FDIC shuts down Silicon Valley Bank, crash incoming? Update: 2nd bank, Signature Bank in NY closed

IIVI

IIVI

Superstar
Joined
Mar 11, 2022
Messages
15,636
Reputation
4,076
Daps
57,118
Reppin
Los Angeles
Good summary here:


Short term worst-case scenario for tech workers is that companies using SVB lose access to their funds and can't make payroll for a while.

Medium-term worst-case scenario for tech workers is that companies can't pay their rent, or cloud fees, or their power bills either. Those companies will vanish, and their employees become non-employees.

Long term worst-case scenario is that both the VCs and the companies permanently lose the funds and aren't able to recover it. That could lead to hundreds of companies closing and another massive wave of layoffs. The resulting crash would rival 2001.

For what it's worth, there's very little chance of ANY of these scnarios happening. The FDIC is moving fast on this one, and the odds are solid that SVB will simply be a subsidiary of JP Morgan (or some other big bank) by Monday morning. In spite of being overleveraged, SVB is still a very attractive takeover target because of its ties to the tech world, and it DOES still have considerable assets and deposits. It provides a great opportunity for a bigger player to move into the tech financing market, becoming the banking provider for VC's like Andreessen Horowitz. The odds of them going belly up and their deposits going POOF are almost zero. It'll be a long weekend, but I'd be shocked if this is still a problem next week.
Click to expand...

You are entirely correct that there are other options, which is why I said "worst-case scenario" for each of those. There are many other options, and a lot of things would have to go wrong for us to reach those outcomes.

The odds of the worst-case scenarios happening are not zero, but they aren't far away from it. SVB is a high-value asset. The FDIC will steer it into the hands of a bigger financial partner that will keep its accounts solvent. That's its purpose. To protect the assets of the account holders.

As I said, my money is on the whole thing being resolved by Monday, when the FDIC will announce that SVB is now a subsidiary of JP Morgan, Wells Fargo or Citigroup. They'll follow the same script they did with Washington Mutual and other failed banks.

As a yardstick, the FDIC seized control of Washington Mutual on a Thursday night. Control of its accounts was transferred to JP Morgan within 24 hours. This wont take long.

The only people who really lost out on the WaMu takeover were the stockholders (including me, unfortunately).
Click to expand...

Again, as with most things reddit and social media, double check the poster.

This poster here is an adult with 20+ years of experience as a software engineer and not some college kid hypothesizing about the economy or some loon babbling about an economic downfall of society.

You even got 13 year olds out there on these sites trying to "break it down" to sit at the adult table trying to feel important.

Seeing way too many people running with narratives they read online posted by 16-21 year olds who absolutely know crap about the world.
 
Last edited:
StretfordRed

StretfordRed

Afro-European
Joined
Feb 9, 2014
Messages
11,606
Reputation
-1,889
Daps
33,632
Crap, I didn’t even know SVBUK is also affected, I read they were ring fenced but the Bank of England are putting them into solvency on Sunday.

Got a few friends from there. But I’m not reaching out. I told them to dip out when they could but some people just like to stay comfortable.
 
B

bnew

Veteran
Joined
Nov 1, 2015
Messages
69,283
Reputation
10,627
Daps
187,213




bF3XfOc.png
 
itsyoung!!

itsyoung!!

Veteran
Bushed
Joined
May 1, 2012
Messages
38,914
Reputation
6,560
Daps
110,440
Reppin
Bay Area
sayyestothis said:
If it's joint that's 500k coverage. If it's joint with a beneficiary that's 750k fdic coverage. If it's in a separate llc that's a separate 250k coverage...

Lots of ways to structure deposit protection as it's by related individual persons per bank.
Click to expand...
ahh yes... companies with $500 million in the bank are micro managing 1000's of $250k accounts... are you fukking serious right now typing this non sense ?
 
sayyestothis

sayyestothis

Free the guys
Joined
Nov 3, 2013
Messages
6,677
Reputation
1,515
Daps
14,892
Reppin
Baltimore, MD "The Greatest City In America"
itsyoung!! said:
ahh yes... companies with $500 million in the bank are micro managing 1000's of $250k accounts... are you fukking serious right now typing this non sense ?
Click to expand...
Yeah I was just explaining something. Not really chiming in on if ppl were covered with millions breh so no im not serious.
 
6

69 others

Superstar
Joined
May 2, 2012
Messages
6,564
Reputation
786
Daps
24,379
Reppin
NULL
IIVI said:
A lot of people who went into tech demanding high salaries with very little formal education. It definitely flooded the market, asking for more and more money that nobody had.

I'd say that one study about people leaving their jobs every two years making 50% more than somebody who stays at their job for 10 years has plenty to do with this problem as well: cats kept jumping jobs for salary raises.

Now companies have to narrow the scope and be more selective with who they hire and who they pay big. This is why it's so vital to have your degree and any other relevant pieces of information. It's no different from other jobs.

I have a feeling the jobs left now and the higher-paying job listings will be for those with the degree filter first and foremost.

They definitely jumped in trying to get that shortcut, which is what lead to bootcamps which then people started to say screw bootcamps altogether and watched a few youtube videos thinking they can do the work.

This is all going to resort to a reset back to skilled documentation or those with lengthy work experience (those who have stuck with a company over two years) earning the big dollars once again imo.
Click to expand...

You have it backwards. Tech firms were paying higher and higher salaries and giving more perks as they competed for talent.

The only thing workers can demand is what employers are willing to pay.
 
You must log in or register to reply here.
Top