of San Francisco newspapers for some 75 years, I can accurately report that the current San Francisco Chronicle is barely a faint shadow of what a real newspaper should be, and in fact, of what the Chronicle once was. The Hearst Corporation is evidently targeting readers between 12 and 20 years of age.
Well, you guys got me off my lazy, and I moved my last over the FDIC excess which produced a 5-day settlement window. (Technically still over a bit). So, should credit unions be safe if over $250K NCUA?
Well, you guys got me off my lazy, and I moved my last over the FDIC excess which produced a 5-day settlement window. (Technically still over a bit). So, should credit unions be safe if over $250K NUCA?
If they have supplimental insurance to cover a certain amount over 250K, you're probably ok. For significant cash holdings, I'd even consider throwing it into t-bills at a brokerage and rolling them regularly until you decide what to do with the money.
@Crash - couldn't help it. My accounts went from 2 to 1 person so half the coverage. I was slowly correcting as CDs matured so I didn't get it done in this one instance within the 6mo. grace period. I moved the remaining high yield savings but would need to break a CD to get completely under $250K.
First Republic shares fell 52% in early trading before storming back to near the previous day’s closing level, only to then finish the day down 15%. Investors expressed concerns about unrealized losses on assets at the bank as well as its heavy reliance on deposits that could turn out to be flighty.
Addressing its liquidity, First Republic said: “Sources beyond a well-diversified deposit base include over $60 billion of available, unused borrowing capacity at the Federal Home Loan Bank and the Federal Reserve Bank.” Regarding its financial position, First Republic said it “has consistently maintained a strong capital position with capital levels significantly higher than the regulatory requirements for being considered well-capitalized.”
Investors have grown wary of First Republic for reasons similar to those that caused concern at SVB. Like SVB, First Republic showed a large gap between the fair-market value and balance-sheet value of its assets. Unlike SVB, where the biggest divergence is in its portfolio of debt securities, First Republic’s gap mostly is in its loan book.
In its annual report, First Republic said the fair-market value of its “real estate secured mortgages” was $117.5 billion as of Dec. 31, or $19.3 billion below their $136.8 billion balance-sheet value. The fair-value gap for that single asset category was larger than First Republic’s $17.4 billion of total equity.
All told, the fair value of First Republic’s financial assets was $26.9 billion less than their balance-sheet value. The financial assets included “other loans” with a fair value of $26.4 billion, or $2.9 billion below their $29.3 billion carrying amount. So-called held-to-maturity securities, consisting mostly of municipal bonds, had a fair value of $23.6 billion, or $4.8 billion less than their $28.3 billion carrying amount.
Another point of concern that echoes SVB is First Republic’s liabilities, which rely heavily on customer deposits. At SVB, those deposits largely came from technology startups and venture-capital investors, who quickly pulled their money when the bank ran into trouble.
First Republic’s funding relies in large part on wealthy individuals who increasingly have a range of options to seek higher yields on their cash at other financial institutions as interest rates have risen.
Total deposits at First Republic were $176.4 billion, or 90% of its total liabilities, as of Dec. 31. About 35% of its deposits were noninterest-bearing. And $119.5 billion, or 68%, of its deposits were uninsured, meaning they exceeded Federal Deposit Insurance Corp. limits.
Uninsured deposits can prove flighty since they can be subject to losses if a bank fails.
(Text emphasis added in above.)
For additional perspective, there's this from a post that I made earlier in this thread:
Hopefully we all know or understand that holding bonds or CDs of various types can easily lead to a capital loss if we are required to sell those types of instruments before maturity, and if their value has meanwhile deteriorated due to overall financial market conditions.
But I had never given any thought to the possibility of potential bank losses when they have parked substantial amounts of their money in "ultra safe" US Treasuries. An article in this morning's WSJ pointed out that banks are potentially in the same situation as we are.
