The Fed Had Already Spotted Big Problems at SVB Before Its Collapse (smh.com.au) 150
And starting in 2021 — long before the run on Silicon Valley Bank — the Federal Reserve had "repeatedly warned the bank that it had problems," reports the New York Times:
In 2021, a Fed review of the growing bank found serious weaknesses in how it was handling key risks. Supervisors at the Federal Reserve Bank of San Francisco, which oversaw Silicon Valley Bank, issued six citations. Those warnings, known as "matters requiring attention" and "matters requiring immediate attention," flagged that the firm was doing a bad job of ensuring that it would have enough easy-to-tap cash on hand in the event of trouble.
But the bank did not fix its vulnerabilities. By July 2022, Silicon Valley Bank was in a full supervisory review — getting a more careful look — and was ultimately rated deficient for governance and controls. It was placed under a set of restrictions that prevented it from growing through acquisitions. Last autumn, staff members from the San Francisco Fed met with senior leaders at the firm to talk about their ability to gain access to enough cash in a crisis and possible exposure to losses as interest rates rose.
It became clear to the Fed that the firm was using bad models to determine how its business would fare as the central bank raised rates: Its leaders were assuming that higher interest revenue would substantially help their financial situation as rates went up, but that was out of step with reality. y early 2023, Silicon Valley Bank was in what the Fed calls a "horizontal review," an assessment meant to gauge the strength of risk management. That checkup identified additional deficiencies — but at that point, the bank's days were numbered. In early March, it faced a run and failed within a matter of days....
The picture that is emerging is one of a bank whose leaders failed to plan for a realistic future and neglected looming financial and operational problems, even as they were raised by Fed supervisors. For instance, according to a person familiar with the matter, executives at the firm were told of cybersecurity problems both by internal employees and by the Fed — but ignored the concerns.
The Federal Reserve Bank system has 12 distircts, and the one overseeing California had a board of directors which included SVB's CEO Greg Becker, the article points out. "While board members do not play a role in bank supervision, the optics of the situation are bad."
But the bank did not fix its vulnerabilities. By July 2022, Silicon Valley Bank was in a full supervisory review — getting a more careful look — and was ultimately rated deficient for governance and controls. It was placed under a set of restrictions that prevented it from growing through acquisitions. Last autumn, staff members from the San Francisco Fed met with senior leaders at the firm to talk about their ability to gain access to enough cash in a crisis and possible exposure to losses as interest rates rose.
It became clear to the Fed that the firm was using bad models to determine how its business would fare as the central bank raised rates: Its leaders were assuming that higher interest revenue would substantially help their financial situation as rates went up, but that was out of step with reality. y early 2023, Silicon Valley Bank was in what the Fed calls a "horizontal review," an assessment meant to gauge the strength of risk management. That checkup identified additional deficiencies — but at that point, the bank's days were numbered. In early March, it faced a run and failed within a matter of days....
The picture that is emerging is one of a bank whose leaders failed to plan for a realistic future and neglected looming financial and operational problems, even as they were raised by Fed supervisors. For instance, according to a person familiar with the matter, executives at the firm were told of cybersecurity problems both by internal employees and by the Fed — but ignored the concerns.
The Federal Reserve Bank system has 12 distircts, and the one overseeing California had a board of directors which included SVB's CEO Greg Becker, the article points out. "While board members do not play a role in bank supervision, the optics of the situation are bad."
Credit where credit is due BUT (Score:5, Insightful)
The good news from this story is that this didn't leak; despite these concerns being raised, they didn't get out into the media, which would have killed the bank immediately.
But, of course, the problem this reveals is that the watchdog barked and nothing happened. This is BAD. This sort of misbehaviour needs to have serious consequences for the executives responsible (think prison sentences and massive fines).
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Re:Credit where credit is due BUT (Score:5, Insightful)
Banks get MRA's from regulators all the time. It's part of a continuous audit process. However, to get that many in such a short period of time and then not have actionable plans in place to cure the deficiencies is not common at all. At many banks, having a "rap sheet" like that will trigger cuts to the bonus pool for leadership and/or disciplinary action against the people responsible. The fact that none of that occurred (at least to my knowledge), shows an epic miss in how the bank was governed. The relevant C suite folks as well as the members of the board should be held accountable (fines and censure at a minimum) for the lack of oversight. Those clowns are probably on a number of other boards. Hopefully someone is looking at those other firms for evidence of similar shenanigans.
