Wait. You look like a genius because you transferred the money like a bunch of other people? That's not being g a genius. That's common sense.
Oh look everything is happening just like I said it would. You'll hear the other acquisitions right before bell.
You said a lot of things lol, but certainly not anything about HSBC buying SVB UK. I guess I am the only one here directly (positively) affected by this. Good.
I told you the acquisition will be announced right before the bell dude. This happened in uk as their markets opened. It's crazy how millions of small business were in limbo all weekend not knowing what will happen to their money. If biden hadn't acted I think the trickle down would be catastrophic. Were talking small business with little capital and real middle class Americans. As long as taxpayers don't burden any $$ then I don't see how you can be agaisnt saving small business and firms just beginning. Man these firms are going throw biden so much $$$ come 24 lol
The problem is the fractional reserve banking system is broken in this country and many banks systems around the world. It puts so much pressure when bank runs happens. Loosen regulations over the decades exposed banks to getter risks. As bank were given more freely to lend money away against the liquid assets. There is a reason why the government has to step in to stop a total collapse.
I dont even think its a conspiracy at this point. Thiel told all of the startups tied to his founders fund to pull out and then started the panic with his tweets. This is on brand for him. If we're going back and looking at fault, I think there are a few areas to revisit: 1. Banks have to focus on diversifying their client base. When Dodd Frank was written, bank capital requirements were changed to be variable depending on the types of holdings that they have. For example, Silvergate actually had higher capital requirements because the banking regulators classified crypto as a highest risk asset. However, where Dodd-Frank comes short is that no one really had the foresight to imagine banks that catered to narrow types of clients like crypto users (Silvergate) or VCs and startups (SVB). I dont think regulators get a full pass because we've had specialized banks serving older industries like agriculture for ages and bank regulations have been written to specifically deal with those older examples of specialized banks. But other banks do have rigid requirements around diversifying the risk tied to their clients (rather than just focusing on the types of assets that they hold). And it seems like other banks wanted to step in and take advantage of this but it clearly came at a huge cost. I think regulations around capital requirements need to start taking into account the bank's client base in addition to the assets on the bank's balance sheet. 2. This gets to the second problem, bank runs look really different now. There's a lot of publicity around the fact that the stress tests were eliminated for regional banks by the Trump Administration but by all accounts, SVB probably would've passed the stress tests if they still had to. The big problem with Dodd-Frank is that the stress tests never envisioned banks where most activity is online and instant. Dodd-Frank reflects the time in which it was written (2010) and online banking wasn't anywhere near what it is today. In fact, in 2010, I dont think most banks could even initiate wire transfers via online banking so going to branches was a required for any large movement of funds. I think the stress tests still assume that half of all withdrawals would occur in person which isn't reality. Especially for a bank like SVB or Silvergate, all of their withdrawals would occur online via wires or EFT. So the stress tests need to be updated to account for scenarios like this (and all banks probably need to be required to complete stress tests again). If this is 2010, I actually think SVB survives because the bank run simply can't happen this quickly nor is there social media to whip everyone into a frenzy. 3. Regulators probably have to get better when it comes to analyzing the assets a bank holds when determining the capitalization requirements. They just assume that treasury bonds are zero risk without accounting for the duration of the bonds and the interest rates. Its a simplistiic calculation that works in normal times but zero percent interest isn't normal and capitalization requirements are supposed to account for worst case scenarios. Again, this is a flaw in Dodd-Frank that should be updated. Personally, I'd be fine if we implemented new regulations to address these types of problems and in exchange, the FDIC agrees to ensure all deposits (although banks would probably have to contribute more to the FDIC as well). But banking regulations can't be static. They have to continue to modernize as technology and banking behavior changes. And unfortunately, that doesn't really happen.
I'm seeing a lot of anger around this and I don't get it. The depositors didn't do anything wrong here. They were victims of a bank run and a management team that made poor choices. I still don't know the details, but yesterday I suspected that there were enough assets to cover the deposits, but I thought it would take a bit longer to do so. It's not too surprising that the depositors will be made whole. My list of those to blame, in no particular order: Bank management for poor investment allocation choices. Republicans and some Democrats for partially repealing regulations that would have applied to SVB. A bank run started by a powerful individual (this is concerning for future bank runs). Need to do something about this.
SVB isn't an indictment of fractional reserve banking. They didn't go bust because of bad loans and no regulation that was changed since Dodd-Frank would have caused this. SVB failed because it had poor risk management (both in terms of its client base and its strategy to hold deposits). Ultimately, they chased 1% yield and locked up a lot of money for three years which in hindsight was extremely stupid. But there isn't a single regulation on the books that would have stopped this. Even the removed stress tests that everyone is going on about wouldn't have stopped this. What we're dealing with now is the rise of social media and its ability to induce a panic combined with the ability to instantly withdraw money over the internet (facilitating much faster bank runs). So while we need new regulations to help address this, this isn't an indictment of fractional banking. They never lent out the excess deposits. They put them in highly liquid treasury bonds. Where they messed up is that they stupidly didn't account for the possibility of rising interest rates and the impact that would have on the value of those bonds.
That's very interesting. Although one has to imagine that those "fees on banks" are passed on to the consumer. Not a tax, per se, but a utility fee.
