- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Why Signature Bank was seized this weekend in the 3rd biggest bank failure in US history
Posted on 3/13/23 at 11:29 am
Posted on 3/13/23 at 11:29 am
Bank customers were worried and got spooked by SVB collapse. While SVB was exposed to high risk tech startups, Signature bank was far too exposed to crypto.
Yes - the Barney Frank they are quoting is the same Barney Frank that was in congress and was the co-author of the Dodd-Frank bill. He was on the board of Signature Bank which has collapsed.
quote:
Why regulators seized Signature Bank in third-biggest bank failure in U.S. history
CNBC
On Friday, Signature Bank customers spooked by the sudden collapse of Silicon Valley Bank withdrew more than $10 billion in deposits, a board member told CNBC.
That run on deposits quickly led to the third-largest bank failure in U.S. history. Regulators announced late Sunday that Signature was being taken over to protect its depositors and the stability of the U.S. financial system.
The sudden move shocked executives of Signature Bank, a New York-based institution with deep ties to the real estate and legal industries, said board member and former congressman Barney Frank. Signature had 40 branches, assets of $110.36 billion and deposits of $88.59 billion at the end of 2022, according to a regulatory filing.
“We had no indication of problems until we got a deposit run late Friday, which was purely contagion from SVB,” Frank told CNBC in a phone interview.
Problems for U.S. banks with exposure to the frothiest asset classes of the Covid pandemic — crypto and tech startups — boiled over last week with the wind down of crypto-centric Silvergate Bank. While that firm’s demise had been long expected, it helped ignite a panic about banks with high levels of uninsured deposits. Venture capital investors and founders drained their Silicon Valley Bank accounts Thursday, leading to its seizure by midday Friday.
quote:
Signature Bank was founded in 2001 as a more business-friendly alternative to the big banks. It expanded to the West Coast and then opened itself to the crypto industry in 2018, which helped turbocharge deposit growth in recent years. The bank created a 24/7 payments network for crypto clients and had $16.5 billion in deposits from digital-asset-related customers.
quote:
But as waves of panic spread late last week, Signature customers moved deposits to bigger banks including JPMorgan Chase and Citigroup, Frank said.
According to Frank, Signature executives explored “all avenues” to shore up its situation, including finding more capital and gauging interest from potential acquirers. The deposit exodus had slowed by Sunday, he said, and executives believed they had stabilized the situation.
Instead, Signature’s top managers have been summarily removed and the bank was shuttered Sunday. Regulators are now conducting a sales process for the bank, while guaranteeing that customers will have access to deposits and service will continue uninterrupted.
Yes - the Barney Frank they are quoting is the same Barney Frank that was in congress and was the co-author of the Dodd-Frank bill. He was on the board of Signature Bank which has collapsed.
This post was edited on 3/13/23 at 11:30 am
17
Posted on 3/13/23 at 11:30 am to frequent flyer
Dont invest in startup tech that makes no money and crypto. Simple as that
Posted on 3/13/23 at 11:36 am to frequent flyer
Posted on 3/13/23 at 11:38 am to Cosmo
quote:
Dont invest in startup tech that makes no money and crypto. Simple as that
FOMO
Posted on 3/13/23 at 11:39 am to Cosmo
quote:
Dont invest in startup tech that makes no money and crypto. Simple as that
Especially if you are a retail bank.
Posted on 3/13/23 at 11:39 am to frequent flyer
Q for smart guys.
How much in the hole is the bank really when it’s all sorted out? Few banks could handle a 47b run. Is it a cash flow problem based on losses and panic, or did the balance sheet actually go negative by a large amount?
How much in the hole is the bank really when it’s all sorted out? Few banks could handle a 47b run. Is it a cash flow problem based on losses and panic, or did the balance sheet actually go negative by a large amount?
Posted on 3/13/23 at 11:39 am to Cosmo
quote:
Dont invest in startup tech that makes no money and crypto. Simple as that
It wasn't these "investments" that directly caused the failures of these banks though.
