Silicon Valley Bank meltdown sparks contagion fears: ‘We found our Enron’

[mystery-ak]

Silicon Valley Bank meltdown sparks contagion fears: ‘We found our Enron’
By Ariel Zilber   
March 10, 2023 8:49am

Fears of a broad financial contagion spread on Friday after tech lender Silicon Valley Bank set off alarm bells over liquidity concerns — sparking share losses across the banking sector worth some $52 billion on Thursday.

Peter Thiel’s venture capital firm Founders Firm advised clients to withdraw their deposits from Silicon Valley Bank — despite the fact the lender has been a mainstay for tech startups for decades, according to Bloomberg News.

Bill Ackman, the billionaire hedge fund manager, called on the US government to step in and bail out Silicon Valley Bank.

Michael Burry, the eccentric investor featured in the 2015 film “The Big Short,” warned: “It is possible today we found our Enron.”

Shares of Silicon Valley Bank’s parent company, SVB Financial Group, nosedived by 60% on Thursday evening, wiping out more than $80 billion from its market capitalization.

The company’s stock was down another 45% in pre-market trading on Friday — dragging down the share price of several other publicly traded banking giants.

more
https://nypost.com/2023/03/10/silicon-valley-bank-meltdown-sparks-contagion-fears/

[mystery-ak]

Silicon Valley Bank is shut down by regulators, FDIC to protect insured deposits
Published Fri, Mar 10 202311:46 AM ESTUpdated 2 Min Ago

Jesse Pound

Greg Becker, the CEO of Silicon Valley Bank, tried to calm tech investors and startups during a Thursday Zoom call.

“My ask is to stay calm because that’s what is important,” Becker told listeners on the call. “We have been long-term supporters of you — the last thing we need you to do is panic.”

Shares of Signature Bank dropped by some 4% in pre-market trading while First Republic Bank, whose stock fell 17% on Thursday, was down another 3% before the opening bell on Friday.

Shares of JPMorgan Chase, which fell 5% on Thursday, dropped another 1% in pre-market trading on Friday.

more
https://nypost.com/2023/03/10/silicon-valley-bank-meltdown-sparks-contagion-fears/

[Timber Rattler]

Update: https://www.cnbc.com/2023/03/10/silicon-valley-bank-is-shut-down-by-regulators-fdic-to-protect-insured-deposits.html?__source=iosappshare%7Ccom.apple.UIKit.activity.PostToTwitter

FDIC taken control and has shut it down until Monday to stop the run.

[Kamaji]

Michael Burry, the eccentric investor featured in the 2015 film “The Big Short,” warned: “It is possible today we found our Enron.”

Is he alleging massive accounting fraud at SVB?

[mystery-ak]

Feds Take Over Silicon Valley Bank in Biggest Bank Failure Since 2007
Joe Cunningham

Silicon Valley Bank (SBV), a financial institution that focused primarily on investing in tech start-ups, has been taken over and shut down by federal regulators in one of biggest financial failures in history, and the biggest since the Global Financial Crisis over a decade ago.

The collapse of the bank comes as the tech industry has lost a lot of profitability in recent months. Major tech firms are slashing jobs, and new start-ups are dwindling.

The stunning downfall of the bank, once a darling of the financial world, comes after it raced to find a buyer following a major reported loss, according to the Wall Street Journal.

https://redstate.com/joesquire/2023/03/10/feds-take-over-silicon-valley-bank-in-biggest-bank-failure-since-2007-n714598

[Weird Tolkienish Figure]

Just read that 97% of accounts aren't insured by FDIC due to them being over the limit of $250K.

[catfish1957]

Just read that 97% of accounts aren't insured by FDIC due to them being over the limit of $250K.