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However, to get that many in such a short period of time and then not have actionable plans in place to cure the deficiencies is not common at all.
Actually it may have had a plan, but not actioned in fast enough. In a reply I made to someone else pointing out that all the CEO of relevance (HR and marketing are not relevant) were white males (replying to the usual woke caused the failure BS), and pointing out the 1 female of relevance had only been in the position since January, someone pointed out that the role of Chief Risk Manager at the bank had only been created in 2021.
That said it doesn't bode well that they churned through two CxOs in that time
Re: Credit where credit is due BUT (Score:5, Interesting)
I been wondering where this was hiding. Even thou the bank didn't need to do stress testing and scenario testing, the Fed does a TON of it every time they consider rate changes. They do it to almost ALL the banks, no matter the size. It's how they partially determine who much to raise or lower the rate per quarter. If they raised the rate 2% in any quarter... it will easily kill off numerous banks around the world!
It's not unusual to get these statements from the Fed; they put everyone against the most stringent rule sets. Even getting this many isn't abnormal... especially for banks not under full regs.
But very concerning that once the reviewes showed horrible planning for the future, not enough restrictions were put in place. The Fed should have really pushed the bank to divest its customer base a bit to other banks... spread the risk to hold up the confidence and limit the damage, if not the risk, of a bank run.
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The Fed should have really pushed the bank to divest its customer base a bit to other banks... spread the risk to hold up the confidence and limit the damage, if not the risk, of a bank run.
Not sure that's a viable approach, because it would show anyone who was watching that the bank being told to divest its customer base was not a secure place for deposits, thus triggering the bank run one wants to avoid.
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Re: Credit where credit is due BUT (Score:2)
Yes, that can still happen but far less of a chance. When you sell the depositor account to another, you also transfer the backing and reserves for those accounts. The point isn't to trade risk levels but to spread it out and mix it with less risk.
That new owner can be healthy enough to ride out the underlying security maturity, or may have other securities to sell sooner if needed. That is the problem here, the securities needed to be prematurely sold... if they could be sold on the original schedule, thi
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When you bribe enough politicians to lower the standards, you can get away with incompetent management and pay yourself a big "bonus" on the way out the door.
Re:Credit where credit is due BUT (Score:4, Interesting)
think prison sentences
I think people forget that we have banking regulations. Because some "unelected federal bureaucracy" (or whatever some here on Slashdot like to call them), they get a chance to settle out of court and avoid their one strike. With regulations, we can only toss someone into jail if they violate it AND are found guilty in a court of law at least twice. Now, anything that any of these regulatory agencies really wants to put on the fast track for criminal prosecution, that has to be referred to the Department of Justice. The DOJ would then have to begin their own investigation into the matter and offer any recommendation and/or file to convene a grand jury. There is a catch in this. Sending it to the DOJ means that everything is stuck, that would mean all that money in the bank was stuck until the DOJ could determine how to handle it. Now maybe they tell the FDIC to deal and document, if it's something the DOJ hasn't done before, they have to ask the judge "mother may I?" And that can only happen after a grand jury finds a commission of crime, which all of that can only happen at the pre-scheduled calendar pace unless the DOJ files an emergency appeal. Which that's got a whole process in of itself.
The reason you don't see a lot of people instantly going to jail is because a lot of these large complex systems do not fall under law but regulatory process. Regulatory process isn't law, so there is a very long process to go through before a regulatory violation can turn into a criminal violation. Usually, the public doesn't want to sit on the thing for a decade or in this case, there's no way anyone could sit on this for longer than a week.
If you want harsher penalties and people going to jail. You can squarely blame Congress for the way they have written the law that grants the regulatory authority rather than outline actual criminal action. However, seeing how we're doing the whole EPA v West Virginia thing, if you want Congress to get serious about this, expect a few thousand pages of new law needing to be written. Because with the current Supreme Court, they've taken the whole major questions doctrine and basically indicated that "if Congress didn't explicitly say ABC, then ABD cannot be taken to mean ABC". That's the corner we've apparently wanted to paint ourselves into. If we want to address everything, we're going to need thousands upon thousands of new laws to move regulatory authority into statue, because someone wanted to goad SCOTUS into "the EPA's mandate is too broad!" I mean, look at the fallout from the EPA v WV case. Congress twenty-six days later added 300+ pages of new laws into the Inflation Reduction Act of 2022 because SCOTUS said, "the EPA's mandate is too broad". And the big question that took 300 pages to address was "is CO2 a thing the EPA can regulate?" So yes, we've got hundreds of new laws that go insanely out of their way to tell everyone that yes the EPA can indeed regulate CO2 and a couple of other gases for tens of thousands of industries. So yeah, you want insta go to jail for being a dumb banker and taking stupid risks? Easily will take tens of thousands of new laws to cover every aspect enough to where someone doesn't squirm their way out with the whole "you're being too vague" SCOTUS we've got right now.