Posted on 3/13/23 at 11:41 am to TFSUXASS
quote:
How much in the hole is the bank really when it’s all sorted out? Few banks could handle a 47b run. Is it a cash flow problem based on losses and panic, or did the balance sheet actually go negative by a large amount?
Supposedly SVB was -$1 billion in the hole on Friday.
But they also had a lot of deposits going out in that run. They do have a lot of assets that will be liquidated to cover what is above and beyond the FDIC limits. The taxpayers are on the hook for the rest unfortunately - through their own banks who have to pay additional fees to the FDIC to cover this.
And there aren't enough assets to liquidate to cover all deposits, so your local bank (which means you indirectly) will be paying for this.
This post was edited on 3/13/23 at 11:46 am
Posted on 3/13/23 at 11:41 am to frequent flyer
So what happens if we all just say “f it” and go get our money out of the banks and stuff it under our mattresses?
I guess we quickly find out that US monetary policy is the biggest pyramid scheme of all.
I guess we quickly find out that US monetary policy is the biggest pyramid scheme of all.
Posted on 3/13/23 at 11:41 am to Mo Jeaux
quote:
It wasn't these "investments" that directly caused the failures of these banks though.
It was the run specifically. That's why it happened so damn fast and why it shocked everyone. It went from just another day to "holy shite we are done" in less than 3 days.
Posted on 3/13/23 at 11:42 am to TFSUXASS
no bank could handle a deposit run of 25% in two days....this is what happened
using round easy to understand number / assume % are round values = $100
Average Bank Balance Sheet
25% bonds 75% loans and capital ratio (asset - liabilities) of 9%
right now banks have unrealized losses of around 12% / so value of securities is .88*25 = 22 or 3$ loss that reduces capital to 6% if realized
SVB was 60% bonds 40% loans and had a unrealized loss of around 15% - so .85*60 = 51 / or 9$ loss - assuming 9% initial capital and the equity is 0
this info has been public for a long time, but when they sold some bonds idiots the info was highlighted to some of their uninsured depositors which caused a bank run
using round easy to understand number / assume % are round values = $100
Average Bank Balance Sheet
25% bonds 75% loans and capital ratio (asset - liabilities) of 9%
right now banks have unrealized losses of around 12% / so value of securities is .88*25 = 22 or 3$ loss that reduces capital to 6% if realized
SVB was 60% bonds 40% loans and had a unrealized loss of around 15% - so .85*60 = 51 / or 9$ loss - assuming 9% initial capital and the equity is 0
this info has been public for a long time, but when they sold some bonds idiots the info was highlighted to some of their uninsured depositors which caused a bank run
Posted on 3/13/23 at 11:55 am to hubreb
Sounds like a good article explaining the bank failures.
LINK
quote:
What happened to SVB and Signature Bank? Several factors led to the precipitous collapse of SVB. Most of SVB's clients include tech and venture capital companies, in addition to executives for these firms. In an effort to attract clients, SVB offered relatively higher rates on deposits compared with many larger rivals. To help fund these higher rates, SVB bought longer-term, higher-yielding bonds when it was cash rich. But that was before the Fed began aggressively hiking rates and the venture capital market experienced some turbulence. The value of most of those bonds SVB purchased has declined substantially (bond values generally decrease as interest rates increase), resulting in big investment losses. "This is a classic asset-liability mismatch, triggered by higher rates, and compounded by leverage," according to Jurrien Timmer, director of global macro at Fidelity. "Some banks have offered to pay higher rates to their depositors, but as the Fed has raised rates and bond values decreased, banks like SVB are taking losses on their bond assets." Complicating the situation, SVB kept a lower level of deposits on hand and invested a greater percentage of its capital in order to try and pay its relatively higher rates. Consequently, SVB has been on looser footing than most other banks. Additionally, some have speculated that SVB developed a reputation for having not-as-strict lending standards. It is speculated that the quality of loans to some riskier venture-backed companies with deposits at SVB has deteriorated over the past year. Many of those firms have come under significant financial pressure as rates have risen and securing capital has become more difficult compared to the low interest rate environment from just a couple of years ago. After SVB announced recently that it lost $1.8 billion in asset sales, the bank failed to secure additional investment capital and many customers rapidly withdrew deposits. Everything culminated with Friday's seizure by regulators. "There's an old adage that says the Fed tightens until something breaks," Timmer adds. "It looks like we have a sense of what is breaking during this Fed cycle." Like SVB, Signature Bank’s clients included many tech and venture capital companies, and in the aftermath of SVB’s failure, those clients similarly rushed to withdraw their funds from Signature, triggering its collapse.
