Tech Banking Fallout

There is nothing interesting about a cataclysmic banking failure of the magnitude that is occurring with SVB. There is going to be a lot of pain, despair, and ripples across industries worldwide. It’s hard to fathom one sole bank housing the magnitude of VC funds that it did and having 97% of accounts exceeding FDIC insurance limits.

 

oh crap! that part!! did not catch that information until now.

 

Yup, this is a Big One alright. Fortunately for average depositors, the feds moved in and took possession of the bank's assets and will guarantee deposits up to $250,000 per depositor. A lot of venture capital may be lost but ordinary customers will come out okay. So no, it's not like crypto. All that pesky regulation has its uses.

 

Also don't assume that even the VC people will lose everything. There may be sufficient assets to satisfy some part of their uninsured claims.

 

But yeah, I'm glad I didn't hock my soul to buy a condo near Fisherman's Wharf. Real estate prices in SF had already taken a slight downturn. This isn't going to help.

 

Roku held approximately $487 million of its $1.9 billion in cash at Silicon Valley Bank
https://www.cnn.com/2023/03/10/business/roku-svb-cash/index.html

 

Nothing will. Dominoes. Who's next?

"Prophet Muhammad (SAWS) said, "A time is certainly coming over mankind in which there will be nothing

which will be of use save a (gold) dinar and a (silver) dirham."

(The Musnad of Imam Ahmad ibn Hanbal)​

 

For sure. Where there's smoke, there are gunslingers.

 

Dunno. My problem with crypto is that it fails as both an investment and as a currency. I don't really care about the "culture" around it.

 

Banks have ALWAYS been a good business.

SVB's stock is still cheap and is a BUY BUY BUY!!!!!!

 

The Thursday press release to defuse the run will become a case study in how not to do it. Eeks.

 

They hoped to raise the required 2 Bil but faild to do so in time.
FDIC will bail many of customers but as long as it's just SVB. If others follow the same rout/fate then Feds won't be able to help.

 

If you can believe the financial press (and Wikipedia!) vultures have been circling to the tune of half a billion USD for awhile now. I had gotten the impression that the bank was killed by an old fashioned run but apparently there has been reason for concern before that run began.

 

I'd like to know how it is that some of these VC supported tech companies handed all their (vast amounts of) cash to SVB. You're really not supposed to do that.

 

Fed is having a closed-door meeting about SVB etc. Monday.
https://www.federalreserve.gov/aboutthefed/boardmeetings/20230313closed.htm

Read somewhere else that part of the meeting is about plans to "prevent contagion." Good luck - there are no masks or vaccine to help against the twin, intertwined evils of avarice and stupidity. I'd expect there to be some further "lockdowns" though...

 

Yeah, seems like the feds are going to back depositors without limit. That might mean that SVB did have sufficient assets to cover claims but those assets weren't liquid enough. Might have been easier just to act as the lender of last resort instead of taking over but who knows.

 

A bank from London UK purchased SVB UK arm , it states that for UK customers its business as usual no interruptions in banking services.
HSBC has scooped up the UK arm of failed Silicon Valley Bank, securing the deposits of thousands of British tech firms that hold money at the lender.

" Several large banks within the United States gained market exposure to cryptocurrency and cryptocurrency-related firms prior to and during the COVID-19 pandemic. Among these banks were Silvergate Bank, Silicon Valley Bank, and Signature Bank, each of which would collapse in March 2023."

 

We have HSBC branches in Canada. HSBC originally stood, I believe, for Hong Kong and Shanghai Banking Corporation. That old enterprise is gone, now, I believe. If it isn't, let me know, because for fifty years, I've had some old banknotes issued by them. Denominated in "Customs Gold Units" - and I've never been able to find the size or weight of one of those units. Local HSBC branch, of course, had no clue about any of this.

Numismatically - or, more properly, notaphily-wise, they're almost worthless, maybe a dollar or two apiece. I'm pretty sure they haven't been redeemable for ANYTHING in more than 80 years.

I have no idea how "Chinese" the present incarnation, HSBC Bank, is --- no idea at all.

Edit: Google knows everything!

"History. The customs gold unit was adopted on 1 February 1930 to replace the Haikwan (Hǎiguān) or Customs tael (海關両 hǎiguān liǎng) as the standard for customs payments. It was defined as equal to 601.866 mg fine gold or US$0.40."

At today's prices, my "gold units" should be worth considerably more. 30 Customes Gold Units add upt to around 18 grams of gold, worth about $1080.71 US. Hmmm.... don't think I'll ever see it.