The biggest bank failure in almost a generation explained
“Silicon Valley Bank are dead!" (Apologies to Shakespeare)
Silicon Valley Bank. Not exactly a household name, is it? I don't have a checking account, credit card, or mortgage there. Bet you don't either. Don't dismiss this as small potatoes though. SVB is one of the 20 largest banks in America. It has (had) $200 Billion (with a B) in assets. Now you know.
Evidently, SVB has very few "branches”. A couple in the ACTUAL “Silicon Valley”. And another on Wall Street. Yesterday afternoon, the bank was closed – permanently – by the federal government. Earlier that morning SVB's wall street branch manager called 911 to have his customers arrested. They were lining up in the lobby, and becoming 'unruly' while 'trying to get their money back" before SVB failed. Which, in fact, it did, later that same day.
SVB's own president (Greg Becker) had better timing. Last month he sold 12,500 shares of his personal SVB stock at $287 a share (!!!!). Today those shares are worth zero. Some luck, eh? And just a week or two ago realty TV financial guru Jim Cramer ("mad money") was exhorting his sheep - er, viewers - to buy SVB shares. Hey, Cramer - talk much with Becker?
Clearly SVBs kingpin knows his way around money, even if Cramer is an idiot. And Becker should. He's also a Federal Reserve Board member (San Francisco/Silicon Valley district). Geez Louise – does this look shady, or what?
I withdraw that slur. I'm sure Mr. Becker – if he's ever charged – will have months (years?) of thorough investigation, before government officials decide not to charge one of “their own”. Quick - name a fed governor/bank president who EVER went to jail. Keep googling this, while i move on.
Back to those unfortunate, “unruly” depositors at the wall street branch of SVB. Who the heck deposits millions in a weird bank nobody ever heard of? One with almost no branches? Evidently “wall street traders” and “start up entrepreneurs” with $10 million in cash, and no better ideas. Fortunately, NYC's finest declined to arrest these customers. They left the bank premises quietly. And then were impoverished hours later. Well, that's the job of police, right? To keep unruly bank customers at bay. Their job certainly doesn't seem to be preventing drive by shootings, drug dealing, and carjackings. Do you doubt me? Quick - call 911 right now about the corner meth dealer and see how quickly police come - if at all.
So why did SVB collapse? PBS - our official government news channel - was interviewing “Julia Coronado, economist for the federal reserve” last night. On how great the Biden economy is doing. You know – lots of new jobs; inflation might possibly be tamed soon; tax increases are good. Exactly the sort of thing you'd expect a government economist to say. Then, poor Julia went COMPLETELY off the rails. Unscripted TV. Ms Cornodo - live via a Zoom hookup from her dining room - was ALSO asked about the collapse of SVB – which had happened only an hour before. Was this bank failure going to be "significant”? I'll paraphrase Julia's reply (the entire PBS news hour episode is already available online): “Well maybe. Probably not that much. They failed because of high interest rates and risky loans”.
Wait . . what? High interest rates? You mean like the TRIPLING of fed funds rates over the past year by “government economists” and “federal reserve officials”? Geeze Louise, Julia - you CAN'T say that on live TV! Isn't there a 10 second audio delay, and a censor, like on SNL?
Okay. Let's accept Julia's impulsive honesty at face value. Until her bosses reach out, and she “walks back” her comments. Let's move on to Julia's reason #2: SVB has “risky loans”. Nobody disputes that startups with sketchy cash flow and scruffy management talent are “risky”. That's why “normal banks” - like Chase, Citibank, Wells Fargo, Bank of America – rarely touch the hard stuff. Regulators keep "good" banks away from that kind of risky business. But clearly our regulators DIDNT have qualms about all those risky loans flowing downhill to SVB. Regulators like “the federal reserve”, “office of the comptroller of the currency”, etc.
But there's another side to SVB. One which Julia the fed economist failed to mention. It's a MAJOR, MAJOR crypto currency player. Huge deposits from, and loans to, crypto players like “Circle” (billions and billions). FTX, which has already failed, and IT'S founder Sam Bankman-Fried, Arrested, but free on "mortgage bail".
Why aren't crypto-scam-companies better regulated? Because they make HUGE donations to political officials. Both parties. No foolin'. Check out Sam Bankman-Fried, if you doubt me. That's why he's chillin' at his 'rents mansion, instead of in the hoosegow.
Crypto markets plummeted $70 billion yesterday. Before the closure of SVB was even announced. Bet crypto traders they wish they were better friends with Greg Becker, lucky SVP/president and federal reserve official, eh? Their own timing might have been better if that was the case.
Okay - so here's the important part - especially for people who graduated after 2008. There's been one (and only one) bank failure this century bigger than SVB. The collapse of Washington Mutual in September 2008. Hundreds of Billions – same scale as SVB. How did the stock market react? The Dow Jones Industrial Average declined 40% (from 14,000 to 8,000). Because Washington Mutual was a (big) “canary in the coal mine”. Just like SVB.
More corporate and bank failures are likely. And a major stock market decline. You believe what you want, though. I've been dissin' crypto for years. And now I'm finally right.
Thank you, Ms. Julia Coronado, for appearing on PBS last night to assure us that this probably isn't going to be a problem.
Government economists say the funniest things, no?
