SVB loss was the reason the technology-focused lender attempted a $2.25 billion stock sale last week using Goldman Sachs as an adviser

[GON]

No surprise here whatsoever. I posted this happened in a speculative post on BITOG a few days ago. And it did in fact happen.

SVB reached out to GS to advise to raise money. I won't go into GS most likely shorting SVB at the same time, and then pickups up SVB assets.

No, I am not a clairvoyant- but this story is the reason I don't invest in equities. The script is always the same.

Goldman Sachs was the purchaser of the bond portfolio that Silicon Valley Bank booked a $1.8 billion loss on, setting SVB's failure into motion.

SVB revealed the news on Tuesday.

The loss was the reason the technology-focused lender attempted a $2.25 billion stock sale last week using Goldman Sachs as an adviser.

The capital raise failed as depositors fled, and investors worried SVB would have needed even more capital.

https://www.foxbusiness.com/markets/goldman-bought-portfolio-svb-reportedly-booked-losses-on

 

[BMWTurboDzl]

No surprise here whatsoever. I posted this happened in a speculative post on BITOG a few days ago. And it did in fact happen.

SVB reached out to GS to advise to raise money. I won't go into GS most likely shorting SVB at the same time, and then pickups up SVB assets.

No, I am not a clairvoyant- but this story is the reason I don't invest in equities. The script is always the same.

Goldman Sachs was the purchaser of the bond portfolio that Silicon Valley Bank booked a $1.8 billion loss on, setting SVB's failure into motion.

SVB revealed the news on Tuesday.

The loss was the reason the technology-focused lender attempted a $2.25 billion stock sale last week using Goldman Sachs as an adviser.

The capital raise failed as depositors fled, and investors worried SVB would have needed even more capital.

https://www.foxbusiness.com/markets/goldman-bought-portfolio-svb-reportedly-booked-losses-on

It's also worth noting that GS backed crypto startup Circle. SOURCE

Circle was also one of the largest depositors at SVB. Source

 

[PimTac]

The more I hear about SVB the more I am convinced that this was a very poorly run operation that couldn’t even be called a bank. People were hired for representation. Lots of favors were pulled including some big names.

I guess things are really different down there.

 

[KrisZ]

I’m shocked I tell you, shocked!

 

[Snagglefoot]

I was gobsmacked!

 

[PWMDMD]

I was gobsmacked!

Nice word!

 

[BMWTurboDzl]

The more I hear about SVB the more I am convinced that this was a very poorly run operation that couldn’t even be called a bank. People were hired for representation. Lots of favors were pulled including some big names.

I guess things are really different down there.

It was a failure which didn't need to happen. Part of it was how SVB opted to invest a deluge of deposits and not realizing that investing those deposits in long term Treasuries would be a bad idea when the Fed had been telegraphing rate increases for the duration.

A lot of banks have unrealized losses due to the rate increases (Bonds prices go down when rates go up).

Technically the Federal Reserve has billions in unrealized losses in MBS and Bonds but they wipe it away with an accounting trick.

 

[miden851]

Swiss bank is next

https://www.reuters.com/business/fi...s-drop-fresh-record-low-cds-widen-2023-03-15/

so get ready for a pull back in economy

everything is rotten in the post C19 world

 

[miden851]

The more I hear about SVB the more I am convinced that this was a very poorly run operation that couldn’t even be called a bank. People were hired for representation. Lots of favors were pulled including some big names.

I guess things are really different down there.

IMO its all about printing a fiat currency; the economy is just floating around very same products, just shuffling them around, with different name, packaging and along with a hire price, the result of printing money senselessly and greed

but in reality, economy does not create real value, and that actually what has happened in past 3 years

now, there is a price to paid for it

 

[javacontour]

I was listening to the Reason Roundtable podcast yesterday and one of the potential contributing factors was SVB's inability to make a statement as to WHY they were selling stock.
The theory was that instead of deregulation being the issue, regulation actually contributed (wasn't the whole problem) to the issue.
As others have mentioned, they owned way too many government bonds that were purchased with low yields while the Fed was telegraphing rate increases. As has been stated, such increases lower the value of the bonds they held.
Of course, partisan hacks on both extremes of the spectrum want to blame their particular whipping boy to make political hay.

 

[mk378]

investing those deposits in long term Treasuries would be a bad idea when the Fed had been telegraphing rate increases

I don't understand buying those bonds while the prime rate is near zero. The market can only move one way from there, and it will be against you.

 

[SC Maintenance]

I don't understand buying those bonds while the prime rate is near zero. The market can only move one way from there, and it will be against you.

You forget they were talking about negative rates not long ago. I think some countries were actually selling negative rate bonds.

Austria sold a 100 year bond not long ago at about 2.5% yield. I think there currently trading at like 30% of their original price.

When you start drinking your own cool-aid, bad things happen.

 

[Wrenchturner44]

The obvious question with SVB is where were the Fed bank examiners, and how come they did not catch this?

 

[KrisZ]

The obvious question with SVB is where were the Fed bank examiners, and how come they did not catch this?

Maybe because there is a bigger game than we are aware of. All of the sudden other banks are reporting troubles, for example.

 

[SC Maintenance]

The obvious question with SVB is where were the Fed bank examiners, and how come they did not catch this?

The treasury is supposed to be the ones that regulate banks.

The FDIC is involved in regulating certain smaller banks

The Fed doesn't regulate but they run stress tests and other funding concerns on banks with over $250B - which SVB was not.

And there is your problem - when everyone is in charge, no one is in charge.

 

[JeffKeryk]

Remember, SVB was squeezed by the Internet frenzy fueled $42B withdrawls. Their assets were (and are) OK in the long term; likely profitable. Just a liquidity mis-management that crippled the short/near term banking operations. That's why another bank could have absorbed SVB.
Now the reasons for the mis-management are many, and another story.

 

[The Critic]

The more I hear about SVB the more I am convinced that this was a very poorly run operation that couldn’t even be called a bank. People were hired for representation. Lots of favors were pulled including some big names.

I guess things are really different down there.

I will say that most of the start-up community would not be here today without SVB. What alternative option do you propose?

 

[PimTac]

I will say that most of the start-up community would not be here today without SVB. What alternative option do you propose?

The better way would be to act like a bank instead of the direction they went in.

Back in 2008 WAMU gave the dream of home ownership to anyone that breathed. That didn’t work out well.


Banks have to be responsible. Political donations and favors, donations to the latest causes, and hiring people that are not experienced in banking and finance but meet other standards is not responsible.

 

[The Critic]

The better way would be to act like a bank instead of the direction they went in.

Back in 2008 WAMU gave the dream of home ownership to anyone that breathed. That didn’t work out well.


Banks have to be responsible. Political donations and favors, donations to the latest causes, and hiring people that are not experienced in banking and finance but meet other standards is not responsible.

If you are suggesting that all of their actions in the marketplace were completely irresponsible, I think that is a misguided view. They certainly had some questionable risk management practices, but it is unlikely that they are the only bank that partook in such behaviors.

 

[PimTac]

If you are suggesting that all of their actions in the marketplace were completely irresponsible, I think that is a misguided view. They certainly had some questionable risk management practices, but it is unlikely that they are the only bank that partook in such behaviors.

but it is unlikely that they are the only bank that partook in such behaviors.

And that is a problem not just with them. Time will tell how this all plays out.