Now collapsed SVB's parent files for bankruptcy as Biden calls for stiffer penalties SVB Financial Group, parent to the imploded Silicon Valley Bank (SVB), has filed for Chapter 11 bankruptcy protection less than a week after the top tech bank imploded. In a statement on Friday, SVB Financial Group said it had filed a petition for court-supervised reorganization under Chapter 11 in the Southern District of New …
Trump repealed the laws that would have prevented SVB from operating the way it did.
SVB was a major lobbyist to repeal those laws.
They would have immediately failed the "stress tests" had they remained in place, as they were completely exposed to even small changes in interest rates. You'd never get a mortgage or business loan if you operated like SVB, for example.
Funny how that works.
That's pretty much how the whole CDO mess started. There were only a few smart people who suddenly discovered that the whole system was hollow as f*ck, and they got laughed at for betting against the system - until it all collapsed in a heap.
The best movie about it was The Big Short, worth watching as it's very well made and pretty much play by play shows what waht really happening, including the rating agencies being in bed with those who they rated..
"You don't make such inquiries in the City. They seemed like decent chaps. Decent chaps don't check up on decent chaps to see if they're behaving like decent chaps."
More from the same source - we would be grateful today if Jim Hacker and Sir Humpty were running the country.
"Just the one. [rule]
If you're incompetent, you have to be honest.
If you're crooked, you have to be clever.
If you're honest and make a pig's breakfast of things, chaps help you out.
- If you're crooked? - With good profits, chaps don't ask questions"
https://www.springfieldspringfield.co.uk/view_episode_scripts.php?tv-show=yes-prime-minister-1986&episode=s02e04
It was supposed to be a bank, not an investment vehicle. Banks are required to give current account depositors their money at any time - so need a lot of liquid (or easily liquidated) assets.
Ten year bonds are pretty much as illiquid as you can get.
They also didn't pay any attention to who their depositors actually were. While they had many thousands of business accounts, most of them were effectively controlled by the same small number of VCs.
So when one VC gets worried about a bank, a thousand companies are required to withdraw everything, lest the VC lose their investment.
"When banks fail due to mismanagement and excessive risk, it should be easier for regulators to claw back compensation from executives, to impose civil penalties, and to ban executives from working in the banking industry again,"
That sounds good on the campaign trail at least.
Don't expect Congress to enact any laws that actually hold bankers responsible for their actions. That would be Un-American. After all, the money comes from the bankers, and how are the little white envelopes going to be filled without that money?
Their problem is that NOBODY borrowed money from them. Banks make money on loans and lose money on deposits.
All their customers deposited the $MM from VCs, those sat in the bank paying 0% interest. The bank needed to raise money to pay wages so bought long term US government bonds paying 1% - the safest thing you could possibly do
Then all their customers began taking money out of their accounts to pay their bills, and no new money came in
It might sound fun on the internet for the government to let them go bust. Keep the bonds they bought and make a profit - and destroy the USA's tech and biotech industry
Yep wipe out businesses that deposited their money there, and have them miss payroll and go bust, and have their employees not make rent.
(Hope none of the biotechs that banked with them were about to cure cancer.)
Then next week every company banking with a regional bank pulls all their money out. So those banks call in all their loans. So every farmer, and every small business, across America is bankrupt by the weekend.
But fsck capitalism ! Except Wall St will make $$$ buying all those assets for pennies, and they can have their food imported.
@Yet Another Anonymous coward
Continual bail by the tax payer out of companies <too big to fail> is not acceptable.
That's what regulation is supposed to prevent. And yet it (still) doesn't.
Especially when millions of US citizens don't have access to decent health care and know it won't improve anytime soon because "bank bailouts are are more important".
They grossly mismanaged the durations of their portfolios and their diversification of clients. The government should not let them fall but should not allow them and any related corporation to enter chapter 11. All assets and liabilities of any associated companies should be auctioned to other banks and financial institutions to make the government whole. Management, directors, and activist shareholders should be liable for the difference.
That is really funny because...
... on Thursday, in Morrisons car park, an American bloke shouted across to his wife, who was getting the trolley,
“Buy up all of the toilet rolls! Credit Suisse is going bust.”
He was joking, as I had to explain to my BH, as they hadn’t really been listening, and asked what that was all about.
"In a joint statement, the Treasury Department and Federal Reserve emphasized that none of the losses would be borne by taxpayers."
Which is a lie and they know it. Statement very carefully does not say where the money comes from and it has to come from somewhere.
Unidentified payer always means it's the taxpayer. Either directly or indirectly, where FED creates couple of trillion dollars from thin air, again, lowering the value of the dollar.
M3 (money supply) shows continuous >30% yearly increase (~inflation) since mid-2021. Obviously FED doesn't give a f**k for a few trillions more.
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