Not the only bank in the poodoo (Score:2)
Re: Credit where credit is due BUT (Score:2)
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Interesting comment; thank you (Score:2)
Raising the question: when does culpable inaction come to be criminal? Or did lots of the executives have short selling positions so they have profited massively from its crash?
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Re: Credit where credit is due BUT (Score:3, Informative)
It's called a "bank run", a lot of people got out. That is why the take over happened... Not the other way around.
Re: Credit where credit is due BUT (Score:2)
Perhaps by checking the balance sheet.
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And other companies got the other $41B. What's your point ?
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They're not all bad. Some of them just jump over plants every now and then.
But could do nothing (Score:5, Informative)
I donâ(TM)t think this failure came as any surprise. The execs were selling stock, at least four million in the two weeks prior. I suspect that general knowledge of the weakness of the bank is what caused the bank run. The official story is that fake news caused a panic and the bank was an innocent victim. But that appears not to be the case.
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Or, rather, taxpayers are paying the price. Again.
Re: But could do nothing (Score:3, Insightful)
Nope, relaxing of some of Frank-Dodd not relevant, you can look up Congressman Frank's NPR interview where he states would not have prevented SVB collapse. it's a meme liberal news media spew for Trump hate points
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He really just tried to blame crypto.
Re: But could do nothing (Score:4, Informative)
That is what he said. And what experts say.
"
----- USA Today ---
The changes in Dodd-Frank did not cause the failure of the banks, Thomas Hoenig, a distinguished senior fellow at the Mercatus Center at George Mason University and former president of the Federal Reserve Bank of Kansas told USA TODAY.
"The amendments were a bipartisan action to ease some of the burden on smaller regional banks," says Hoenig. "There was nothing in those changes that prevented the Fed Board of Governors from examining this bank, or questioning its growth rate, or criticizing its concentrations."
The bankâ(TM)s management was incompetent and sales-oriented, he says.
"Nothing kept the regulators from seeing this, certainly not the changes to Dodd-Frank," says Hoenig. "The issue that needs focus is that the industry is not over-capitalized. Thatâ(TM)s where the critics need to focus attention." -- USA Today
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"FRANK: No, I disagree. I didn't like that whole bill because there were parts of it in the housing discrimination and the like. But, no, I don't think there is any sign that the rollback caused the problem in the first place. The regulator who took the lead in closing Signature Bank was the financial regulator appointed for the state of New York. Their authority was in no way affected by the 2018 inc
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Retired Congressman Frank stated in that interview that the repeal would not have prevented the collapse of Signature Bank, which also recently failed and he had served on its board. It may or may not be true that the same could be said about SVB, but Congressman Frank never commented on that directly. In fact, SVB never came up once during that interview (despite the fact that it's mentioned in the headline).
A lot of people are cla
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If he does think it would have helped, he must also expect that even saying that about SVB but not Signature would blow back in his face as hypocrisy and hurt the cause more than it helps. Or he really has sold out. Or maybe he doesn't think the federal level regulators would have found anything in time and Dodd-Frank depends on the states more than anyone wants to say.
He was my rep.
Re:But could do nothing (Score:4, Insightful)
The limits aren't really the issue. There was clearly a systemic problem in the way the firm managed risk and how it hedged its portfolio against fluctuating interest rates. It's classic poor governance rather than the result of a single rule change.
Bond math isn't rocket science.
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The execs were selling stock, at least four million in the two weeks prior.
To raise cash to cover their losses on devalued assets.
Re:But could do nothing (Score:4, Informative)
The 2018 change to the threshold for a "systematically important financial institution" (SIFI) does mean that SVB was not automatically covered by the regulations for SIFIs -- but regulators could still [go.com] apply those rules if they chose to. And others say [cnn.com] the rule change wouldn't have mattered for SVB (search for "Richardson").