If there are two signatures and people on named account that would be $500K.  And if those two had over $500K, their fiscal IQ needs to be improved.

https://www.fdic.gov/deposit/diguidebankers/documents/joint-accounts.pdf

[Weird Tolkienish Figure]

If there are two signatures and people on named account that would be $500K.  And if those two had over $500K, their fiscal IQ needs to be improved.

https://www.fdic.gov/deposit/diguidebankers/documents/joint-accounts.pdf

I worked at a Credit Union 2004 - 2008 in IT but I could see people's balances, I would routinely see six figures parked in a regular checking account making hardly any interest or in things like CD's. Kinda crazy but I don't know what it's about.

[catfish1957]

I worked at a Credit Union 2004 - 2008 in IT but I could see people's balances, I would routinely see six figures parked in a regular checking account making hardly any interest or in things like CD's. Kinda crazy but I don't know what it's about.

CD's right now are about the best bet out there short term and decently safe.  We've got slews of banks and credit unions around here paying 3.5-4.5% yields on 1 year terms.  With the silly rate inversions, we are seeing oddly rates dropping as the terms length increases.

[mountaineer]

Biden economic advisor Cecilia Rouse downplays today's collapse of Silicon Valley Bank — the largest bank to fail since the 2008 financial crisis

https://twitter.com/RNCResearch/status/1634286909185839125

[mountaineer]

Mar 10 20235:36 PM EST
Dow closes more than 300 points lower, posts worst week since June as Silicon Valley Bank collapse sparks selloff: Live updates
Samantha Subin and Alex Harring

Stocks tumbled Friday as tech-focused lender Silicon Valley Bank shut down following losses in its bond portfolio, prompting the biggest bank failure since the global financial crisis and sending shockwaves through the banking sector.

The Dow Jones Industrial Average dropped for a fourth consecutive day, finishing 345.22 points lower, or 1.07%, to close at 31,909.64. The S&P 500 lost 1.45% to settle at 3,861.59. The Nasdaq Composite shed 1.76% to end at 11,138.89.

All the major averages capped off the week with losses. The Dow fell 4.44% to post its worst weekly performance since June. The S&P dropped 4.55%, while the Nasdaq lost 4.71%. ... CNBC

[mystery-ak]

SVB International Fallout: UK and EU Lenders Lose £30 Billion Overnight as ‘Panic’ Spreads

The Silicon Valley Bank fallout went international with UK and European lenders seeing nearly £30 billion wiped off their portfolios

https://www.breitbart.com/europe/2023/03/11/svb-international-fallout-uk-and-european-lenders-lose-30-billion-overnight-as-panic-spreads/

[Timber Rattler]

Monday's gonna be rough...

All the Companies Facing Major Troubles After Silicon Valley Bank Crash

https://www.thedailybeast.com/roku-etsy-vox-media-companies-impacted-by-silicon-valley-bank-crash

[mountaineer]

The Kobeissi Letter
@KobeissiLetter
This Week's Liquidity Crisis:

1. Stock markets lost $2 trillion in 5 days

2. Crypto markets lost $100 billion in 24 hours

3. U.S. banks lost $100 billion in 2 days

4. SVB failed with $200 billion in 24 hours

5. Bonds post biggest move since 2008

All of the buyers are gone.
4:45 PM · Mar 11, 2023

[Hoodat]

Monday's gonna be rough...

Next week, there will be a lot of very wealthy Democrats asking Biden for a government bailout.

[catfish1957]

Maybe the best idea at least at the moment on short term upcoming effect, .... is after hours on KBE...  Which is is about as true of a barometer ETF on the banking industry.  A blended index fund of the banks in the S & P 500.

At this exact moment , it's up 0.4% which at least right now does't look like a crash imminent.   

OTOH, I will be really watching trading in European markets early Monday to see if there is any cracks in the line.  If we see another large bank failure, we might be in for a downward slide Monday.  I've been looking for a major correction for some now.....   Based on last week I'm taking it from DEFCON 3 to 2.

[Free Vulcan]

I hope this isn't one of those events that spreads and sneaks up to bite the world economy on the butt.

These kind of things can get out of hand fast.

[catfish1957]

I hope this isn't one of those events that spreads and sneaks up to bite the world economy on the butt.

These kind of things can get out of hand fast.