LINK
Posted on 3/13/23 at 11:57 am to inspectweld
apparently it's trump's fault since he rolled back some of obama's controls in place
Posted on 3/13/23 at 12:01 pm to Pax Regis
quote:
So what happens if we all just say “f it” and go get our money out of the banks and stuff it under our mattresses?
I guess we quickly find out that US monetary policy is the biggest pyramid scheme of all.
What if your house burns down then?
Honestly it's safer in a bank - just watch the FDIC limits. Put your eggs in multiple baskets.
Posted on 3/13/23 at 12:05 pm to frequent flyer
quote:
board member and former congressman Barney Frank
I know why it failed and didn't have to read anymore.
The Banking Queen strikes again.
For your musical entertainment, Paul Shanklin's Banking Queen...
Posted on 3/13/23 at 12:06 pm to Cosmo
quote:
Dont invest in startup tech that makes no money and crypto. Simple as that
The type of investment is almost irrelevant here. The problem was their depositors removed funding and they didn't have the fund available to shore up those depositors
Posted on 3/13/23 at 12:07 pm to joshnorris14
quote:
The problem was their depositors removed funding and they didn't have the fund available to shore up those depositors
But why did they do this? What spooked them specifically with SVB, since that's where it seemed to start.
Signature seemed to happen later.
Posted on 3/13/23 at 12:08 pm to frequent flyer
Signature was about 30% in crypto
Trumps were involved and I think his daughter was a director
It was a Richy Rich Bank that nobody on here could get an account at
SVB was similar, a Richy Rich bank that most never heard of because we are too poor to be customers.
The issue with these types of banks is not that they are making loans like to say you or me where they are covering 1:1 or 2:1 but they leverage it up to say 5:1 or 10:1 where they have to put up less and make much bigger profits. These guys take more risk than you or I going to Vegas and shooting craps.
Pre 1980's banking was boring but very low risk. That has all but disappeared in the age of self and the age of greed.
Trumps were involved and I think his daughter was a director
It was a Richy Rich Bank that nobody on here could get an account at
SVB was similar, a Richy Rich bank that most never heard of because we are too poor to be customers.
The issue with these types of banks is not that they are making loans like to say you or me where they are covering 1:1 or 2:1 but they leverage it up to say 5:1 or 10:1 where they have to put up less and make much bigger profits. These guys take more risk than you or I going to Vegas and shooting craps.
Pre 1980's banking was boring but very low risk. That has all but disappeared in the age of self and the age of greed.
Posted on 3/13/23 at 12:10 pm to frequent flyer
quote:
Yes - the Barney Frank they are quoting is the same Barney Frank that was in congress and was the co-author of the Dodd-Frank bill. He was on the board of Signature Bank which has collapsed.
Lets not forget the Barney Frank who was responsible for the collapse of the housing market with Fannie Mae and Freddie Mac in 2008. He needs to stick to sucking d*cks.
This post was edited on 3/13/23 at 12:14 pm
Posted on 3/13/23 at 12:11 pm to frequent flyer
quote:
former congressman Barney Frank.
The guy who helped make the Fannie Mae and Freddie Mac crash possible in 2008.
Page 1 of 4
Popular
Back to top
Follow TigerDroppings for LSU Football News