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Re: But could do nothing (Score:5, Insightful)
For anyone thinking the execs did insider trading or anything illegal or even immoral... they didn't.
The bank financial statements were pretty clear that rising interest rates were stressing the bank. Before the financials with material shortfall statement, people already knew that deposits and reserves were dwindling... you can see it in the quarterly statements.
So as long as the execs didn't sell before the financial disclosure, they are fine. Normally you don't keep that disclosure so dagger like. It wasn't a large amount, but you would have still seen a "outlook good in procuring funding; waiting for ink to dry" type of accompaniment. Lacking that, enough people lost confidence to get a bank run rolling.
The Execs clearly lost it too and cut their losses before they sunk with the ship. For any Exec who sold before the statement release, yeah, the Fed, Bankruptcy Court, & SEC will easily claw that back for reparations.
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Except that the SEC isn't enforcing anything below massive thresholds, and hasn't been since before the dotcom crash. They are one of the means by which such insider information is leaked to other major stock buyers, not the means by which such limits are enforced.
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Perhaps the government should also start a TBTF (Too Big To Fail) insurance to which all TBTF companies are expected to pay premiums for future bailouts, in addition to being subject to stricter regulations. Save the taxpayers
Apparently too "friendly" regulation (Score:2)
Thew regulator should have been able to save the bank, they knew early enough and were already involved. That this was not enough indicates the regulator does not have enough bite. This usually is a problem caused by stupid politicians.
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It's not the regulator. It's a massive internal failure due to ideology. They didn't even have a risk assessment manager for 3/4 of 2022. Because the person responsible for hiring a replacement was focusing on promoting "Diversity, Inclusion, Equity" withing the company instead.
[citation needed]
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Pretty much any report on the facts of this bank's failure at this point. You can pick your choice of major news outlet from google.
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Except that regulator did its job. It looked at, found and pointed out to the bank that its risk assessment was not done as industry best practices dictate. When bank failed to correct the problem within reasonable period of time (notably, this was a very rapidly evolving problem, their risk manager was supposedly fired in April 2022, which is what caused the delay in reacting to regulator's instructions) and started failing as a result, bank was taken over by the insurer before it took out most of the acco
Re: Apparently too "friendly" regulation (Score:2)
No, these were not "effective regulations". The regulator reviewed the bank and noted the deficiencies... this is normal and not a "regulation". Because they have no teeth. The teeth here were the required financial disclosures... which are nice but real regs ensure a severely mitigated blow or avoidance.
If this was a larger bank like Chase, these findings would be found internally and fixed before an external got wind of it. Because having material findings like this has automatic repercussions in the
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Wait, you think that reviewing bank's financials is not regulation but "normal"?
Have you ever heard of the concept of "bank secrecy"? There is NOTHING "normal" about reviewing internal accounting of a bank. It's in fact a highly abnormal, highly exceptional process that requires a tremendous amounts of safeguards to maintain bank secrecy.
Re: Apparently too "friendly" regulation (Score:2)
Yes, it's normal, happens all the time. I can bet you that pretty much every bank in the US... it's happening every day of the year.
You think companies just get into million and billion dollar partnerships and loans without standardized attestation statements? You think the smaller banks don't provide similar statements as the ones required of bigger ones so that customers can make an informed comparison?
Other than NDAed auditors, no one else needs to comb through the secret sauce of the bank. Once the au
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Your entire post is "regulation is normal".
And yet your previous post's key point was "this is normal and not a "regulation"".
Square this circle for me.
Re: Apparently too "friendly" regulation (Score:2)
Let me simplify it:
Regulators do more than Regulate. They can just attest/review. It's actually something they do more of. It's not unusual for banks to have more stringent internal policies than the legal regulations... because they don't want to leave any doubt or walk the line...
Reviews != Regulation/Regulated
Attestation != Regulation/Regulated
Reviews per standards != Regulations/Regulated
Findings != Regulations/Regulated
Regulations != Effective Regulations
Maybe unintended, but you basically said Revie
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You have no secrecy against an auditor (within the audit scope). An auditor is under NDA, but any questions you do not answer are red flags and get escalated right away.
