jh0400 said:

---

Commercial treasury pricing is already death by a thousand cuts. Adding another 30 bps for insurance is extremely cost prohibitive for most companies.

---

Check out what the TBTF bank is charging you for "FDIC recoupment, or balance fee, etc". The FDIC charges banks for the standard insurance. The mega banks add that to your analysis statement - it's a profit center for them.

You should be able to do an overnight MM sweep which would reduce your risk.

Never thought about it much in the past but I'm glad I'm with BOA after this abortion (and the company is with Citi).

Signature Bank in NY just got shut down by Feds. No idea how big they are.

Customers will have full access to all accounts on Monday.

Quote:

---

Federal regulators rolled out emergency measures Sunday night to stem potential spillovers from Friday's swift collapse of Silicon Valley Bank, including measures to backstop all depositors.
…

"Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer."

The Fed said it would make additional funding available to banks to ensure they have "the ability to meet the needs of all depositors" through a new "Bank Term Funding Program," which will offer loans of up to one year to banks that pledge U.S. Treasury securities, mortgage-backed securities and other collateral.

---

https://www.wsj.com/articles/federal-reserve-rolls-out-emergency-measures-to-prevent-banking-crisis-ba4d7f98

Source?

It's the headline on WSJ right now.

BREAKING: The US has said that all Silicon Valley Bank depositors will have access to all their money Monday.

— unusual_whales (@unusual_whales) March 12, 2023

Caught me during my edit.

They must have found a buyer for SVB.

Quote:

---

Joint Statement by the Department of the Treasury, Federal Reserve, and FDIC
March 12, 2023
WASHINGTON, DC -- The following statement was released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg:

Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.

After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.

We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.

Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.

Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.

The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today's actions demonstrate our commitment to take the necessary steps to ensure that depositors' savings remain safe.



###

---

I'm an idiot. Who is covering the losses if not the taxpayer?

Surely they're not recovering enough from the management team who liquidated their holdings to cover it.

Also, doesn't every single person pull their money first thing tomorrow?

Maybe this?

Quote:

---

Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.

---

Oh snap!

There can be several reasons for this that don't relate to the current situation. A regional bank headquartered in Dallas requests or requires their borrowers to have their cash receipts flow through their bank accounts as do many. I would be curious if this email specifically referenced the SVB situation. Or the people reading it are just assuming it does.

How can you be so sure the money is there? The tech lending scenarios are what I call fairy tale lending. The hope is that the borrower lives happily ever after knowing that this isn't the reality when the music stops. You're just counting on the music not stopping suddenly. Lending on recurring revenue streams when the business is burning cash and not making money is a game of musical chairs. Unwind this SVB drama and there isn't 100% certainty that you'll have a chair when the music stops.

Of course though the government will keep it from collapsing for now.

I know this unraveling wasn't based on "bad loans" (for now). The VC's bailed on SVB. What do you think the loans they have to the tech companies are based on? It's certainly not profits or true collateral for that matter. The VCs bail and then what happens? Other banks in this space are more diversified but we're thought to be less successful in the tech "bubble" than SVB. The feds stepping in are saving these other regional banks from public panic. . I'm sure they're hoping and working on figuring out how another bank in this space can step in…if not, you're about to find out what types of loans that are left after the VC's bailed. I'll answer it for you - fairy tale lending.

uneedastraw said:

---

I know this unraveling wasn't based on "bad loans" (for now). The VC's bailed on SVB. What do you think the loans they have to the tech companies are based on? It's certainly not profits or true collateral for that matter. The core business model in tech lending is based on VC's. They bail and then what happens? Other banks in this space are more diversified but we're thought to be less successful in the tech "bubble" than SVB. The feds stepping in are saving these other regional banks from public panic. . I'm sure they're hoping and working on figuring out how another bank in this space can step in…if not, you're about to find out what types of loans that are left after the VC's bailed. I'll answer it for you - fairy tale lending.

---

My understanding of their business model is they didn't make many traditional loans. More they took deposits and invested in mortgage-backed-securities and treasury bonds.

My quick look at their Dec22 balance sheet
Assets
$14B of cash
$102B FMV of available for sale and FMV held to maturity securities (book value is $15B higher)
$74B of net loans receivable (0.9% loan loss reserve)
$2B Other securities
$3B accrued interest

Liabilities
$173B of deposits
$14B ST borrowings
$5B LT debt
$3B others

A very bleak picture for equity and debt holders, but there should be more than enough to make depositors whole. Their loan losses would have to be about 20x their current reserve if you wipe out the equity and debt. I'm not a banking expert so I would be curious to hear someone else's take. Certainly not somewhere I would want to have my cash held though.

bingo

zero lessons learned

Not an accountant, but isn't part of the problem that the securities marked held to maturity (HTM) didn't have to be written down to current market value, and are therefore worth less than stated on their balance sheet? So we don't have a good idea of the actual market value of these securities, and the actual value of capital that can be paid to depositors. Example:

SVB buys MBS with yields of 3.25% and holds them for two years until the market rate today is 6.50%. Instead of marking these down to market value (something like 97% of the original purchase price, I'm not doing the math, but we all get the point), they just note them as HTM and continued to value them at their "full" value. But then when it hit the fan and folks started the run, they were forced to sell at actual market value to be able to pay out those making withdrawals. And this could be the case across the country.