All deposits held by Silicon Valley Bank will be available regardless of the amount of their deposits, federal officials said over the weekend.
That includes businesses who must pay their employees and their bills.
“Americans can have confidence that the banking system is safe,” President Joseph Biden said Monday morning. “Your deposits will be there when you need them.”
Investors will not be protected because they took a risk and “that’s how capitalism works,” Biden said.
Taxpayers will not be on the hook for the losses. Money to cover the losses will come from fees that banks pay into the deposit insurance fund, Biden said.
Silicon Valley Bank failed Friday after depositors and investors tried to withdraw $42 billion from the bank Thursday, which had $175 billion in deposits at the end of last year.
The withdrawals left the bank with a negative cash balance of nearly $1 billion Thursday.
They keep pushing eco and equity and keep on failing. Just like the eco businesses Obama got going. Let things evolve naturally and stop pushing dumb ideas. Everytime someone gets rich and the majority lose money. Usually the taxpayer. In the end it does no good to talk about it because they will keep doing it.
I remind folks that everyone doesn’t want to live on a polluted planet, so what can be done about that is good. OTOH, the control freaks want to be ridiculous about it as well as unrealistic. Besides it may not be such a problem post 2025. 😉
The failure of Silicon Valley Bank had nothing to do with hi-technology clients involved in Eco.
It had to do with assets (a $21 Billion dollar US Treasury portfolio that was being held to maturity from when interest rates were very low, to being mismatched with liabilities (depositors). Their capital ratio’s got out of whack and they were unable to raise enough cash to meet requirements. Depositors became spooked when they sold their entire bond portfolio and started withdrawing their money out of their accounts, which magnified their capital ratio issues. This is basic Econ. 101a
When the bank has a sign on the door that says deposits are protected up to $250,000, you should probably heed that warning. If you don’t, that’s on you. However, the rich are always protected and always will be. That’s just the way it is.
Who believes anything Obama… I mean Biden (or his stand in) says? There may be a crash and burn but it may be slowed a bit.
The news won’t cover that all deposits are NOT available.
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Can you say “BAILOUT”?
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It’s not a BAILOUT.
The management team has lost their jobs and shareholders have been wiped out.
It’s a BAILOUT out of depositors who had more than $250K in SVB.
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In terms of shareholders, investing has its risks.
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Had SVB in your portfolio? You lose. Now move on.
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So, by your logic it’s not a bailout if people lose their jobs? Please define “bailout” so the rest of us can abide by your definition.
The Bank was not bailed-out.
It no longer exists.
The $250,000 depositor insurance is LAW.
Sounds good but these people were playing around with the eco and equity thing and not paying attention to what they should have been doing, and to top that off the CEO sold millions in equity days before they went into the bucket. Then started paying bonuses.
Ricardoh I heard that on the radio today as well. He’s gonna be doing some time. … unless he left the country before it went down.
Do they seriously expect people to believe that “Taxpayers will not be on the hook for the losses”?
Where do the “fees that banks pay into the deposit insurance fund” come from? Bankers foregoing their yearly bonuses? Raiding their children’s trust funds? Selling their second and third houses in Aspen and Swiss Alps?
Or may be these fees are paid from the interest and various ever-increasing banking fees (service, overdraft, transfer, currency exchange)? Paid by the banks’ customers, who – strangely enough – are not some extraterrestrial beings, but exactly the taxpayers who presumably won’t be on the hook for the losses.
@Tashaj
100% correct that this will be on the taxpayers. Do you know how I know that? Because that sniffing creepy pedo who showered with his daughter, said just the opposite.
If the deposits are to be made available – then I’m ok with it as long as the banks, higher management, stock holders are the ones being held liable. (That would be unlike 2008). FYI – FDIC insures up to $250K only… if you have checking, savings, IRAs, CDs, etc in say all your own name – they insure on only the aggregate of all the accounts. ie – if all your accounts total $300K – they’ll only insure to $250K … so you may need to diversify $$ into different names – some in your wife’s name, a trust, move $$ to a different bank, etc.)
In 2008, most bank holding company common stockholders were either wiped out or had their shares diluted to near zero as the result of taxpayer capital infusions.
And taxpayers wound up eventually making money on those bank “bailouts”
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Not true. Shareholders of those institutions that folded lost money (WaMu, Wachovia, Bear Stearns, Lehman Bros, etc.). Other shareholders nearly went to zero but they still had shares -albeit likely a fraction of their original cost.