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Bingo. It's all regulation, for everyone. Nothing about this is "normal", unless you classify severe regulatory environment as "normal", in which case entire previous argument is a hell of a malicious one.
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You seem to be completely ignorant as to the role of regulation and audit. Hence you claim complete nonsense. How embarrassing.
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Except that of course, I wasn't addressing some general complaint about regulation, but a specific statement that makes no sense in context. Namely:
>The regulator reviewed the bank and noted the deficiencies... this is normal and not a "regulation"
But you can certainly tear my statement out of context and make it look like an ignorant statement. Just like I am now pointing out that you appear to be ignorant of context at which my complaint was aimed, and making wide sweeping and utterly ignorant assumpti
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Well, I think you need to learn to read. My statement you responded to was "You have no secrecy against an auditor (within the audit scope). An auditor is under NDA, but any questions you do not answer are red flags and get escalated right away." which is literal truth and not in any way special in a regulated environment.
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Banking basics for dummies: In general, there are two kinds of bonds that banks hold on their balance sheet that must be registered differently. First is liquid assets, and those are available for sale immediately. These have one risk calculus and hedging requirement set. Other is "held to maturity", which bank intends to hold until they're due and these have completely different risk calculus and hedging requirement set.
SVB held those ~1% bonds as "held to maturity". That was the problem, because they didn
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I guess we found another person who has "alternative ways of knowing" and therefore believes that ~1% interest rate bonds that made the massive part of SVB's investment portfolio in time of rapidly rising inflation are a great investment. And those pointing out the obvious thing that every other bank does that you absolutely hedge against inflation risk even when you don't invest in such a fundamentally idiotic way as a bank...
That supposedly makes me a deranged halfwit. Somehow. I guess that also requires
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You believe they were so focused on being woke that they made bad investments. That's pitiful of you to think. No, they were so focused on getting their next stock cashout that they ran the ship into the ground.
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No, I believe that their actions in hiring were about wokeness, and it was specifically lack of risk management head for 3/4 of critical year that led to the ultimate collapse. But their general financial illiteracy seems to be more of a "we are superior people, we know what's best both for us and for you" attitude that permeates entirety of Silicon Valley and wokeness is just one expression of it.
For example "you totally should put all or at least most of your accounts into this same bank because it's a sp
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You don't need inside information. It's all over the press. You merely need to go and read the news cycle focusing on factual information rather than opinion pieces. Or if you need to go for opinion pieces, go for non-US investment advisors with no dog in the fight, political or economical.
SVB had a problem that it had massive inflows of cash from its clients during the early and mid stages of the pandemic. This is because its clients are mostly SV startups and reasonably established IT companies that were
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Re:Apparently too "friendly" regulation (Score:5, Interesting)
> blame this on the latest culture-war fad
It actually was the lack of diversity that killed them, just not of the Woke kind:
"SVB also violated the second tenet of sound banking: attracting a broad mix of customers. He points out that SVB had an extremely small proportion of retail clients to balance all the Silicon Valley startups and their wealthy founders."
The economist who won the Nobel for his work on bank runs breaks down SVB's collapse -- and his fears over what's next
https://www.yahoo.com/lifestyl... [yahoo.com]
Re: Narrow range of hosts (Score:3)
"SVB also violated the second tenet of sound banking: attracting a broad mix of customers. He points out that SVB had an extremely small proportion of retail clients to balance all the Silicon Valley startups and their wealthy founders."
Exactly this--my credit union's president said the exact same thing, and I've seen it echoed across other credit unions & a statement from the NCUA (credit union's version of FDIC). You can read it for yourself here:
https://www.arizonafinancial.o... [arizonafinancial.org]
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They gave $74 milllion to to Black Lives Matter. Tell me how that worked out for any one in long run?
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Tucker Carlson lied to you.
https://www.vanityfair.com/new... [vanityfair.com]
Also, for scale: withdrawals from the bank run on SVB totaled about $42 billion.
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That is cool link. I can post dozens that say they did, but that would get us no where.
You are correct that a 74M dollar loan is just a drop in the bucket. What is shows is a history of ill responsible lending.
Re: Apparently too "friendly" regulation (Score:3)
Sleepy retards with tired drivel are the new Rickroll.
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I mean head of risk management only wasn't on staff from April 2022 to early 2023. You can pretend really hard as you did in the post you linked that this is somehow not relevant that SVB implemented massive policies against white heterosexuals, so white heterosexual head of risk management gets the fuck out from that hostile work environment.
