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Thread: Silicon Valley Bank

  1. #1
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    Silicon Valley Bank

    I feel like Rob here starting the Covid thread, but anyone else very concerned about our financial system today? Anybody got any words of comfort and wisdom? I fear we are hitting 2008 again.

  2. #2
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    Why do you feel this way?

  3. #3
    Yppej
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    Yellen isn't too concerned and she's not bailing them out.

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    Quote Originally Posted by frugal-one View Post
    Why do you feel this way?
    because it was announced on a Friday, when they announce the really bad news, and the news was quickly saying, there's no contagion impact, and I feel like it is being downplayed to avoid a panic.

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    I think banks are not regulated to help people. My main concern is the high interest rates on credit cards. which the states get to control, not the Feds. I never have to pay it, as i pay it off every month, but for anyone who got into debt trouble the 24-25% interest rate insures they will NOT EASILY recover, even if they stop spending. It is loan sharking. Banks own pawn shops, same day loans....There needs to be more regulation of those things. I believe usury is a crime unless the banks do it. I realize people spend foolishly and just hide their heads...I have family members who fell into the trap and didn't learn. I know others who did and with determination recovered.

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    I am most concerned about contagion and bank runs on Monday, and the impact on the stock market. But so far, it has impacted some Etsy sellers and wineries, who have been locked out of their accounts. I think this is going to be bigger than the initial spin is trying to say, that it is contained within the startup industries.

  7. #7
    Senior Member Tradd's Avatar
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    I just read several articles on SVB’s situation in the Economist (I’m a subscriber). There are a number of factors that make SBV’s situation unique. We’ll have to see what the feds do. I couldn’t tell if it will have a big impact or not. The fact that it catered to start-ups is part of its issues.

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    In the 1930s when there was a run on a bank, the tellers were often directed by branch managers to count the money very slowly for customers who were making withdrawals. Thus, the lineup of depositors got longer and more emotional about the situation.

    In the era of online banking, depositors who have an alternative bank account elsewhere can make transfers out of the panic bank by electronic funds transfer (EFT) or by wire. Silicon Valley Bank was rapidly "cleaned out" by online withdrawals.

    I understand that First Republic Bank (FRC) settled with the Federal Deposit Insurance Corporation (FDIC) that effective 3/10/2023 FRC is no longer processing any wire transfers. I wonder if EFTs have become difficult or impossible at FRC. If so, it is the modern equivalent of instructing the bank tellers to count slowly.

    The resolution of bank liquidity issues will always be cloaked in secrecy. Depositors will certainly be able to withdraw deposits up to the limit of FDIC insurance.

    I believe that misinformation is worse than no information at all. It is difficult for me to obtain reliable information. So here we are, living with the known unknowns.

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    Quote Originally Posted by dado potato View Post
    In the 1930s when there was a run on a bank, the tellers were often directed by branch managers to count the money very slowly for customers who were making withdrawals. Thus, the lineup of depositors got longer and more emotional about the situation.

    In the era of online banking, depositors who have an alternative bank account elsewhere can make transfers out of the panic bank by electronic funds transfer (EFT) or by wire. Silicon Valley Bank was rapidly "cleaned out" by online withdrawals.

    I understand that First Republic Bank (FRC) settled with the Federal Deposit Insurance Corporation (FDIC) that effective 3/10/2023 FRC is no longer processing any wire transfers. I wonder if EFTs have become difficult or impossible at FRC. If so, it is the modern equivalent of instructing the bank tellers to count slowly.

    The resolution of bank liquidity issues will always be cloaked in secrecy. Depositors will certainly be able to withdraw deposits up to the limit of FDIC insurance.

    I believe that misinformation is worse than no information at all. It is difficult for me to obtain reliable information. So here we are, living with the known unknowns.
    Signature Bank was just closed, too. I guess we will see what tomorrow brings when it comes.

  10. #10
    Simpleton Alan's Avatar
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    Quote Originally Posted by dado potato View Post
    In the 1930s when there was a run on a bank, the tellers were often directed by branch managers to count the money very slowly for customers who were making withdrawals.
    In 1933, when bank runs seemed popular, Barney Kroger of Kroger supermarket fame quelled a run on Provident Bank in Cincinnati by stacking up $15,000,000 of his own money in the banks window. All curious depositors could see that their money was available and safe so they all went home happy.
    "Things should be made as simple as possible, but not one bit simpler." ~ Albert Einstein

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