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| Silicon Valley Bank Collapses |
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| wilfred:
--- Quote from: Stray Electron on March 13, 2023, 02:33:45 pm ---<snipped> Regardless of why you think SVB is different, this sets a VERY BAD precedent IMO. In effect, this means that from here on out the Feds are going to bail out any and all failing banks. This is an open door invitation for BAD management in the banks, knowing that there will be no consequences for them. --- End quote --- Guaranteeing the funds of depositors is not bailing out the bank. The bank is bust. Janet Yellen said they are not bailing out the banks anymore. Which I agree with, but we'll see what happen if Wells Fargo is at risk. I heard on the news some bank in London (whose name escapes me) bought the UK arm of SVB for one British pound. I don't know if some large American bank bought or will buy the US operation but SVB no longer exists. Nor does the other bank. Neither will resume business. That sounds like not bailed out to me. |
| coppice:
--- Quote from: wilfred on March 13, 2023, 02:54:04 pm ---I heard on the news some bank in London (whose name escapes me) bought the UK arm of SVB for one British pound. I don't know if some large American bank bought or will buy the US operation but SVB no longer exists. Nor does the other bank. Neither will resume business. That sounds like not bailed out to me. --- End quote --- It looks like HSBC are grabbing the UK arm of SVB. They have quoted healthy figures for that business, but buying it for one pound doesn't make it sound too healthy. |
| TimFox:
The proximate cause of SVB's failure was an old-fashioned bank run, after depositors became worried about the bank and many withdrew funds immediately. Today's New York Times business section had an article suggesting that the run was exacerbated by the depositors' being members of the tech community who spent much of their time online, thus spreading the fear quickly. Their fear was possibly an overreaction to normal business activities by the bank that were communicated badly to the public. |
| dave j:
--- Quote from: coppice on March 13, 2023, 03:28:29 pm ---It looks like HSBC are grabbing the UK arm of SVB. They have quoted healthy figures for that business, but buying it for one pound doesn't make it sound too healthy. --- End quote --- SVB UK weren't in a position to haggle on price - the Bank of England had already decided to rule them insolvent. With the customers about to have financial problems and the markets in panic mode having someone like HSBC buy it for a nominal amount meets both protect the customers and calm the markets objectives all without the UK government having to spend a penny. Wins all round (apart from for SVB owners) as far as the UK government are concerned. |
| coppice:
--- Quote from: dave j on March 13, 2023, 04:16:48 pm --- --- Quote from: coppice on March 13, 2023, 03:28:29 pm ---It looks like HSBC are grabbing the UK arm of SVB. They have quoted healthy figures for that business, but buying it for one pound doesn't make it sound too healthy. --- End quote --- SVB UK weren't in a position to haggle on price - the Bank of England had already decided to rule them insolvent. With the customers about to have financial problems and the markets in panic mode having someone like HSBC buy it for a nominal amount meets both protect the customers and calm the markets objectives all without the UK government having to spend a penny. Wins all round (apart from for SVB owners) as far as the UK government are concerned. --- End quote --- Larger, more stable, banks usually hoover up the pieces at bargain prices when there is a collapse. However, if the bank that failed still has genuine net value you might expect everyone to be a the trough fighting for a piece of the action. |
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