And turns out that unicorns aren't real, and neither are skilled risk management heads that are also extremely sexually publicly perverted dark skinned women. So it takes bank nine months before it breaks and hires someone competent even though they aren't open about how perverse they are in the bedroom and have a positively hitlerian skin color. Horrible. Such a step backwards for diversity at the company.
Of course at that point, it was far too late to set up a proper hedge against inflation risk, and bank crashed within two months. But we can't blame wokeness for this. Wokeness did nothing wrong! We have alternative ways of knowing telling us this!
There are two possibilities here. You are either a really lousy troll or, if you actually believe that horse shit, you are dumber than a rock.
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There are two possibilities here. You are either a really lousy troll or, if you actually believe that horse shit, you are dumber than a rock.
You forgot the third possibility; that Luckyo actually believes his bullshit, is dumber than a rock, and also a really lousy troll.
Frankly, I think that's closer to reality.
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It's genuinely funny looking at people who clearly know nothing about what happened at SVB look at someone giving them the basic explanation of facts of what happened and likely motivations behind it, and they can't believe it.
Because surely no one would be so fucking stupid.
Sad part is, SVB leadership was that fucking stupid. That's why bank went under. And leadership mostly matched the clientele. Many of the bank's clients held huge sums in the bank, with many having this as their sole bank. So it's not j
Key takeaway (Score:5, Insightful)
The key takeaway here is that the government had known for nine months that the bank was at risk of failure, and could not, or did not take the steps necessary to prevent collapse.
This does not restore my confidence in either the government or the banking system. What good does it do us for the government to know that a bank is about too fail if they can't or won't actually do anything about it?
Change how you vote (Score:5, Insightful)
One party is consistently in favor of deregulation, and consistently passes laws to that effect. Stop acting like there isn't a difference, and vote in primary elections for the Democratic party so you're not voting for Republicans with a "D" next to their name.
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Problem is, it's really hard to put an "I did that!" sticker with Trump's face on a failed bank. Plus, since this bank primarily catered to corporate customers, its failure mostly just contributes to an overall feeling of malaise about the economy in the eyes of the general public. People notice things like higher grocery, rent, and utility prices; a bank failing out in California is just a headline you scroll past to get to the cat videos.
You already know who'll be blamed for that (and I'm not referring
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we had the laws in place to stop this prior to 2018...
No we didn't. We had other laws in place, but not ones that would have prevented precisely this from happening. This has been debunked over and over again. Yeah SVB were dicks for lobbying to have those laws rescinded, but they didn't fail as a result of what the laws were covering.
Re:You can't reason with NPCs (Score:2)
You are wasting your time, just like I was wasting my time a week ago [slashdot.org]. Just like the other NPCs, he got his pre-programmed speech the day after the bank failed, and his parser doesn't understand any questions.
It just doesn't matter that this theory was debunked by Tuesday [cnn.com]. It isn't a reasoned opinion that he can be reasoned out of. He'll just keep repeating it until the next NPC update gives him new lines.
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I'm glad we're in agreement (Score:3)
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The key takeaway here is that the government had known for nine months that the bank was at risk of failure, and could not, or did not take the steps necessary to prevent collapse.
Why should the government step in? Capitalism allows for failure of non-profitable business - I'm sure the IRS could point to thousands of failing businesses right now that won't have any government intervention to save them.
This does not restore my confidence in either the government or the banking system. What good does it do us for the government to know that a bank is about too fail if they can't or won't actually do anything about it?
You mean because the banks themselves lobbied to have their government regulations reduced, so the government no longer needs to intervene if they're going to fail? Sounds like an own goal to me.
The root of the problem is that your lawmakers allowed this deregulation in the first p
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The business did fail. The investors lost all. The CxOs and board are all out. Even the stock options sold recently can be clawed back if the government wants to.
Only the depositors are being made whole. The reason for that is to prevent a run on other banks in similar situations.
That's the price to pay for a partial reserve banking system.
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You are assuming that the goal is to protect the bank rather than to protect the depositors. Sure, the easiest way to protect the depositors would be to head off the bank failure in the first place, but if the bank investors insist on setting themselves on fire they will always find a way to do so. All you can do is get the depositors out of the way.