A bank such as Silicon Valley Bank can have a significant amount of their capital in short-term "safe" Treasuries, but if they are faced with an unexpected run on their deposits, they can be forced to sell those Treasuries before maturity, and at a loss.
So even a reasonably run bank can get into trouble.
@old_Joe, thanks for sharing these invaluable info. I am still catching up on the SVB and its potential implication to smaller banks of similar profile.
Also I agree that quality journalism has decline significantly and I try to read as much as I can from our local library’s online subscription to major newspapers.
@Sven "I agree that quality journalism has decline significantly and I try to read as much as I can from our local library’s online subscription to major newspapers". =+1 @Old_Joe From your wrap up. "Hopefully we all know or understand that holding bonds or CDs of various types can easily lead to a capital loss if we are required to sell those types of instruments before maturity, and if their value has meanwhile deteriorated due to overall financial market conditions. So they held short term T-bills paying ? , while paying their customers 20 times less than the T-bills on the customers accounts !! 2% T-bill & customer gets paid .1% !? Over extended I'd say. Have a good day, Derf
As of today, SVB is still receiving an "A" rating, by the Bank Rating agencies. Those who depend on Rating agencies to identify the best and most healthy banks may want to think twice about how these rating agencies work
May I ask some of the experts on the board to educate me/us on what they would look for pertaining to the financial strength of a bank? Texas ratio, capitalization, deposit growth etc? What does it all mean and how should one intrepret all that? What is BS and what is important?
Example that got me sideways, Schwab bank...poor capitalization ratio, I would not have guessed that..assets/equity is low...hmm.
USDC (US Dollar Coin, a so-called 'stablecoin') broke its $1 peg and is now trading around 90c b/c of concerns over SVC and the USDC reserves that were there.
I do find it painfully amusing to see board members here and people in general complaining about the “decline in quality journalism” while simultaneously seeking new and ever more ingenious ways to avoid paywalls so they can read and disseminate articles without subscribing to publications. You do realize it costs money to produce quality journalism, right?
Investigative journalism in particular is expensive to produce as the companies/institutions being covered are usually unwilling participants so more digging and research are necessary. But even a regular informative quality article will generally be less informative if the publication is half as thick because of declining subscriptions and advertising. Writers will have half the space to cover complex topics like finance. Meanwhile deadlines because it’s the Internet and information is disseminated immediately are shorter, so analysis when it does happen often comes after the fact.
Comments
@Devo- Yes, exactly my point. Lehman and Home Savings were big outfits too.
Of course, the pension funds would have got clobbered and that would have been another issue
Question. What responsibility did the folks who took out loans they couldn't afford bear. The Ninja loans etc. Who approved those? What was the due diligence etc. I believe the government was almost forced to overlook all that. Similar to the ppp loans in the past two years. Oy vey what fraud!!
Best
Baseball fan
90s% $ gone in 2d
Mama had 50k in first republic banks in sjc, matured 2 months ago... Asked her to move $$ to schwab so we bought more bonds... She is extremely lucky today... First republic may belly up next
Yep. Must get boring repeating the market numbers day after day. I’m sure some can’t wait to get off air and head to happy hour seeing as how it’s Friday. With the Dow over 30,000 even small percentage moves appear large in terms of points to a casual viewer or listener.
Can somebody tell me which industries the govt. will bail out this time around when the Fed wrecking crew finishes work? I’d like to invest in those.
https://dfpi.ca.gov/2023/03/08/dfpi-statement-silvergate-bank-to-begin-voluntary-liquidation/
https://dfpi.ca.gov/2023/03/10/california-financial-regulator-takes-possession-of-silicon-valley-bank/
Its share price got clobbered, the past couple of days. I wonder if it's simply because of its Gotham exposure?
