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Inmate Central: RE: The Federal Reserve wasn't clueless about problems at Silicon Valley Bank. by 6bq5 Inmate Central, where civil and family-friendly discourse about off-audio topics (other than religion and politics) is welcome. |
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In Reply to: The Federal Reserve wasn't clueless about problems at Silicon Valley Bank. posted by vacuous on March 19, 2023 at 10:40:31:
SVB was set p to fail.
Managed poorly,
and was greedy-
SVB ran a closed shop in the SF Bay area -
You pitch an idea for a company (high-tech, BioTech, FinTech...) and the VCs give you some money - but then tell you to go to SVB-
So you take your 10s of Million dollars and open an account in SVB -
Based on your burn rate/spend per month, you have enough for 24-40+ months (or whatever) - and it gets complicated fast-
But with SVB running a closed shop, you don't have options, which simplifies the questions/options- this is the story for most start-ups using SVB-
You spend a few months working w/ SVB and they pressure you to put your personal money into SVB-
In looking for more depositors, and of course there are bragging rights once you bag one, SVB went courting the Wine business - small medium and large producers - not too dissimilar from startups, lots of money required, long payback cycle, and often course corrections along the way-
and of course, if your business is banking with SVB, why wouldn't you put your personal finances with SVB...
Now then the Fed starts to raise interest rates -
this is an old story, in a rising interest rate market, you do not buy Long term Fed Bonds, especially if you need to maintain liquidity
But apparently SVB felt that the VC spigot would never shut off (really, I have seen that capricious bunch of money change on a dime...)
Oh, and don't forget, in an effort to 'diversify(?)' their holdings they took a 20% stake in backing a crypto coin....
So, when Peter Thiel tweets 'pull your money from SVB...'
the run is on!
On the one hand, it is good that the Feds/Treasury & FDIC saved their sorry a$$ - but in truth, it would only cost them $2B to right the $209B ship, so not a bad investment - now comes the problem of how to make it look like normal policy...
Oh Shitt, here comes First Republic with ~$30B of bad debt....
Regulators can't fix greed
or stupidity
They could manage the situation better - SVB is the Poster child for the down side of a Monocrop
what is that old saying,
-Hmmm
Oh Yeah - Diversify, Diversify, Diversify...
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Topic - The Federal Reserve wasn't clueless about problems at Silicon Valley Bank. - vacuous 10:40:31 03/19/23 ( 6)
- RE: The Federal Reserve wasn't clueless about problems at Silicon Valley Bank. - Inmate51 15:34:47 03/19/23 ( 3)
- It's you who are clueless. READ the article Inmate51. n/t - vacuous 15:57:59 03/19/23 ( 2)
- Yea right - Uncle Mike 16:13:36 03/19/23 ( 1)
- Maybe Inmate51 has special reading allergies. Can't stomach left-leaning publications like the NYT. - vacuous 16:46:02 03/19/23 ( 0)
RE: The Federal Reserve wasn't clueless about problems at Silicon Valley Bank. - 6bq5 03/19/23 13:19:44 03/19/23 ( 1)
- RE: The Federal Reserve wasn't clueless about problems at Silicon Valley Bank. - Uncle Mike 15:03:41 03/19/23 ( 0)