stock market was up today...

#13,576
#13,576
Orangeburst said:
So the FDIC invests in US treasuries...Holy Snap
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I’ve got some really bad news for you on your Social Security benefits then too. They aren’t sitting in a pile of money in a bank vault ala Scrooge McDuck. I’m pretty sure by law they are required to be invested in treasuries.

It’s going to be fine. The people with exposure here are all rich MFers anyway. Thus you see Ackman squealing like he was in an earlier post.
 
#13,577
#13,577
Just wait, SVB will open up tomorrow under another name like Wells Fargo or BAC. Rich people will get their money and everyone will be happy.
 
#13,579
#13,579
What scares me more than the current state of the FDIC is that the concept of negative interest rates was a thing a couple of years ago and then it quietly went away. Imagine having a huge pile of cash and wanting to “safely” tuck it away in conservative bank accounts only to have them reduce the money in the account every year. Makes a case for holding paper money if negative interest rates are accompanied with disinflation. Instead of payday advance stores on every corner, there’s be safe deposit box businesses on every corner. But then the Fed probably eliminates paper currency after that.

Makes the case for crypto.
 
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#13,580
#13,580
NorthDallas40 said:
There is plenty of info available on SVB showing they were being reckless. Deposits nearly doubled in a year, they used them to buy longer term treasuries with data showing inflation was looming and thus fed rate hikes were looming. And that caused a self imposed liquidity crunch. I read somewhere that 90% of SVB’s deposits were not FDIC insured as they are big chunks of money deposited by high risk startups. I mean it’s like they wrote a playbook on the fly to demonstrate exactly how to not manage risk in this current inflationary environment
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Yes. I was assuming this was ESG and finally read up last night.

85SugarVol said:
It would appear I was wrong.

This has nothing to do with ESG
This also has nothing to do with Trump

These people were just really really dumb. I mean they got caught short and failed over basic ABC-123 type sh!t…

What happens to bond prices when interest rates go up?

Anyone? Bueller?
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Doesn’t change the landscape or the questions I asked imho
 
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#13,581
#13,581
NorthDallas40 said:
I’ve got some really bad news for you on your Social Security benefits then too. They aren’t sitting in a pile of money in a bank vault ala Scrooge McDuck. I’m pretty sure by law they are required to be invested in treasuries.

It’s going to be fine. The people with exposure here are all rich MFers anyway. Thus you see Ackman squealing like he was in an earlier post.
Click to expand...

I would still like to know how much money they are supposedly sitting on. Find it and get back to me.
I am sure private insurance would have liquidity thresholds..gov not so much
 
#13,582
#13,582
Orangeburst said:
I would still like to know how much money they are supposedly sitting on. Find it and get back to me.
I am sure private insurance would have liquidity thresholds..gov not so much
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Sure thing. Sit tight and don’t do a thing till I get that for ya! 😎

Private insurers can’t print their own money.
 
#13,583
#13,583
lawgator1 said:
That tweet is way overblown and designed to get clicks. SVC had a particular flaw in the way it did business, which was that it bought long term treasures at locked in low rates. As people with deposits realized they could be earning a lot more elsewhere and started to withdraw last week, it became apparent that SVC had too much money locked up in the treasuries.

The money is still there. It's just in suspense until the Treasury and others let them off the hook on getting out of those long term, low interest bonds.

Everyone realizes the cascading effect of this. They'll have a solution sooner than later to fix it and make everyone whole.
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That money is not there, and they are not going to be made whole. Unless someone pays for it.

The state of California stepped in and seized the bank. It’s over.
 
#13,584
#13,584
NorthDallas40 said:
Sure thing. Sit tight and don’t do a thing till I get that for ya! 😎

Private insurers can’t print their own money.
Click to expand...

And the gov cannot print money in an inflationary environment unless the $250K that they may be able to pay by writing will be worth much less..Hmmm
 
#13,587
#13,587
volfanhill said:
Read a post above. It's laughable to worry about the FDIC. These banks have trillions but that's not what's insured. State Farm would be screwed too if everyone they insure got hit by a car today. It ain't happening. And remember it's only 250K. And then consider how many of these accounts are business accounts.
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You are correct. People get confused over what it is the FDIC does - it backstops deposits.

Bank of Mellon rolling deep in close to $45 Trillion in assets (yes, with a T), nary a commercial deposit in sight…
 
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#13,588
#13,588
NorthDallas40 said:
You can’t just agree on the last two sentences and claim that the money is “still there”. The treasury bonds are worth what they are worth on that days valuation. Knowing they had long term exposure showing a large loss they should have spent the last year conserving liquidity.

There isn’t going to be a fed bailout apparently. The Feds appear to be trying to broker a sale… likely to a larger bank that understands how treasury bonds work and with the capital reserves to absorb SVB. And that’s exactly how it should work.
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I understand what you are saying but am confused by it because I thought they would have had enough assets -- including treasuries -- to represent their liability as to deposits. Not with interest or otherwise, just the sheer dollar value of deposits.