Do we need to come up with a new category entirely, for the sake of accuracy? I eschew the BIG banks. Then there are mid-sized banks. Regional banks. (Zions, Huntington.) Then small banks. Should there be an "obscure banks" category? Wherever my own "darling" fits, she is down for this past full week by -9.05%. ( BHB but up +0.48% in the after-hours, which never helps the likes of ME.) Price target is 22% higher than its closing price today, Fri. 10th March, '23. (Number there is from Stock Rover.)
BHB has branches all over northern New England. Still no panic here. I see a buying opportunity. Same with BPRN, when it falls a bit further.
Scrutiny Falls on $43B USDC Stablecoin’s Cash Reserves at Failed Silicon Valley Bank
https://www.coindesk.com/markets/2023/03/10/scrutiny-falls-on-43b-usdc-stablecoins-cash-reserves-at-failed-silicon-valley-bank/
Per Circle: "Silicon Valley Bank is one of six banking partners Circle uses for managing the ~25% portion of USDC reserves held in cash. While we await clarity on how the FDIC receivership of SVB will impact its depositors, Circle & USDC continue to operate normally."
[narrator]: "Until it can't...."
The USDC chart since that official tweet has, predictably, fallen off a cliff.
Posting the 'this is fine' meme would've been about as reassuring as their official update tweet, I think.
* Having been a reader of San Francisco newspapers for some 75 years, I can accurately report that the current San Francisco Chronicle is barely a faint shadow of what a real newspaper should be, and in fact, of what the Chronicle once was. The Hearst Corporation is evidently targeting readers between 12 and 20 years of age.
BlockFi has $227 million in uninsured funds in Silicon Valley Bank
https://www.theblock.co/post/218943/blockfi-has-227-million-in-uninsured-funds-in-silicon-valley-bank
(well, 'had' is a more correct tense, I think.)
@WABAC Thanks. Corrected from NUCA to NCUA.
Could be few months pain if the dust settle, maybe spy head toward 3300, many pundits been calling for this level last 12 14 months
Only thing working few days $TMF, tsla slightly up today
Following are selected excerpts from a current article in the Wall Street Journal- (Text emphasis added in above.)
For additional perspective, there's this from a post that I made earlier in this thread:
Also I agree that quality journalism has decline significantly and I try to read as much as I can from our local library’s online subscription to major newspapers.
@Old_Joe From your wrap up. "Hopefully we all know or understand that holding bonds or CDs of various types can easily lead to a capital loss if we are required to sell those types of instruments before maturity, and if their value has meanwhile deteriorated due to overall financial market conditions.
So they held short term T-bills paying ? , while paying their customers 20 times less than the T-bills on the customers accounts !! 2% T-bill & customer gets paid .1% !?
Over extended I'd say.
Have a good day, Derf
Example that got me sideways, Schwab bank...poor capitalization ratio, I would not have guessed that..assets/equity is low...hmm.
YogiBB...looking at you...thoughts?
Best Regards,
Bob
Buckle up, folks...
Startup Bank Had a Startup Bank Run
One problem for Silicon Valley Bank is that its customers had too much cash, and now they don’t.
https://www.bloomberg.com/opinion/articles/2023-03-10/startup-bank-had-a-startup-bank-run?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTY3ODU0ODE5NiwiZXhwIjoxNjc5MTUyOTk2LCJhcnRpY2xlSWQiOiJSUkJOU1REV0xVNkEwMSIsImJjb25uZWN0SWQiOiIxQTZFNTVBMDIxREI0REJGQjc3MDc4RTE2MUNBNjI0MyJ9.VDcRvPyCtAcky6NCXXKuwLL85ic9ybNwVFh5UXHXpWM
Investigative journalism in particular is expensive to produce as the companies/institutions being covered are usually unwilling participants so more digging and research are necessary. But even a regular informative quality article will generally be less informative if the publication is half as thick because of declining subscriptions and advertising. Writers will have half the space to cover complex topics like finance. Meanwhile deadlines because it’s the Internet and information is disseminated immediately are shorter, so analysis when it does happen often comes after the fact.