As a child, maybe 9 or 10, I remember watching "It's a Wonderful Life", and the scene around the bank run unfolded, I asked what that meant.  And got quite an education. 

There aren't that many people left alive who can realistically remember The Depression.  But they'll sure give you a interesting take of "getting out of hand". 

[catfish1957]

Nikkei down 1 1/2 % in mid day trading. 

So though a down day so far, no panic selling.  Anxious to see how the European markets react later....

[catfish1957]

Nikkei stablized and close down 1.11% for the day.

Mid day

 FTSE (England), DAX (Germany), and CAC (French) all  down 2%


Gold approaching $1900/oz

VIX futures down just a tad (good sign)...Oops, updated up 12%

KBE- Down 5% pre-market (This will be the one to watch) It will be the first barometer to see if this banking crisis has legs.

[Free Vulcan]

Nikkei down 1 1/2 % in mid day trading. 

So though a down day so far, no panic selling.  Anxious to see how the European markets react later....

Guess we're about to see just how much cryptocurrency and t-bill exposure the banks have out there.

[catfish1957]

Guess we're about to see just how much cryptocurrency and t-bill exposure the banks have out there.

BTC/$USD ratio is pretty flat in futures markets this morning.  Could be inverse factors in play here too though.  How much is of bit coin is dissolved in the bank crisis vs. how much is a so called flight to safety of those scared of the $USD that might result from a bank run.

[Free Vulcan]

BTC/$USD ratio is pretty flat in futures markets this morning.  Could be inverse factors in play here too though.  How much is of bit coin is dissolved in the bank crisis vs. how much is a so called flight to safety of those scared of the $USD that might result from a bank run.

We've dropped so many turds in the punch bowl that it's made things much more unpredictable for the USD and the world financial system. Plus we've done so much to enable China that they can really screw with us while this is all going down.

[Idiot]

We've dropped so many turds in the punch bowl that it's made things much more unpredictable for the USD and the world financial system. Plus we've done so much to enable China that they can really screw with us while this is all going down.

Our market has been so skittish the last several months this may very well be the "cockroach trips over a cigarette butt" moment that sends it plummeting.

[catfish1957]

 

KBE now down 7% as we approach open, and VIX rocketed to 30 as Pedo Joe opened his mouth.

Going to be an interesting day. 

[mountaineer]

John Cardillo
@johncardillo
If you manufacture a pandemic, you can shut the world down for a few years in an attempt to control everything.

If that doesn’t work, you can manufacture a banking crisis, nationalize the banks, and truly control everything forever.
8:33 AM · Mar 13, 2023

[catfish1957]

KBE now down 7% as we approach open, and VIX rocketed to 30 as Pedo Joe opened his mouth.

Going to be an interesting day.

KBE down 11% at opening.  And don't forget this is the ETF for the big boys.

What's that...... about half a trill market cap?

[catfish1957]

KBE now down 7% as we approach open, and VIX rocketed to 30 as Pedo Joe opened his mouth.

Going to be an interesting day.

Long treasury bonds are down 6% at open. Wonder how long China holds on to them. 

[Kamaji]

Interesting snippet from NY Post's timeline of the SVB collapse:

SVB had invested the cash into higher-yield, long-term mortgage-backed securities and bonds. When the Fed hiked interest rates, however, the value of those investments plummeted.

Source:  https://nypost.com/2023/03/13/a-timeline-of-silicon-valley-banks-collapse-how-it-all-unfolded/


Looks like, amongst other things, they had a rate/maturity mismatch of titanic proportions that went against them.

[Free Vulcan]

Interesting snippet from NY Post's timeline of the SVB collapse:

Source:  https://nypost.com/2023/03/13/a-timeline-of-silicon-valley-banks-collapse-how-it-all-unfolded/


Looks like, amongst other things, they had a rate/maturity mismatch of titanic proportions that went against them.

Make no mistake, these dumbass 'quants' that come out of these Ivy league b-schools in particular are academic drones, chalkboard smart and market/economy stupid.

