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International Banking Crisis - Update

intel-bank

intel-bank

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Joined
Jun 13, 2022
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PNW, United States
Silicon Valley Bank collapsed Friday morning after a stunning 48 hours in which its capital crisis set off fears of a meltdown across the banking industry.

Its failure marks the largest shutdown of a US bank since 2008, when Washington Mutual fell during the financial crisis.
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California regulators closed down the tech lender and put it in control of the US Federal Deposit Insurance Corporation. The FDIC is acting as a receiver, which typically means it will liquidate the bank’s assets to pay back its customers, including depositors and creditors. The FDIC is an independent government agency that insures bank deposits and oversees financial institutions.
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The FDIC said all insured depositors will have full access to their insured deposits by no later than Monday morning, and it will pay uninsured depositors an “advance dividend within the next week.”
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www.reuters.com

Banking regulators shutter SVB, move quickly to avert crisis

California banking regulators on Friday closed SVB Financial Group , the largest bank failure since the financial crisis, moving quickly to protect depositors as a crisis at the startup-focused lender rippled through global markets and hit banking stocks.
www.reuters.com www.reuters.com
www.fdic.gov

FDIC Creates a Deposit Insurance National Bank of Santa Clara to Protect Insured Depositors of Silicon Valley Bank, Santa Clara, California

FDIC Creates a Deposit Insurance National Bank of Santa Clara to Protect Insured Depositors of Silicon Valley Bank, Santa Clara, California
www.fdic.gov www.fdic.gov
 
I'm getting flashbacks to Northern Rock...
Let's hope this doesn't ripple into more shutdowns.
 
BorisBadenov said:
Isolated incident or are they part of a larger network? Im sure FDIC will come into play for some.
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Well they are a pretty big tech bank and any account with over 250k isn't getting compensated in cash (more like some crappy ious) so it could have serious tech ramifications, as well as start a domino effect. But as far as I know it's just the one. The FDIC took over.

CNN says it's likely isolated, but you know how those politically bias analysts can be. In other news, we aren't in a recession and inflation was transitory, so no need to fear! Economy is perfect until next election! Just the biggest bank failure since 08!

It's a really bad sign. It shows just how much stress the economy is under, and the fed isn't planning on slowing down rate hikes any time soon.
 
intel-bank said:
Well they are a pretty big tech bank and any account with over 250k isn't getting compensated in cash (more like some crappy ious) so it could have serious tech ramifications, as well as start a domino effect. But as far as I know it's just the one. The FDIC took over.

CNN says it's likely isolated, but you know how those politically bias analysts can be. In other news, we aren't in a recession and inflation was transitory, so no need to fear! Economy is perfect until next election! Just the biggest bank failure since 08!

It's a really bad sign. It shows just how much stress the economy is under, and the fed isn't planning on slowing down rate hikes any time soon.
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So no need to pull out 100k in cash and put it under the mattress yet.
 
JPod said:
This is good, now if only the whole financial system would blow up from some good ole contagion.
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What would be the purpose of that? Lots of people will lose jobs, houses, cars and even worse people might have to pull their kids out of school and send them to the local public school and worse yet have to have the children leave the university and attend community colleges!
 
intel-bank said:
Well they are a pretty big tech bank and any account with over 250k isn't getting compensated in cash
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So you don't know how the rich insures their money? They open up several hundred or thousand bank accounts than only put in $250,000 in it. This way all my money is insured.

The rest is usually invested in gold or other things that do not devalue hardly if ever.
 
DarkNoon said:
So you don't know how the rich insures their money? They open up several hundred or thousand bank accounts than only put in $250,000 in it. This way all my money is insured.

The rest is usually invested in gold or other things that do not devalue hardly if ever.
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That's what some do, yes. But companies often cannot do it like this because the issue is far more complex than it seems. Quite a few companies are likely going to struggle because of it. (As in the ball is rolling) The simplest way to put it is, if you are betting your bank won't fail, the benefits of keeping more than 250k in one account may outweigh the negatives. We aren't talking about rich *people* that are at risk, it's rich companies.

Keep in mind, too, that just because you open 20 accounts at the same bank under those amounts doesn't mean that the FDIC will see each individual account vs the deposited. And frankly, a fuck ton of tech companies recently have been making very poor buisness decisions since 08.

There is a reason for the limit of 250k. Because the FDIC will struggle to insure 100b in deposits if the banks assets are only worth 10k, without a bailout.

Also, the final nail in the coffin may be that too many depositors probally figured a bank that size would be bailed out if worse comes to worst.
 
DarkNoon said:
Correct but there are well over 1000 different banks and branches in America. Pretty much every town and city has their own independent local bank or branch.
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Granted your right doing this on a large scale of say billions of dollars like a business or the ultra rich cannot do this. Would be impractical to open up that many bank accounts.
 
DarkNoon said:
Granted your right doing this on a large scale of say billions of dollars like a business or the ultra rich cannot do this. Would be impractical to open up that many bank accounts.
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Exactly my point, tech companies currently struggling are worth too much to keep their deposits insured. It is not just impractical, it hurts liquidity and the banks willingness to issue credit
 
DarkNoon said:
The rest is usually invested in gold or other things that do not devalue hardly if ever.
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I also want to note, gold prices from peak to low after the great recession fell 30%, stayed 30% down for at least 4 years. USD did not. Gold devalues plenty, not over the large scale periods but recessions and especially ones following inflation, it can stay low for several years. USD actually tends to increase in purchasing power as recessions set in, because deflation/disinflation inevitably occurs.

So gold does not tend to be how they keep their money. They tend to keep it in stocks or bonds or savings accounts or CDs
 
intel-bank said:
I also want to note, gold prices from peak to low after the great recession fell 30%, stayed 30% down for at least 4 years.
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Yes but it is stable durring non turbulent market. Sell the gold before turmoil hits so they can buy up the stocks, bonds, CDs, ect. There is a warning window you can sell before markets crash.

Gold is a nice way to stash your wealth until you need it, say a recession is around the corner.

In fact good way to determine when recession is nearing or starting is watching gold price. Because rich are selling off the gold to invest in stocks, bonds, CDs, for when the market crashes and purchasing power goes up.

I should know its what I do.
 
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