SVB - Next major bank run?

[herzlos]

It seems that the Silicon Valley Bank failure has caused a bit of a run on the banks, because the bulk of the depositors were above the $250k Fed guarantee.
It's spreading as nervous savers are moving funds from small banks to larger banks that they feel is safer.

An emergency meeting of congress has announced that the Federal bank will guarantee all deposits of SVB even above the previous $250k limit to try and prevent the run getting worse.  This money will come from a fund paid into by banks for such contingencies and will only pay back depositors - not management or investors.

So what do we think is going to happen? Are in we in for a repeat of the 2007 crash? Because I've barely just got over that clusterfuck.

[Disciple of Fate]

You would hope some of the preparations after 2008 will prevent contagion on a similar scale, but given that the stock market runs on feelings, we can only hope nerves hold. As the meme goes, massive inflation and a possible economic crash, it really is the 20's.

[Peregrine]

My instinct is it probably stays contained. It's bad, but the government stepping in and saying "ok, we realize it would be bad if a whole bunch of businesses die because they can't pay their employees" should reassure everyone that this isn't a major crisis across the whole economy. The concerning thing is that SVB didn't really do anything all that bad, they just fell victim to irrational panic that could hit pretty much any bank, so who knows what future problem may be lurking.

[skyth]

I'm surprised that the Republicans are allowing any sort of help here. First off, this is in CA. Second, they are intentionally trying to crater the economy so they can blame it on Biden

[Disciple of Fate]

Mar 13, 2023 19:08:07 GMT -5 skyth said:

I'm surprised that the Republicans are allowing any sort of help here. First off, this is in CA. Second, they are intentionally trying to crater the economy so they can blame it on Biden

The vast majority of accounts are over $250k, so they're just bailing out the rich/companies, that's second nature to them.

[herzlos]

Mar 14, 2023 1:04:20 GMT -5 Disciple of Fate said:

Mar 13, 2023 19:08:07 GMT -5 skyth said:

I'm surprised that the Republicans are allowing any sort of help here. First off, this is in CA. Second, they are intentionally trying to crater the economy so they can blame it on Biden

The vast majority of accounts are over $250k, so they're just bailing out the rich/companies, that's second nature to them.

It's mostly Silicon Valley start-ups, new lefty money.

I suspect they are more interested in keeping Wall Street and the stock market up, as many of them will be deeply invested.

[herzlos]

Mar 13, 2023 18:22:14 GMT -5 Peregrine said:

My instinct is it probably stays contained. It's bad, but the government stepping in and saying "ok, we realize it would be bad if a whole bunch of businesses die because they can't pay their employees" should reassure everyone that this isn't a major crisis across the whole economy.

That only works if you can rely on the average American to be rational and considerate. The banks will probably be safe if everyone behaves, but if enough people pull their money anyway (and unnecessarily) then problems can still occur.

Hopefully those with significant funds are a bit more careful though.

[easye]

I heard two other banks collapsed over the weekend, Silvergate and Signature. At least one of those was a big Crypto lender.

Wall ST. also punished the stock price of regional and smaller banks pretty hard. Not exactly what they needed at the moment.

[Disciple of Fate]

Mar 14, 2023 9:11:01 GMT -5 herzlos said:

Mar 14, 2023 1:04:20 GMT -5 Disciple of Fate said:

The vast majority of accounts are over $250k, so they're just bailing out the rich/companies, that's second nature to them.

It's mostly Silicon Valley start-ups, new lefty money.

I suspect they are more interested in keeping Wall Street and the stock market up, as many of them will be deeply invested.

The companies might be lefty, but the investors behind those start-ups will likely be investment funds or similar. Because the interest rates were so low, a lot of funds simply threw money at the Silicon Valley wall to see what stuck. They would stand to lose if those companies went under due to lost deposits.

[easye]

Banks are continuing to get hammered on Wall St. Could these big stock drops lead to more Bank instability and collapses?

I do not know enough to know.

[mikosann]

Gosh I hope not, I'd hate to have millions of regular people getting pinched because the rich fucks in the investor class aren't feeling good this week.

[Disciple of Fate]

Mar 15, 2023 10:31:59 GMT -5 easye said:

Banks are continuing to get hammered on Wall St. Could these big stock drops lead to more Bank instability and collapses?

I do not know enough to know.

Big stock drops are risky, because it plays into the feeling that the bank is not doing well. It could have a harder time attracting more money like through loans or creditors start pulling out their funds.

Technically stock price is meaningless to the financial stability of a bank, but it could set things in motion if emotions take over.

[maddocgrotsnik]

Got to admit. Kind of.

There are a couple of U.K. Banks I’d gladly see crash and burn from a purely selfish professional point of view.

What part of “Inquisitorial Mandate, when I say jump you don’t have a fucking choice in the matter” is it those obstructive bellends don’t understand.

[Haighus]

Huh, apparently Credit Suisse is on the verge of collapse, which could be a "Lehman" moment.

Yikes.

[maddocgrotsnik]

Bank of England claims to be confident these are being contained. I guess we’ll just have to wait and see.