This sort of chicanery is why nobody trusts government officials, the media, lawyers, or bankers.
Silicon Valley Bank. Not exactly a household name, is it? I don't have a checking account, credit card, or mortgage there. Bet you don't either. Don't dismiss this as small potatoes though. SVB is one of the 20 largest banks in America. It has (had) $200 Billion (with a B) in assets. Now you know.
Evidently, SVB has very few "branches”. A couple in the ACTUAL “Silicon Valley”. And another on Wall Street. Yesterday afternoon, the bank was closed – permanently – by the federal government. Earlier that morning SVB's wall street branch manager called 911 to have his customers arrested. They were lining up in the lobby, and becoming 'unruly' while 'trying to get their money back" before SVB failed. Which, in fact, it did, later that same day.
SVB's own president (Greg Becker) had better timing. Last month he sold 12,500 shares of his personal SVB stock at $287 a share (!!!!). Today those shares are worth zero. Some luck, eh? And just a week or two ago realty TV financial guru Jim Cramer ("mad money") was exhorting his sheep - er, viewers - to buy SVB shares. Hey, Cramer - talk much with Becker?
Clearly SVBs kingpin knows his way around money, even if Cramer is an idiot. And Becker should. He's also a Federal Reserve Board member (San Francisco/Silicon Valley district). Geez Louise – does this look shady, or what?
I withdraw that slur. I'm sure Mr. Becker – if he's ever charged – will have months (years?) of thorough investigation, before government officials decide not to charge one of “their own”. Quick - name a fed governor/bank president who EVER went to jail. Keep googling this, while i move on.
Back to those unfortunate, “unruly” depositors at the wall street branch of SVB. Who the heck deposits millions in a weird bank nobody ever heard of? One with almost no branches? Evidently “wall street traders” and “start up entrepreneurs” with $10 million in cash, and no better ideas. Fortunately, NYC's finest declined to arrest these customers. They left the bank premises quietly. And then were impoverished hours later. Well, that's the job of police, right? To keep unruly bank customers at bay. Their job certainly doesn't seem to be preventing drive by shootings, drug dealing, and carjackings. Do you doubt me? Quick - call 911 right now about the corner meth dealer and see how quickly police come - if at all.
So why did SVB collapse? PBS - our official government news channel - was interviewing “Julia Coronado, economist for the federal reserve” last night. On how great the Biden economy is doing. You know – lots of new jobs; inflation might possibly be tamed soon; tax increases are good. Exactly the sort of thing you'd expect a government economist to say. Then, poor Julia went COMPLETELY off the rails. Unscripted TV. Ms Cornodo - live via a Zoom hookup from her dining room - was ALSO asked about the collapse of SVB – which had happened only an hour before. Was this bank failure going to be "significant”? I'll paraphrase Julia's reply (the entire PBS news hour episode is already available online): “Well maybe. Probably not that much. They failed because of high interest rates and risky loans”.
Wait . . what? High interest rates? You mean like the TRIPLING of fed funds rates over the past year by “government economists” and “federal reserve officials”? Geeze Louise, Julia - you CAN'T say that on live TV! Isn't there a 10 second audio delay, and a censor, like on SNL?
Okay. Let's accept Julia's impulsive honesty at face value. Until her bosses reach out, and she “walks back” her comments. Let's move on to Julia's reason #2: SVB has “risky loans”. Nobody disputes that startups with sketchy cash flow and scruffy management talent are “risky”. That's why “normal banks” - like Chase, Citibank, Wells Fargo, Bank of America – rarely touch the hard stuff. Regulators keep "good" banks away from that kind of risky business. But clearly our regulators DIDNT have qualms about all those risky loans flowing downhill to SVB. Regulators like “the federal reserve”, “office of the comptroller of the currency”, etc.
But there's another side to SVB. One which Julia the fed economist failed to mention. It's a MAJOR, MAJOR crypto currency player. Huge deposits from, and loans to, crypto players like “Circle” (billions and billions). FTX, which has already failed, and IT'S founder Sam Bankman-Fried, Arrested, but free on "mortgage bail".
Why aren't crypto-scam-companies better regulated? Because they make HUGE donations to political officials. Both parties. No foolin'. Check out Sam Bankman-Fried, if you doubt me. That's why he's chillin' at his 'rents mansion, instead of in the hoosegow.
Crypto markets plummeted $70 billion yesterday. Before the closure of SVB was even announced. Bet crypto traders they wish they were better friends with Greg Becker, lucky SVP/president and federal reserve official, eh? Their own timing might have been better if that was the case.
Okay - so here's the important part - especially for people who graduated after 2008. There's been one (and only one) bank failure this century bigger than SVB. The collapse of Washington Mutual in September 2008. Hundreds of Billions – same scale as SVB. How did the stock market react? The Dow Jones Industrial Average declined 40% (from 14,000 to 8,000). Because Washington Mutual was a (big) “canary in the coal mine”. Just like SVB.
More corporate and bank failures are likely. And a major stock market decline. You believe what you want, though. I've been dissin' crypto for years. And now I'm finally right.
Thank you, Ms. Julia Coronado, for appearing on PBS last night to assure us that this probably isn't going to be a problem.
Government economists say the funniest things, no?
This sort of chicanery is why nobody trusts government officials, the media, lawyers, or bankers.
31-35, F