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As a contrarian, yours truly
made a boat ton of money buying bank stocks in 2008 and 2009 because they were “too big to fail”.
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People should have bought BAC, JPM, and WFC shares when they were truly hated.
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Fear is profitable.
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I might play a little with First Republic Bank (FRC).
Gotta bail out those rich Democrat donors with no brains.
I guess some people dont have a problem when Trump bailed-out the Farmer’s with $29 Billion, buying their votes after the tariffs from his Trade War with China sent the family farm bankruptcy rate to a decade high. But they have a problem with FDIC insurance covering depositors at a Bank.
If you’ll pardon the bad farming pun, it’s apples and oranges. Everyone who walks into a bank sees the FDIC Insurance sign on the door – up to $250k. The matter to which you speak was a US policy change, not a demonstration of mismanagement by a publicly held company. Either it’s $250k FDIC insured or it isn’t – but anyone who thinks that this isn’t a taxpayer funded bailout is not accurately informed. This is AIG “Too Big to Fail” all over again.
Youre confused.
The $250k FDIC Depositor Guarantee is not a bail-out. It is LAW.
Trumps bail-out of farmers was not pre-existing law. It was purely discretionary and political.
@ Animal Lover-
Nobody is arguing that getting paid your FDIC insurance payout of $250k is a bailout. The bailout is not for the bank, nor for the depositors who had balances of $250k or less.
The bailout is for the depositors who had balances OVER $250k. Something like 96% of the deposits at SVB were uninsured. There are really easy ways that individuals and businesses can avoid going over the $250k limit, like buying short term T-Bills.
Up to $250K is the law. Anything above that is a bailout.
This has nothing to do with AIG.
AIG wasnt a Bank. It didnt have any depositors.
And it has nothing to do with Trump.
This has everything to do with the bank’s management, especially the CFO.
“It had to do with assets (a $21 Billion dollar US Treasury portfolio that was being held to maturity from when interest rates were very low, to being mismatched with liabilities (depositors). Their capital ratio’s got out of whack and they were unable to raise enough cash to meet requirements. Depositors became spooked when they sold their entire bond portfolio and started withdrawing their money out of their accounts, which magnified their capital ratio issues. This is basic Econ. 101a”
You explained the problem very well here. This is what I’ve been saying on this site since Friday. It was all accounting issues related to “mark to market”. But what caused the need to M2M, thereby screwing up the ratios? The answer to that was a CFO who was trying to squeeze out a few basis points of return and didn’t pay attention to economics and general accounting principles. Surely not someone that you want to run the finances of a bank.
As for the Eco and ESG stuff, Go woke, go broke really does apply here. SVB was more concerned with wokeness than actually running a bank properly.
Sorry, but youre mistaken.
The FDIC insurance on depositors has been law since June of 1933.
Trumps ridiculous Trade War which imposed tariffs (taxes) on the American Consumer and his subsequent BAILOUT of the farmers was a political move to secure their votes after being wiped out by his ill-advised Trade War with China.
Big difference.
Yet another individual who cannot resist conjuring up a Trump reference in an unrelated conversation. Trump living rent free in Animal Lover’s mind.
@DOMO
This is not true. Here is a quote from FDIC itself, available at https://www.fdic.gov/resources/deposit-insurance/brochures/deposits-at-a-glance/
The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.
The FDIC provides separate coverage for deposits held in different account ownership categories. Depositors may qualify for coverage over $250,000 if they have funds in different ownership categories and all FDIC requirements are met.
All deposits that an accountholder has in the same ownership category at the same bank are added together and insured up to the standard insurance amount.
This tells you that the same account holder can have multiple checking accounts in different banks, and each of them will be insured up to 250K. No need to complicate things by adding accounts in the name of other people – and then when they empty them out trying to sue them and prove that you were simply trying to protect yourself against potential bank failure.
“ownership category” are your key words… if the holders are in the same name(s) the $$ is aggregated – if over $250K – only up to $250K is insured….. per my personal banker today
The key is the account’s tax reporting ID. For you and me, that’s a social security number. For businesses, that’s a Tax ID number (a business social security #). If you have multiple accounts that use the same social, then the insurance limit is $250k total, not $250k per social. Domo is correct.
