More opinions on bank failures

Patrick Bet-David and panel  Barry Habib, Adam Sosnick, and Tom Ellsworth dig into how Dodd-Frank contributed to the SVB collapse. Silicon Valley Bank Collapse | The Patriot Post

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"Our economic seas are so rough that the financial experts at SVB made a bad bet on U.S. Treasuries — one of the safest asset classes — and sank their bank. At the end of 2022, SVB was holding onto over $17 billion in U.S. Treasuries and another $91 billion in government-issued mortgage-backed securities (MBS) that function similarly to U.S. Bonds. These bonds were purchased when interest rates were 1.5%. As interest rates rose north of 5%, those bonds could only be sold for a substantial loss.

Inflation and rising interest rates killed Silicon Valley Bank, slowly moving their balance sheet out of balance. Depositors became suspicious and withdrew their money.:   Jessica Anderson JESSICA ANDERSON: Congress Killed Silicon Valley Bank | The Daily Caller

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“Remember that after 2008, the Obama administration, Eric Holder swooped in and imposed DEI, diversity, equity and inclusion standards on the entire financial sector, and that’s one of the main reasons our big banks are now increasingly incompetent and one of reasons Americans are so divided by race,” Tucker Carlson said. “Ideologues who used the 2008 bank bailout to kill American meritocracy, that’s a big step, mostly unacknowledged, but we are living with its consequences. So, you have to ask yourself, what are they going to do this time?” Tucker Carlson Wonders What The Federal Gov’t Will Get In Return For ‘Backstopping’ Deposits At Failed Banks | The Daily Caller

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“Interest rates spiked, right, because of inflation,” Bill Maher said to former Democratic presidential candidate and Forward Party founder Andrew Yang and Democratic Rep. Elissa Slotkin. “So, when Uncle Sugar was very generous during COVID, right? That was the result of that. That’s what caused the inflation, a lot of what caused the inflation. You cannot put $6 trillion that you don’t have into people’s pockets and not expect some inflation.” ‘Uncle Sugar’: ‘Generous’ Spending During COVID Pandemic Led To Bank Failures, Bill Maher Says | The Daily Caller

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"There are 186 banks across the country that could fail if half of their depositors quickly withdraw their funds, a new study published on the Social Science Research Network found. Even insured depositors — those with $250,000 or less in the bank — could have problems getting their cash if these institutions face the sort of run that Silicon Valley saw a week ago.

The concern is that these banks hold a significant amount of their assets in interest-rate sensitive financial instruments like government bonds and mortgage backed securities. The value of those older, low-interest investments dropped sharply as the Federal Reserve hiked interest rates over the past year."

Nearly 200 banks could fail the same way SVB did: study (nypost.com)

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"Silicon Valley Bank, a lender that was a fixture in the venture capital space for decades, collapsed on Friday. The California Department of Financial Protection and Innovation closed SVB and named the FDIC as the receiver. The trouble started on Wednesday after SVB suddenly announced a plan to raise billions in capital to cover big losses, setting off widespread panic among investors and the tech founders they backed. Shares of the company fell by around 60% in Thursday trading, another 20% in aftermarket trading, and were halted at the open on Friday. Hours later, amid reports that SVB was struggling to attract buyers in a sale, the government took control. In the run-up to all this, SVB’s proxy statement, filed earlier this month, reveals that the firm’s chief risk officer stepped away from her role early last year, and the bank did not hire a replacement until this past January." SVB had no official chief risk officer for 8 months | Fortune

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"The broader problem, though, is that just as the government had created that brittle 2008 financial industry in the first place, with the too-big-to-fail regime that had begun in 1984, the government also created today’s self-satisfied tech industry. How did SVB’s deposits triple in less than half a decade? Why did Signature Bank start dabbling in crypto? Why on earth did anyone ever trust Sam Bankman-Fried to do anything?

The culprit is all the money the federal government has pumped into the financial system over the past 15 years. After the financial crash of 2008, the Treasury and the Federal Reserve wanted to revive the economy by spurring yet more cheap lending and borrowing, ignoring how it was cheap lending and borrowing that had crashed the economy in the first place; household debt levels already stood at record highs. . . " Silicon Valley Bank: Who's to Blame? | City Journal (city-journal.org)

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"In big, bold type on its website, Silicon Valley Bank bragged that “44% of U.S. venture-backed technology and healthcare IPOs YTD [year-to-date] bank with SVB.”

To put it bluntly, this was a Wall Street IPO machine that enriched the investment banks on Wall Street by keeping the IPO pipeline moving; padded the bank accounts of the venture capital and private equity middlemen; and minted startup millionaires for ideas that often flamed out after the companies went public. These are the functions and risks taken by investment banks. Silicon Valley Bank – with this business model — should never have been allowed to hold a federally-insured banking charter and be backstopped by the U.S. taxpayer, who was on the hook for its incompetent bank management."

Silicon Valley Bank Was a Wall Street IPO Pipeline in Drag as a Federally-Insured Bank; FHLB of San Francisco Was Quietly Bailing It Out (wallstreetonparade.com)

Moody’s Downgrades Entire U.S. Banking System; Credit Suisse Plummets. Welcome to Banking Crisis 3.0 (wallstreetonparade.com)