Anyone watching the collapse of SVB?

Back to degenerate gambling. Did everyone get out of the bank stocks or are you "hodl"-ing?

I took profits so I effectively have a zero cost basis, now Im along for the ride,

Im going to pretend im doing my part to strengthen the banking industry, but really Im a degenerate who enjoys the emotional roller coaster of being in a tumultuous market.

If we continue to reward bad management with bailouts and bonuses, aren't we ensuring that bad management becomes the norm?

Radical notion, I know.

1988RedT2 said:

If we continue to reward bad management with bailouts and bonuses, aren't we ensuring that bad management becomes the norm?

Radical notion, I know.

Oh, come on. It's not like there's a term for that or anything. 

In reply to Tom_Spangler (Forum Supporter) :

Your right and its not just the management, its also the consumers. Theyve essentially signaled to ALL depositors that the FDIC limit doesnt matter.

We are ever removing consequences to actions, then people look around dumbfounded at the loss of personal responsibility in the culture.

I have not been following this very closely at all due to all the hyperbolic finger pointing from lots of people who can only hold 1 thought in their heads at a time. The broader internet and it's bots and troll rhetoric, not pointing at anyone here. 

If I'm understanding the broad strokes here it's basically a business (the bank) that was selling a product (banking) to customers (individuals and businesses) but it's ability to deliver on the product was built on shakey ground. The business went under, FDIC protects depositors up to 250k, and the govt is additionally guaranteeing deposits over 250k. In the context of my rickety analogy, the govt is backing refunds for all of the business's customers. Right? 

Assuming I'm not too far off the mark on the broad strokes of this it really seems like we're just blatantly thumbing our noses at the rules. I'm no fool, I know the rules only apply to those who can't buy their way around them but daggum... Businesses do shady things because they keep not paying the consequences for their actions. 

In reply to Opti :

I'm still in, more out of curiosity at this point, I'll probably pull out Friday no matter where it is. 

Of course a big-4 accounting firm said both banks were fine just before they imploded: https://www.wsj.com/articles/kpmg-faces-scrutiny-for-audits-of-svb-and-signature-bank-42dc49dd

In reply to Error404 :

Satire is sometimes more direct and accurate than official statements:

Babylon Bee <- Edit: Link contains political satire.

In reply to GameboyRMH :

KPMG? Hmm, that's never happened before

In reply to AAZCD-Jon (Forum Supporter) :

While I don't agree with the politics in that satire I can agree with the jab it takes at bailing out the rich. My understanding is that it's technically, businesses that are getting the extra-FDIC bailout, and not really individuals. If businesses are too big to fail, then we're not very capitalist. Businesses should get no more of a safety net for bad decisions than I do. Instead we see that is increasingly becoming the American thing to do to value businesses more than citizens. (I am pointedly avoiding getting more off-topic than that.) The govt is able to quickly come in to backstop risky deposits by a business, for the sake of the banking economy, but isn't able to bring Americans out of student loan debt, for the sake of the banking economy. They both understood the risk but one entity is more valuable and protected. To be clear, I am simply comparing two contemporary "bailout" discussions and their disparate ease of enactment. 

GameboyRMH said:

Of course a big-4 accounting firm said both banks were fine just before they imploded: https://www.wsj.com/articles/kpmg-faces-scrutiny-for-audits-of-svb-and-signature-bank-42dc49dd

Shades of Moody's and S&P in 2008....

Error404 said:

While I don't agree with the politics in that satire I can agree with the jab it takes at bailing out the rich. My understanding is that it's technically, businesses that are getting the extra-FDIC bailout, and not really individuals. 

I don't think this is about businesses vs individuals, because businesses are made up of individuals.  It's small businesses that depend on SVB (Facebook, etc are not affected here), and without those funds they wouldn't be making payroll this week.  That's a lot of individuals (tens, maybe hundreds of thousands) who would be out of a job.  Also keep in mind that the $250K isn't a cap on the money received from FDIC out of a bank failure, it's just a minimum guarantee of returned deposits.  A big part of what they're doing here is short-cutting the process to keep those businesses (and jobs!) afloat.

Another part of what they're doing is protecting the broader economy from runs on other banks.  Fractional reserve banking depends on confidence, and there isn't a bank in the world that would survive the loss of confidence that SVB had last week.  Most of them haven't done anything to deserve such a loss, but these sorts of panics are mob behaviour -- they aren't rational and can very easily spread much further than there's any justification for it.

Error404 said:

I have not been following this very closely at all due to all the hyperbolic finger pointing from lots of people who can only hold 1 thought in their heads at a time. The broader internet and it's bots and troll rhetoric, not pointing at anyone here. 

If I'm understanding the broad strokes here it's basically a business (the bank) that was selling a product (banking) to customers (individuals and businesses) but it's ability to deliver on the product was built on shakey ground. The business went under, FDIC protects depositors up to 250k, and the govt is additionally guaranteeing deposits over 250k. In the context of my rickety analogy, the govt is backing refunds for all of the business's customers. Right? 

