‘Stay Calm,’ It’s Just A Bank Run
"Stay calm."
That was Silicon Valley Bank CEO Greg Becker's exhortation to VCs during a call on Thursday, when the lender's shares plummeted some 60% amid what looked like the beginnings of an old fashioned bank run.
Peter Thiel and other high-profile VCs had suggested their portfolio companies pull money from the bank out of an abundance of caution after a "mid-quarter update" found SVB announcing the sale of its AFS book and unveiling a $2.25 billion capital raise, most of which is common st
Where’s George Bailey when you need him?
If a business is poorly run then we often hear “let the business go under and let competition and merit decide”.
If a bank is poorly run (in this case it seems way too many eggs were in the long term assets and they didn’t hedge/change as interest rates were going up fast) then we hear “save the bankers, they’re a societal need!”
What I suspect is that the hangover from 2021’s pandemic excesses might have been rooted in a number of startups, so just like anyone over-concentrated in crypto (Silverlake!) there’s over-concentration in risk, so should the public bail out the private risk takers?
I know it has been 50 years since we had full employment, but we all need to adjust our mental reflex….no….bailing…out….anyone.
Especially not bankers and Silicon Valley! These guys can redeploy in a nanosecond!
With a bank the “private risk takers” are the depositors. (FDIC doesn’t cover corporate depositors like Peter T’s clients, btw.) The comment from Mr. Tan was quite insightful. First time I’ve seen it in print. All banks actually are dead if anything moves. Sometimes we don’t notice because the dead ones get bought, though not always to everyone’s benefit. Unfortunately, all my cash is not covered by the FDIC so I’m among those who rather not let the market blow up its own system.
Sounds like the government needs to take this thing over and force it to pay all of its profits in perpetuity without ever being able to pay back the original loan aka Fannie Mae.
The situation seems to be deteriorating rapidly, not just for SBV but for hopes of a soft landing and perhaps even for the likelihood the Fed can stay higher for longer.
It sure does. Is this going to spread? That is the big question.
Jay just joined the Bernanke club………………………………….
This is what happens when you jam on the brakes.
Wait until the full force of the hikes hit the economy.
RIP SVB
This is what happens when too much money is sloshing around. Most likely won’t be the last of banks wearing no underwear when the tide goes out. Same as it ever was; eventually bailouts will happen because we wouldn’t want to really look at the problem and maybe try to fix it. Failures would create a lot of havoc for sure but it would also reward good operators. Down the road that would be a great start and would also let main street know there was a little more parity in life. Win-win-win