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We gutted regulations (Score:4, Insightful)
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Yes but the gutted regulations had nothing to do with SVB's failure since what SVB were doing was perfectly fine under previously regulations. SVB lobbied to have the regulations rescinded along with other banks largely in anticipation of future growth.
Just because you bought a gun one day, and die from a bullet wound the day after doesn't mean you used that particular gun to shoot yourself.
Basically (Score:2)
SVB Ticker showed it coming for a year (Score:2)
October 2021 the stock was at an all time high of ~$750/share. A year later (and 4 months before failure) it was about a third of that at ~$230/share. Compared to other large banks like Wells Fargo (which doubled in value) and its not hard to see SVB was in trouble. Now, that doesn't indicate it was about to fail, but banks don't lose 2/3 of their value in a year while others maintain size or even do better without some underlying issues.
Same red flags apply to US national debt (Score:2)
Economists have been saying for a long time that we "shouldn't be worried" about the US national debt. https://www.cnbc.com/2020/09/2... [cnbc.com] They say, among other things, that interest rates are low so borrowing is cheap, and they say that there is no safer creditor than the US government.
That's all true, until it isn't. When interest rates go up, borrowing costs go up for the government too. Those costs eat into the budgets of what the government really wants to spend money on. At some tipping point (as with
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I only have come across this: https://twitter.com/DC_Draino/... [twitter.com]
Impossible to assess causality though.
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Several stories ago the slashdot economists were convinced it was due to being “woke”.
Some people also blame natural disasters on gay people. [logotv.com] Hell, half the time I can't remember to put my clothes in the dryer, do you really think I have time to smite ya'll straight folks with hurricanes and shit? /s
Although, I think I'd find it pretty funny if, in a turnabout is fair play sort of way, The Satanic Temple put out a press release blaming the bank failure on... Republicans.
Yep - I'm sure. (Score:3, Interesting)
Several stories ago the slashdot economists were convinced it was due to being “woke”.
There was exactly 1 person on the board of SVB who had banking experience [nypost.com]. Kim Olson, the director of risk [svb.com] had banking experience, but was only hired in Jan 2023.
The 2022 proxy statement [nypost.com] showed proudly:
... 45% of its board are women, in addition to “other diversity” like “one black” member, “one LGQBT+” and “two veterans.”
The bank made several high profile marketing pushes that were directly about woke issues and how they were solving that problem, while at the same time the bank failed not because liabilities exceeded assets, but because it ran out of liquidity.
As an example of the previous, SVB donated $95 million to Black
Re: (Score:2)
Several stories ago the slashdot economists were convinced it was due to being “woke”.
There was exactly 1 person on the board of SVB who had banking experience [nypost.com]. Kim Olson, the director of risk [svb.com] had banking experience, but was only hired in Jan 2023.
The 2022 proxy statement [nypost.com] showed proudly:
... 45% of its board are women, in addition to “other diversity” like “one black” member, “one LGQBT+” and “two veterans.”
The bank made several high profile marketing pushes that were directly about woke issues and how they were solving that problem, while at the same time the bank failed not because liabilities exceeded assets, but because it ran out of liquidity.
As an example of the previous, SVB donated $95 million to Black Lives Matter, where an extra $95 million might have gotten them by their liquidity problem.
SVB bank lobbied congress to raise the stress test limit so that their bank wouldn't need to be stress tested.
You can claim that "Woke" wasn't the reason, but I think that's the apologist (for woke-ism) viewpoint.
The simplest explanation is that the bank was run by people with no real experience in banking, who felt that banking was going to be easy because hey - everyone else does it, and focused on woke issues they felt were important instead of conscientiously doing a good job at banking.
I see a lot of down-modding of these points, but no actual rebuttals. Interesting.
Re:Yep - I'm sure. (Score:4, Informative)
I see a lot of down-modding of these points, but no actual rebuttals. Interesting.
Because having a diverse workforce was not the reason why SVB failed, and it has become trendy lately (thanks, Reddit) to swing the banhammer rather than explain why someone is wrong.
Some people are laboring under the delusion that workforce diversity is somehow a new thing; it's not. Disney earned a perfect equality score for 14 consecutive years [thewaltdisneycompany.com]. During that time, their stock went from approximately $25.08 (Jan 27th '06), to $93.20 today. Apple has had a gay man in charge since Steve Jobs passed away. He took over in August '11, with Apple's stock price at approximately $13.46. It is $155 today.