Assuming I'm not too far off the mark on the broad strokes of this it really seems like we're just blatantly thumbing our noses at the rules. I'm no fool, I know the rules only apply to those who can't buy their way around them but daggum... Businesses do shady things because they keep not paying the consequences for their actions. 

Just a minor clarification point, these large accounts the businesses have that the FDIC is covering are the payroll accounts for these businesses. So this isn't some sort of rich guy investment thing, it's literally regular people's paychecks.

So raise your hand if you are placing blame on "big banks" for this and other problems in our lives, but you also hold your checking/savings accounts at one.

Don't be shy!

I am on the list. And while I've been wanting to switch to the local CU for years, I've not prioritized it. I'll be starting the swap starting tonight.

Apparently Etsy had a lot of money in SVB and is currently not paying out to all sellers the money that they've earned.

Other than that tidbit I haven't followed this at all

In reply to Javelin :

Im more skeptical than you. I think the "this will affect the little guy" narrative is the smoke and mirrors they are using to justify a bail out in a climate without the political capital to support one. Yes it would undoubtedly affect the little guy and people would be out of a job, but how often does the federal government actually care about that. They didnt seem to care that much about East Palestine. Normal people will largely fall under the FDIC limits but businesses like Roku that  had half a billion largely uninsured in one bank, would take a bath. So lets take care of the businesses and pretend like we are taking care of the little guy.

I think this will just tell everyone they can be even less prudent where they keep their cash because the federal government will always bail us out. Kinda the MO of the govt right now though, who cares about the long term repercussions of our decisions, let take the easy out now. The next guys can deal with the other problem.

I do accept that the banking industry is largely a house of cards and preventing runs on other banks is a decent reason to bail out depositors at this one, im just not convinced it outweighs the cons (im on the fence).

In reply to Robbie (Forum Supporter) :

I do business with a regional bank and a local Credit Union, its resulted in better deals and service for me. Also stay well below the FDIC limits in cash. If my money might just disappear Id rather it be in assets that can appreciate.

In reply to Antihero :

Heard something yesterday they were supposed to resume paying today or tomorrow. No idea if they did or not.

Not sure what language the subtitles are in (Greek?), but the sound is English:

Robbie (Forum Supporter) said:

So raise your hand if you are placing blame on "big banks" for this and other problems in our lives, but you also hold your checking/savings accounts at one.

Don't be shy!

I am on the list. And while I've been wanting to switch to the local CU for years, I've not prioritized it. I'll be starting the swap starting tonight.

Local CU for my entire life. Small business for the mortgage, too.

I haven't really decided what I think about the FDIC guaranteeing the deposits over $250k.  I'm sympathetic to the moral hazard arguments and I generally feel like just because in your case you get a bad outcome when we follow the rules, that's just tough E36 M3 - we should follow the rules.

Buuuut...  I'm also curious how an organization with a large payroll could protect their cash.  Surely you wouldn't be able to manage a payroll where you had your money spread out $250k at a chunk in banks around the country with different employees getting checks from different banks. 

I'm not sure that I believe that their stated goals for that are just to keep large employers from suddenly not being able to make payroll.  But for the sake of the argument, let's say it is.  What other action could the bank's customers have taken to protect their cash?  What lesson are we not teaching them by not enforcing the $250k insurance limit?  Is the argument that they should have done more due diligence when they chose the bank that held their cash?

I totally understand that the folks invested in and running the outfit should get nothing.  I don't need to chew on that at all.  Bad business and investment decisions should be rewarded with massive and unrecoverable losses no matter how big you managed to get on your malfeasance.

CU since 1999

dont own any bank stocks other than what might be in a mutual fund

but not because I'm against owning shares of something I don't use. Hell, I own shares of big tobacco, big food, and big alcohol, and I only use a tiny bit of one of those three.

AngryCorvair (Forum Supporter) said:

CU since 1999

dont own any bank stocks other than what might be in a mutual fund

but not because I'm against owning shares of something I don't use. Hell, I own shares of big tobacco, big food, and big alcohol, and I only use a tiny bit of one of those three.

And a lot of the other two? ;)

In reply to Robbie (Forum Supporter) :

Nope. Small local bank. I learned my lesson when Bank One got bought out by Chase.

Chase can eat the peanuts out of my E36 M3.

Robbie (Forum Supporter) said:

AngryCorvair (Forum Supporter) said:

CU since 1999

dont own any bank stocks other than what might be in a mutual fund

but not because I'm against owning shares of something I don't use. Hell, I own shares of big tobacco, big food, and big alcohol, and I only use a tiny bit of one of those three.

And a lot of the other two? ;)

 Zero, AFAIK. \m/