They create these portfolios based on equations with assumptions that things are going to stay the same forever. It's the same reason their MBS portfolios went to crap in '07. They had every signal to get the hell out of their positions but they relied on their formulas.

The markets and economy are always in motion. You're lucky if your assumptions hold for a year, two at most.

[240B]

[Hoodat]

Looks like the FED is going to be printing up a lot more money to prop up millionaires and billionaires.  Meanwhile, expect the regime to go after small banks, forcing them out of business, only to be bought up by the newly enriched big banks.

[mountaineer]

 Obama official, Hillary donors, improv actor: Meet SVB’s board of directors
By Joshua Rhett Miller   
March 14, 2023 10:24am

One is a Hillary Clinton mega-donor who went to a Shinto shrine to pray after Donald Trump won the White House. Another worked for President Barack Obama before her own political career spectacularly failed. A third is a prolific contributor to Democrats, including Nancy Pelosi — who owns a Napa Valley vineyard just 15 minutes from the former House speaker’s.

There’s even an improv performer.

The 12 directors who were supposed to oversee fallen Silicon Valley Bank — and prevent the catastrophic errors that threw the entire banking system into jeopardy on Friday — might not be household names.

But they are facing a series of investigations into their collective role in its collapse.

A Post examination of the board reveals it did not jibe with Silicon Valley’s young image: Only one independent director is under 60, while the oldest is 78.  ... 

NY Post

[mountaineer]

Libby Emmons
@libbyemmons
Thiel basically caused the bank-run, and will now be paid back in full by the fed.
BREAKING: Peter Thiel had $50 million in failed SVB at time of collapse

     Mar 16, 2023
BREAKING: Peter Thiel had $50 million in failed SVB at time of collapse
The Biden administration said on Sunday that they would move to protect all depositors at SVB.

Billionaire PayPal founder Peter Thiel reportedly had $50 million stored in fed-seized Silicon Valley Bank, this despite his venture fund having warned others that the bank was at risk. The Biden administration has promised to make sure all depositors are able to access the full amount of what they had in SVB's coffers.

Thiel was also blamed for the bank run on SVB, in which depositors attempted to withdraw some $40 billion from the tech-industry bank in 24 hours. Thiel's Founders Fund had advised clients not to keep all their cash in SVB, and to spread it around to other financial institutions.   ...

https://thepostmillennial.com/breaking-peter-thiel-had-50-million-in-failed-svb?utm_campaign=64506

[Timber Rattler]

HOLD ON THERE: Yellen says not ALL deposits at ALL banks are "insured"

https://hotair.com/tree-hugging-sister/2023/03/16/hold-on-there-yellen-says-not-all-deposits-at-all-banks-are-insured-n537411

Regional banks are out of luck!

https://twitter.com/i/status/1636412189832798209

[mountaineer]

So much incest.

Joe Biden’s Green Energy Buddies Have Major Ties To Silicon Valley Bank
By: Larry Behrens
March 21, 2023

The contrast couldn’t be clearer. A devastating train derailment and subsequent toxic fires rock a community in Ohio that President Trump carried by 29 points. Forty days later, President Joe Biden has yet to set foot in East Palestine despite numerous pleas from residents.

A few weeks after the train crash, news breaks about a well-connected bank few have ever heard of crumbling on a Friday afternoon. At a time of the day his supporters say he usually does nothing, Biden is in front of the television cameras telling the world that the U.S. government will bail out Silicon Valley Bank, which is located in a city Biden won by almost 50 points. Biden’s climate buddies and Gov. Gavin Newsom’s wine companies are no doubt relieved.  ...

It’s easy to wonder if President Biden’s actions are driven by the bank’s connection to climate companies. This article highlights a few, noting “Silicon Valley Bank served as a banker to dozens of climate and energy-tech companies, holding their cash on a day-to-day basis and issuing billions of dollars in loans in support of the type of large-scale, one-off projects that are essential to the sector.”

Read it again: Dozens of climate companies. Billions in loans. Holding their cash on a day-to-day basis. Now, it gets interesting. ...

Read more at The Federalist