Banks Failing: Is It 2008 Again?

[theyankel]

https://www.fdic.gov/news/press-releases/2023/pr23016.html

Silicon Valley Bank, Santa Clara, California, was closed today by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.

[CountValentine]

Not even close to 2008 but putting everything in T-bills just in case. 

[dm123]

https://twitter.com/MacroAlf/status/1634224604351692801

www.bloomberg.com/news/articles/2023-03-10/silicon-valley-bank-collapses-enters-fdic-receivership

ETA: Just read that this is apparently the second-largest bank collapse to ever occurt in the US, and that they are (were?) the 15th largest bank in the US.

How bad is this?

Should this conversation be moved here or this into the stocks thread?

[CountValentine]

Should this conversation be moved here or this into the stocks thread?

Here

[foseph]

Just don't risk having assets over FDIC limits...u should otherwise be fine and moving money larger banks is another options to avoid couple day lockup from banks in receivership

[dm123]

Here

So, are all banks significantly invested in crypto? Is this limited to banks that are or has it/will it likely spread to the entire banking/investment sector?

[Yehudaa]

I don't know enough to have an opinion on where this is going, but this thread is in layman's terms and easy to understand:

https://twitter.com/GRDecter/status/1634241442951381002

[CountValentine]

Is SIPC coverage 500k? Does it work the same as FDIC for increasing coverage by adding a joint owner?

[theyankel]

Not even close to 2008 but putting everything in T-bills just in case. 

the question was posed if its fear mongering
its not even close, yet, but when banks like SBNY SVB and FRC lose lots of market share in short periods of time, not necessarily directly correlated to crypto, there is what to pay attention to

[CountValentine]

the question was posed if its fear mongering

I would say comparing it to 2008 is fear mongering.

[dm123]

I don't know enough to hav an opinion on where this is going, but this thread is in layman's terms and easy to understand:

https://twitter.com/GRDecter/status/1634241442951381002

Thanks, looks like a clear write up.
Who's this Roch-Decter?

[CountValentine]

Who's this Roch-Decter?

Hopefully someone that knows what they are talking about.

[Yehudaa]

Who's this Roch-Decter?

https://gritcapital.substack.com/about

[foseph]

Sivb failed not from crypto...

[dm123]

Sivb failed not from crypto...

I guess I was getting mixed up with silvergate?

Seems other things are going on also: https://finance.yahoo.com/news/silvergate-capital-will-liquidate-after-crypto-collapse-wipes-out-bank-220356639.html

Why did SIVB fail? Too heavily invested in "startups"?

[foseph]

I guess I was getting mixed up with silvergate?
Why did SIVB fail? Too heavily invested in "startups"?

upcoming likely losses on startups and falling deposits...so yea...
Theres some good articles on Bloomberg and WSJ

[foseph]

They were trying to raise cash and freaked everyone out

[ExGingi]

Are any BDCs materially affected (other than shares down in the overall selloff of the tech finance sector)?

[ExGingi]

Why did SIVB fail? Too heavily invested in "startups"?

In one sentence: Mismatch of assets and liabilities terms coupled with rising interest rates.

[ExGingi]

Not even close to 2008 but putting everything in T-bills just in case. 

This is part of the problem that SVB (and many other banks) faced. Deposits being pulled out (i.e. liabilities being realized) and parked in safe T-Bills which are yielding more than bank deposits (and are safer). If banks are forced to raise rates they pay for deposits, yet their assets are locked in long-term low-interest loans or bonds - "Houston, we've got a problem".