“This tells you that the same account holder can have multiple checking accounts in different banks, and each of them will be insured up to 250K.” This statement can be interpreted in different ways. If you have multiple checking accounts at the same bank (say BofA), then they will be aggregated for insurance purposes, if under the same tax ID. It does not matter if you have an account at a BofA in Concord and one at BofA in WC. Still aggregated. However, if you have one account at BofA and one at Wells Fargo, then you are covered up to $250k in both.
“Y’all got innnn-surance aintcha? Sure ya do, so there’s no problem, our banking system is safe,” says simple Joe from Scranton. He thinks you’re stupid.
If you make a claim on your homeowners insurance you will always incur a rate increase. This bailout is no different. The banks will now face increased insurance and operating fees. Those costs will be passed along to retail clients in the form of increased fees and reduced services. Further, the stock holder gets hurt as these fees and reduced assets under management negatively affect performance. When business gets more expensive for financial institutions, life gets more expensive for all of us.
Sorry Biden and Yellen, the BS meter is pegged.
Yet another prime example of someone that will cut off their nose despite their face.
They’d rather see a ton of Banks collapse and depositors not have their accounts guaranteed because of “increased fees and reduced services”
The saying goes “cut off their nose TO SPITE their face.” But who’s counting?
Wokers prefer to cut off your nose in spite of their face.
Perhaps I’m being too subtle here: It’s a metaphor. They actually attempt to remove your nose through your wallet.
I’m thinking that “Animal Lover” had some big bucks in the SVB and is very glad he is covered.
For the people out there that actually wish to educate themselves on what happened to SVB
And for those that never were able to make it to college and take a finance course on Banking.
https://www.businesinsider.com/silicon-valley-bank-failure-what-happened-bank-run-explained-2023-3
I would ignore your idiotic reference to that hedge fund guru’s description and attack on Trump alone, except for the contempt you also try to show the readers here. You have no clue. First, your expert hedge fund interview post is from a hedge fund guru??? Hedge funds on average don’t outperform the simple S&P 500 so we are not in awe of him. And, he is wrong. And badly wrong. He calls SVB bank’s asset liability (AL) structure a “bold call.” What an idiot. That’s like saying the gambling addicted dad made a “bold call” by betting and losing the family house on the 5th horse race. They made those AL choices. Those are choices, made intentionally. And, they were way over exposed to only one industry. That was their choice. They invested without interest rate swaps a huge fixed income portfolio into Available for Sale, which by regulation cannot have interest rate swaps. They chose as if the past couple of years of interest rates will be how the world will look forever, making a stupid mistake. And, of course, they had no chief risk officer for most of 2022, and the one they finally hired did not have a good past. The CEO has a BA degree and no experience outside SVB or experience in AL management. In summary, your posted story is stupid and Trump was a far better president than Biden.
Oops. Typo. They categorized it as held to maturity so they could not hedge it. Oh, and again, Trump was a far better president than this Biden clown. Inflation. Open borders. Huge debt. Wokeness. Purposefully creating division. War in Europe. Threatened war in Asia. Carbon obsession here when China is starting up a new coal fired power plant, what, every week now? The list is endless.
I saw one story headline that said “Major Democrat Donors Demand a Bailout for SVB”. Then saw another that said stockholders announce lawsuit against bank management. The management sold their stock just before the collapse. Also, just last month the CNN finance expert was telling people to but the bank stock.
An who do politicians “care about”, . . . . first ? ? ?
We come last.
The CEO of SVB sold $3.6 million of stock two weeks before the company disclosed extensive losses that led to its failure. But the “sales” were PLANNED under a pre-arranged trading plan set up by the SEC called a 10b5-1 plan.
Read up on what a 10b-5 plan is. Your hysterics on this thread are becoming more entertaining by the hour.
ONE member of failed SVB’s board had background in banking – the rest were Obama and Clinton mega-donors who ‘grieved’ when Trump won – including one who went to Shinto shrine ‘to pray’
SVB CEO is a board member of one of Jennifer Newsom’s pet projects, The California Peoples Temple or something like that. Becker even cut them a $100K check at Gavin’s request, knowing a little beak wetting will be repaid many times over. Three Newsom fronted companies had assets with SVB also, hence the urgency to reimburse customer losses.
But it’s not a bailout, no matter what you say, no matter how obvious it becomes, no matter how irrefutable the paper trail, even if the Dalai Lama proclaims it, it’s not a bailout.
Time to distribute anxiety breathing bags.