Re: (Score:2)
You will hire diverse people naturally if they are qualified for the job.
Eh, it's kind of a catch-22, though, isn't it? Where do you find diverse people with that experience unless someone else has hired them? I have no dog in this fight, but you have to start somewhere.
On the other hand, do you want your whole team "diverse" but with no experience? That seems a little too extreme in the other direction. They should've struck a balance somewhere.
Re:Yep - I'm sure. (Score:5, Insightful)
Here's a rebuttle: The GP mixes board and executive team, doesn't understand the role of either, and thinks the irrelevant diverse people ran the bank instead of the all white males + Olsen and her white male predecessor who actually run the bank.
Wokeism is a talking point, one based on a lie and fuelled on by omission of the truth wherever possible. Oh also we should mod it down because that was yesterday's talking point, today's is that work from home killed the bank. God it's so hard to keep track of which political culture war is responsible for the bank failure today.
Re: (Score:2)
Wokeism is a talking point, one based on a lie and fuelled on by omission of the truth wherever possible. Oh also we should mod it down because that was yesterday's talking point, today's is that work from home killed the bank. God it's so hard to keep track of which political culture war is responsible for the bank failure today.
"Woke" has just become a word people use when they want to argue against something but cant without sounding like an utter cunt.
It's lost any meaning and has joined the ranks of "Political Correctness" and "SJW" as a sign the person using it is a moron and should just be ignored. Because they've both misused and overused "woke" in this manner, they've destroyed any impact the word ever had, same with PC and SJW. In fact they don't use those words any more as it just results in the listener rolling their eye
Re: (Score:2)
You can claim that "Woke" wasn't the reason, but I think that's the apologist (for woke-ism) viewpoint.
And yet your claim points to the board. The board has little impact in running a company, and even in TFS it's pointed out the board has little oversight of bank operations.
But then you also said Kim Olson was on the board. She wasn't. She was on the executive team. That's something very different and actually relevant to the day to day business. And on that executive team she sits along side 5 white males (and two females for irrelevant things such as marketing and HR), and she came onboard in January repl
Re: (Score:2)
The 2022 proxy statement [nypost.com] showed proudly
I'll bite here. The NYPost is known to be a right leaning (but not far right) news source. They are going to be biased. If we are going to have a conversation about the SVB board, let's focus on their lack of qualifications, not the narrative the media is trying to sell. Kudos to linking to the 2022 proxy, I'll offer a link to the 2023 proxy: https://d18rn0p25nwr6d.cloudfr... [cloudfront.net]. pg. 14 offers the diversity numbers of the board members. pg. 15 begins their bios. I'll focus on their bios.
Board member
Re: (Score:2)
"You can claim that "Woke" wasn't the reason, but I think that's the apologist (for woke-ism) viewpoint."
If they had promoted anti-Woke issues, e.g. donated that $95 million to groups like the Proud Boys instead of Black Lives Matter, would the bank have been in better shape? No. Therefore it was not the "woke-ism" that caused the bank failure, it was the incompetence.
Re: (Score:2)
The bank had liabilities that exceeded their non-tier 1 assets. That's why they got shut down. It wasn't a liquidity issue. For liquidity issues they could borrow from the fed. The issue was that they average duration of the bonds they owned was 5.7 years and their deposits were all demand-deposits rather than term deposits. That's horfiffic.
The board may
Re: (Score:3)
In fairness, it is quite clear that their priorities were not banking and at best they were asleep at the wheel.
I'm actually pleasantly surprised (Score:3)
Re: (Score:2)
How are those ~1% bonds doing on the market, oh gigachad sitting in the top story of his ivory tower?
Re: (Score:2)
They are generally issued at the completion of an audit. The onus is on the bank to respond to the MRA, publish a plan to cure the deficiency, and then follow through with fixing the issues with hard dates and milestones.
Re: (Score:2)
Well, you've got to point to which explicit laws there is evidence that they broke. I'll agree that their actions SHOULD have been illegal (not necessarily Greg Becker, as I don't know the names of any of the individuals), but this doesn't mean that that's the way the laws read. There are lots of things that should be legal and aren't, and also lots of things that should be illegal, and aren't. And often there actually is a law, but there's no way to get proof. (And, of course, sometimes there's a law,