Breaking News: Major Tech Lender Silicon Valley Bank Fails!

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JLova said:
Fed hiking super fast while telling the public inflation was transitory did a lot of damage. A lot of people still think a pivot is coming. Fed has lost credibility.

Hope thry let the bank fail. Bank leadership not only incompetent but fraudulent as fukk. Same people crying for bail out likely shytting on student loan forgiveness or other “handouts” for the non wealthy. fukking demons.
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Spidey Man

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bnew said:
markets.businessinsider.com

It's crystal clear now: More banks are going to fail

Commentators are warning of another banking crisis on the horizon, as bank stocks buckle under fears of contagion from SVB's failure.
markets.businessinsider.com markets.businessinsider.com
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It's crystal clear now: More banks are going to fail​


Jennifer Sor Mar 13, 2023, 2:33 PM

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Timothy A. Clary/AFP via Getty Images

  • It is likely that more bank failures are coming after the collapse of Silicon Valley Bank.
  • Commentators, politicians, and the markets are all warning of more pain in store.
  • The speed at which SVB fell is a warning that these events can materialize in the blink of an eye.
The dust is still settling following the collapse of Silicon Valley Bank, but there's one thing that's clear: more banks are probably going to fail.

SVB's operations were shuttered on Friday by the FDIC, which shortly after closed Signature Bank. While market commentators say the failures don't mark a Lehman-style crisis, more bearish prognosticators say the risk of contagion across the banking industry remains high.

In an interview with Politico on Sunday, former Federal Deposit Insurance Corporation chairman William Issac said more banks are bound to collapse, and markets could be on the precipice of another 1980s-style banking crisis.

"There's no doubt in my mind: There's going to be more. How many more? I don't know," Issac said, comparing the situation to the banking crises of the 1980s and 1990s, when the FDIC dealt with the failure of over 1,600 banks.

For further clues that there's more pain to come, look to the market. Investors are clearly nervous about the potential for a cascade of bank failures, reflected in the stock price of a handful of regional banks on Monday.

First Republic, PacWest, Western Alliance, and Charles Schwab are among the major names that cratered on Monday morning as investors grow anxious about banks' ties to the tech industry or which may be sitting on large unrealized losses in their bond portfolios, two factors that catalyzed the fall of SVB.

Trading in shares of Western Alliance were halted 20 times since March 10 due to spikes in volatility, according to NYSE data. PacWest trades were halted 11 times, and First Republic was halted 13 times in that timeframe.

Biden, Yellen vow no bailouts​

Though depositors have been made whole in both recent failures, banks and their shareholders should be prepared for the government to let them fail, and should not count on anything resembling a 2008-style bailout.

That message was broadcast clearly by both Treasury Secretary Janet Yellen over the weekend, and by President Joe Biden on Monday.

"Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and we're certainly not looking," Yellen said in regards to a possible bailout. "And the reforms have been put in place means that we're not going to do that again."

As for Biden, the president was quick to point out that no bailout was coming and no taxpayer money would be at risk.

"Investors in the banks will not be protected," Biden said. "They knowingly took a risk and when the risk didn't pay off, the investors lose their money. That's how capitalism works."

He added: "No losses will be borne by the taxpayers. I'm going to repeat that -- no losses will be borne by the taxpayers."

Collapse at lightning speed​

Finally, a startling takeaway from the SVB fall has been the speed at which the bank crumbled and was eventually shut down. This point is especially important in the era of digital banking.

Customers pulled $42 billion in deposits from SVB on Thursday alone, egged on by panicked messages on social media and from prominent VC investors like Peter Thiel.

For context, the biggest bank run of the Great Financial Crisis saw customers cash out $16.7 billion from Washington Mutual over 10 days.

Fundstrat's head of research Tom Lee compared the downfall of SVB to that of FTX, the now-defunct crypto exchange that went down at similar lightning speed. That could easily be the precedent for the future, he warned:

"When FTX collapsed in 2022, those in the traditional finance world viewed that lightning collapse as improbable in the 'real world' — but the collapses of SIVB, Signature Bank and Silvergate show this same dynamic can happen to any financial institution in this digital age," Lee said.
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At a minimum this is going to probably end up costing double with the student loan forgiveness will cost. If it gets really bad, it'll probably end up costing more than student loans and capping insulin at $35.
 
Neo. The Only. The One.

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I know we're not completely out of the woods yet, but this email that Politico sent out today is a great read. Man, I love this political ish :wow:


When President JOE BIDEN decided to speak Monday morning about the Silicon Valley Bank failure, he scheduled his remarks for 9 a.m. ET — an unusually early start to the day for the president.

Biden kept it to just five minutes, wrapping up his remarks by design 20 minutes before the U.S. stock market opened. He didn’t ad lib. And he didn’t take any shouted questions from reporters as he exited the Roosevelt Room.

Giving a presidential address in a fast-moving financial crisis is tricky business, said MICHELE DAVIS, who was a senior member of the Treasury Department’s communications team during the 2008 financial crisis. (She was played by CYNTHIA NIXON in the 2011 HBO movie about that meltdown, “Too Big to Fail.”)

“Almost no one speaks off the cuff during a time like this. Everything is pretty well scripted,” Davis said. “It’s really hard to correct something that’s been misinterpreted.”

Investors and financial markets parse every word that the president utters, looking for clues. Every carefully-planned decision the White House makes — from the timing of the speech to the length and setting of the address — is strategic. In 2007 and 2008, President GEORGE W. BUSH’s staffers read speeches out loud to each other and debated the worst possible way that the market could interpret the remarks. There were a lot of revisions and sleepless nights.

“You have to get every one of those words right,” said another Bush administration official, who asked not to use their name because their current employer did not authorize them to speak. “You have this situation where the president is on CNBC, futures are open, you could see a live reaction.”


While Biden addressed “the American people” in his remarks, Davis said that these types of speeches are fundamentally aimed at calming easily-spooked investors and restoring confidence in the banking system.


But while it’s critical for the president to reassure the public during shaky financial moments, it's equally important for him to know when to turn it over to officials from the Treasury Department, Federal Reserve and other bank regulators who are viewed as less political and more authoritative. Bush’s speechwriters would try to work in mentions of Treasury Secretary HANK PAULSON and give him credit on financial policy. Biden relied on a similar playbook on Monday, crediting Treasury Secretary JANET YELLEN for taking “immediate action.”

“If everyone takes confidence in what the president was saying, we might not hear from him again,” Davis said. “When there’s a fast moving financial situation, the general approach is that the president speaks sparingly and uses the Treasury to respond from moment to moment.”


Communicating in a crisis like this one can feel like balancing on a knife’s edge. The policy solutions matter, but so does communicating them clearly, concisely and memorably. The right words can end a crisis in one fell swoop. Famously, MARIO DRAGHI, then the head of the European Central Bank, declared in 2012 that he would do “whatever it takes” to end the European sovereign debt crisis. Those three words marked the beginning of the effort that saved the euro.

On the other side of the coin, then-President DONALD TRUMP contributed to a steep stock market decline when he failed to clearly communicate his policy response to the Covid pandemic in a March, 11 2020, primetime speech that rattled investors. (Trump said that the U.S. was “suspending all travel from Europe,” only for his administration to later clarify that American citizens and permanent legal residents were exempt from the restriction.)

“There’s no second chance sometimes. Markets move so fast,” said Davis.
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:wow:
 
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