Silicon Valley Bank: Largest bank failure of past decade occurs

https://www.latimes.com/business/st...nt-mantra-was-just-a-scam?consumer=googlenews



Two key factors in the SVB disaster can’t be overlooked:

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The value destruction taking place in the bank’s holdings of long-term securities was written in bright red on its ledger books. With the prospect of interest rate increases continuing through 2022 and into this year, its management had no excuse for failing to unwind its holdings well before now instead of waiting.

Finally, the customers. SVB evidently required some of its Silicon Valley borrowers to do all their banking through the bank as a condition of their loans. According to its annual disclosures, the bank paid an average of 2.2% on savings and checking accounts last year; that’s higher than most commercial banks, but not high enough to compensate for the risk of uninsured cash deposits.

Some companies have reported uninsured balances of hundreds of millions of dollars sitting at SVB. It’s not unusual for businesses to have sizable balances in bank accounts exceeding the insurance cap. But prudent companies spread their deposits around, so they’re not mortally exposed to the failure of any one depository institution.

Multiple options exist for parking cash, such as investing in short-term government securities, money market instruments and corporate commercial paper. None of these is government-insured, but they offer diversification and a cushion against a single bank’s implosion.

With the debacle apparently resolved, the bank’s clients and their employees can enjoy the peace of mind that comes with a well-regulated banking system.
Even at the businesses whose leaders lobbied to make banking less safe for everyone.

 

Another one bites the dust:

Signature Bank Collapse Sends Shockwaves Through the Broadway Industry

 

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I told the guys at Signature those Bialystok & Bloom guys were shady but no, "Springtime for Hitler" is a box office smash", they said...

 

What is the official CCP position on this?

 

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Founded in 1898 and headquartered in Raleigh, N.C., First Citizens Bank operates a nationwide direct bank and a network of more than 550 branches in 21 states.

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Crowd out Small-sized banks --> Mid-sized enough to merge/takeover --> Too Big To Fail --> Step 1

 

Lawmakers Trade Bank Stocks While Working on U.S. Bank-Failure Fallout​

Two lawmakers reported trades in bank stocks last month as they worked on government efforts to address fallout from two of the largest bank failures in American history.


The disclosures, by a New York Republican and an Oregon Democrat, mark the latest instance of congressional stock trading intersecting with official business.

Rep. Nicole Malliotakis (R., N.Y.) bought stock in a regional bank before a subsidiary agreed to take over Signature Bank’s deposits following its closure. Days before she bought the stock,
she said she met with financial regulators to discuss the bank’s closure.

Rep. Earl Blumenauer (D., Ore.) reported three trades in bank stocks as he co-sponsored legislation seeking to strengthen restrictions on financial firms in the wake of the bank failures.

The trades could intensify the pressure on Congress to restrict stock trading by lawmakers. That effort briefly gained momentum last fall, when House Democrats released a bill to ban
stock trading by members of Congress, judges and senior executive-branch officials, but has since stalled. A bipartisan group of lawmakers earlier this year reintroduced a bill seeking to ban congressional stock trading.

 

Buffett Says More Bank Failures Are Likely But Depositors Are Safe; He is willing to bet $1 Millions that depositors will not lose money

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The “Oracle of Omaha” said some of the “dumb” things that banks do periodically became uncovered during this period, including having mismatched assets and liabilities as well as questionable accounting.

“Bankers have been tempted to do that forever,” Buffett said. “Accounting procedures have driven some bankers to do some things that have helped their current earnings a little bit and caused the recurring temptation to do get a little bit bigger spread on record, a little more than earnings.”

Buffett said some bankers will continue this behavior and that will put the shareholders in some of the stocks at risk.

But the 92-year-old investor said there was unnecessary fear and panic about depositors losing their money, when the system is set up to protect the entire nation’s deposits.


“The costs of the FDIC are borne by the banks. Banks have never cost the Federal Government a dime. The public doesn’t understand that,” said Buffett. “Nobody is going to lose money on a deposit in a U.S. bank. It’s not going to happen... you don’t need to turn a dumb decision by managers into a panicking the whole citizenry of the United States about something they don’t need to be panicked about.”

He stressed that it’s crucial that banks retain the confidence of the public and they can lose that confidence in seconds, as highlighted in the recent blowup.

 

To help restore the public's faith in the banking sector,

CEOs of failed banks to live like they ‘work on a Ford production line’ and
give back their pensions and salaries​

The oracle of Omaha has opined that not only that CEOs should be forced to return retirement savings if they “screw up,” but that directors should also be made to hand back
five years worth of their lucrative salaries if they lead a bank to its demise.

The man worth $111 billion, Warren Buffett, believes CEOs should “go back to living like a person that works on the production line of Ford or something like that.
They don’t deserve anything special.”

 

All those "insiders" jumped ship and sold off their stocks a month before the collapses. Buffet can look good here preaching to a powerless choir, but we should also implement at least 1 year clawback for all the damage the board members and executives wrought on top of the mountains of **** they'd need to dig out of to redeem their public reputation and trust.

"Too big midsize to fail"? If you want to run it, then the public, who bails you out, also owns your ass and your ridiculously oversized publicly funded yacht.

Socialize the losses, capitalize the gains...the American Dream.