I was under the impression that the issue was that they took the money and put it into treasuries paying in the 1 % range, but not negotiable for some time. So when enough major depositors came forward and wanted out so that they could go hunt for better returns, SVB could not honor those requests because too much of their assets were locked up.

But I am very much open to having my understanding corrected, this has just happened and so I may be way off. Or a little off. Or in between.
 
#13,589
#13,589
NorthDallas40 said:
Just pause a minute and breeeaaaaattthhhheee
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Just asking questions of FDIC liquidity and no one knows...

ck0-bugs.gif
 
#13,590
#13,590
85SugarVol said:
That money is not there, and they are not going to be made whole. Unless someone pays for it.

The state of California stepped in and seized the bank. It’s over.
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You have to live in LG's world. In his world if you had more than $250k you shouldn't complain. $250 is more than enough for anyone. Thus they should just be grateful.
 
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#13,591
#13,591
lawgator1 said:
I understand what you are saying but am confused by it because I thought they would have had enough assets -- including treasuries -- to represent their liability as to deposits. Not with interest or otherwise, just the sheer dollar value of deposits.

I was under the impression that the issue was that they took the money and put it into treasuries paying in the 1 % range, but not negotiable for some time. So when enough major depositors came forward and wanted out so that they could go hunt for better returns, SVB could not honor those requests because too much of their assets were locked up.

But I am very much open to having my understanding corrected, this has just happened and so I may be way off. Or a little off. Or in between.
Click to expand...

So you think they invested all of their deposits in treasuries and nothing was invested in worthless Silicon Valley startups?
 
#13,592
#13,592
lawgator1 said:
I understand what you are saying but am confused by it because I thought they would have had enough assets -- including treasuries -- to represent their liability as to deposits. Not with interest or otherwise, just the sheer dollar value of deposits.

I was under the impression that the issue was that they took the money and put it into treasuries paying in the 1 % range, but not negotiable for some time. So when enough major depositors came forward and wanted out so that they could go hunt for better returns, SVB could not honor those requests because too much of their assets were locked up.

But I am very much open to having my understanding corrected, this has just happened and so I may be way off. Or a little off. Or in between.
Click to expand...
From reading a bit the Feds give the banks some latitude on reserves offsetting treasuries because they are low risk investments. And they are. But this is really a conflict I think on oversight.

But that doesn’t absolve the bank from managing their risk ultimately they are responsible for their balance sheet. Remrner this all started because they had one ugly balance sheet from being so far down on long term treasuries. This didn’t happen overnight it’s been cumulative since the end of 2021. SVB triggered this when they tried to raise capital on Wednesday. From what I’ve read that was basically the acknowledgment by them that they weren’t solvent. And that triggered the run on the bank.
 
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#13,593
#13,593
lawgator1 said:
I understand what you are saying but am confused by it because I thought they would have had enough assets -- including treasuries -- to represent their liability as to deposits. Not with interest or otherwise, just the sheer dollar value of deposits.

I was under the impression that the issue was that they took the money and put it into treasuries paying in the 1 % range, but not negotiable for some time. So when enough major depositors came forward and wanted out so that they could go hunt for better returns, SVB could not honor those requests because too much of their assets were locked up.

But I am very much open to having my understanding corrected, this has just happened and so I may be way off. Or a little off. Or in between.
Click to expand...
They bought long term instruments at record low interest rates.

Then they offered higher rates on their own deposits to keep people from pulling their money.

They were selling Lemonade for less than what it cost them to make it. They were dumb.
 
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#13,594
#13,594
85SugarVol said:
You are correct. People get confused over what it is the FDIC does - it backstops deposits.

Bank of Mellon rolling deep in close to $45 Trillion in assets (yes, with a T), nary a commercial deposit in sight…
Click to expand...

So a private or public/private bank holds $44T in assets? That is not reassuring to just how the hell.
If I was an investigator..I would be all over that bank and how they manipulate our nations interests, politicians, FP, etc.
 
#13,595
#13,595
NorthDallas40 said:
From reading a bit the Feds give the banks some latitude on reserves offsetting treasuries because they are low risk investments. And they are. But this is really a conflict I think on oversight.

But that doesn’t absolve the bank from managing their risk ultimately they are responsible for their balance sheet. Remrner this all started because they had one ugly balance sheet from being so far down on long term treasuries. This didn’t happen overnight it’s been cumulative since the end of 2021. SVB triggered this when they tried to raise capital on Wednesday. From what I’ve read that was basically the acknowledgment by them that they weren’t liquid. And that triggered the run on the bank.
Click to expand...
That’s what LG is not getting.

SVB’s fixed income holdings appeared fine. Until they were marked to market and sold…

They lost $1.8B selling bonds at actual market price - that sparked the conflagration.
 
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#13,596
#13,596
Orangeburst said:
So a private or public/private bank holds $44T in assets? That is not reassuring to just how the hell.
If I was an investigator..I would be all over that bank and how they manipulate our nations interests, politicians, FP, etc.
Click to expand...
Calm your tits bae.

Mellon is a custodial bank - I used them for dramatic effect.
 
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