shrimp money

Regulators are backstopping depositers with SVB, so it sounds like @usctrojanGT3 's dreams won't come to fruition this week.

DodoBrd

Your touring would indeed go for more but the $$ going to your dealer… happy ADMing

Diablo Dude

Yup!
Deposits are being made whole and can be accessed Monday morning.
Today, Signature Bank failed in NY and its the #3 largest U.S.bank failure.
Depositors will also be made whole.

Dow futures +277
Nasdaq +148
S&P +47

DodoBrd

hmmm....

I get that the depositors will be made whole which is good (although not sure how they are doing it for deposits more than FDIC limits), but... this is now the 3rd bank failure so far in 2023 (last bank failure was 10 years ago). Am I missing something or is everyone just burying their heads in the sand and pretending like something more systemic is not happening here?

Diablo Dude

Silicon Valley Bank failed because they were long bonds and holding them to maturity in a rising rate environment.

Moody's told them last week that if they didnt raise some cash to improve their capital ratio, they would be downgraded.
So SVB sold off their $21 Billion dollar bond portfolio (at the worst possible time) and raised $2.0 Billion to cover the market to market losses in their bond portfolio.
But that spooked depositors and made things even worse as they pulled money out of the bank.

Banks are challenged in this kind of rate environment trying to maintain their customer base and attract new depositors.
It's hard to do this offering 3.75% CD's when you can get a 5% yield on Treasury Bills in your brokerage account.

Banks are in what's sometimes called the maturity transformation business. They borrow short term (think your deposits, which you can remove at any moment), and lend long (think a 30-year mortgage). The key is to manage their liquidity in the meantime, so they have enough cash to meet their short term commitments should lots of their depositors suddenly want their money back.

In the end, it was an old-fashioned bank run that sent SVB spinning.
But it was its decision to invest so much money in hold-to-maturity securities in a period of record-low rates that made it especially vulnerable.

Why Silicon Valley Bank Failed (businessinsider.com)

Manifold

Not clear to me why depositors should be made whole at taxpayer expense,

shrimp money

What don’t you understand regarding how the customers with over $250k are made whole? It’s not like money is real at this point. They just turn on the computers and plug in some numbers. That’s the beauty of digital money.

Everyone knows something catastrophic is coming. The elites aren’t ready to make their next move yet, which is probably why they’re stepping in to prevent this from spreading. If the fed had their digital currency up and running, I’m sure they would have let it collapse and spread.

ScratchTheItch

1) Taxpayers aren't paying, read up on the DIF
2) Even if taxpayers were paying, the ripple effect of of those depositors not getting paid would likely be way worse and yes hit the taxpayers in a different way (collapsing markets, lost jobs, downstream effects)

Depositors being made whole is kinda how the whole "FDIC insured" thing works in the first place...Yes it's only up to $250k but the bank should be punished, not the depositors. Their assets will be sold off no doubt and used to cover those deposits.

rj2014

Liquidity has dried up due to the rising interest rates. Plenty of other entities will fall if they don't stop with the rate hikes. I am not arguing whether the banks should have done a better job to hedge against interest rate hikes.

Papa Powell mentioned earlier that they would not reverse course until something breaks and this seems like a pretty huge break to me.

AlexCeres

they weren’t and they aren’t. They are being made whole by selling off SVB’s assets to an entity that can hold them to maturity and recoup their full value.

RRich

Treasury Secretary Janet Yellen said the her office would protect “all depositors” at the bank, The government actions will also include a new lending program that Federal Reserve officials said would be big enough to protect uninsured deposits in the wider US banking system.

ipse dixit

All this talk about bank failures, bailouts, discount windows and what-not, just shows how much "want" there is for GT cars.

Sifting through all of these more macro economic issues just to extrapolate the future treadlines of ADMs going forward .... might be easier to either pay the ADM or buy another car.

AlexCeres

it’ll be very interesting to see how the Fed reacts. They aren’t going to be heartbroken over some ****ty banks blowing up, have their assets sold to decent banks, and the Feds smooth things over. This is an excellent way to deflate a lot of money and asset prices, particularly MBS. And the Fed is desperately trying to remove a chunk of all that pandemic printed money. However, like bioweapons, you can never be sure how things will spread and if it’s really ever under control. Do they look at this and decide it was an orderly liquidation of a bad bank, the system is operating as intended, or do they squeeze out a couple drops of pee over a bullet dodged ? No idea. Doubt anyone knows. Maybe even the fed won’t know itself just yet. I’d wager on more rate hikes personally. My wild guessing is that unless labor prices stabilize, they’ll spin the chamber for another round of Russian roulette regardless of how precarious they think the bank’s situations are.

Manifold

It’s kind of the opposite for me. I look at availability and prices of things I’m interested in buying as potential indicators of what’s happening with the economy, to inform my investment decisions. Which cars I buy and when are not among my more important decisions.

usctrojanGT3

SVB could be the canary in the coal mine. Now First Republic is getting wacked along with a few other smaller regional banks and futures went red. Screw what happens to GT car prices, let's hope the federal gov't can contain this mess.