America May Face Wave Of Bank Runs, Failures Without SVB Backstop

The path forward following the Silicon Valley Bank fiasco looks pretty binary. One of two things will probably happen this week. I expect markets will have a pretty good idea about which is more likely by late Sunday evening, so I won't spend too much time detailing the alternative realities, but I did want to present the juxtaposition. In one reality, the US government either i) finds a buyer for SVB (the commercial bank part of it), ii) facilitates the sale of its uninsured deposits or the p

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8 thoughts on “America May Face Wave Of Bank Runs, Failures Without SVB Backstop

  1. No contagion huh? I loved the “experts” during the week saying this was a one off. And that the Fed needs to go 50. The Fed needs to stop qt and raising short rates aggressively. It does not mean they can’t raise rates. They need to step back and slow down. And they need to find a buyer for the commercial bank.

  2. I suppose the VC community publishing their letter of support is intended to help with a quick sale of SVB, but it sure sounds like an embarrassed guilty response to me. In my mind, the VC community has lost some credibility here, if not calling their integrity into question. What they did was akin to taking all their kids to front row seats at the theatre – and then yelling “fire” while they watched from the lobby and texted the kids to start running. Maybe SV needs some new VCs rather than new banks.

  3. Soros and GBP

    CDS (07/08)

    Meme stocks – a run on the shorts

    SVB and bank runs

    Innovation, dotcom, crypto etc etc Pump it up to give it to the greedy, the ignorant.

    It is all trying to crack something and if you can bingo – big returns.

    Now we get the pile on once again.

    Basically all the same.

    Once again this is not healthy for the real economy. The GFC destroyed trillions of GDP. THe latest debacle and the unwind will destroy trillions. Free money, tighten fast, “markets” that may not actually be markets. Fed creates the monster then slays it taking many innocents along the way.

    We never learn………………………………………. Something has to change…………………………. someday………………………………….

  4. This may have been covered extensively in another post, I’m behind on my reading….

    It strikes me that some senior management teams of banks across the country may never have run a bank during a high interest rate environment. Sure, they’re old enough to remember high rates, but they weren’t making multi billion dollar decisions in the C-suite 20ish years ago.

    How many other banks are in similar positions?

    1. not just bankers. from what i can observe there are few investors and or money managers that remember remember anything earlier than the dot com bust. more importantly than that many individuals and financial institutions were coaxed into stocks by their inability achieve returns in a zero interest rate environment.

  5. Surprise, surprise but looks like the Fed is planning to make depositors whole and stem any contagion. I bet we’ll have a big rally this week as the market takes advantage of the backstop and the likelihood that the SVB drama will cause the Fed to reconsider how aggressive they are with rate hikes.

  6. I hear you OldSkool. Same as it ever was? Maybe not. The Fed can’t be done right? Still too much money sloshing around. For real. This is their chance to show they mean business on inflation front to US and the world. Let some big dogs and regular people lose some money, lots of sleep, and all kinds of people be scared shi#*^ess a little while, while the USD is still king and our military is still tough as nails. Maybe investing will be a thing again.
    Or save the bank and all involved and kick the can on down the road, keeping the lights on at the casino.
    Like it never happened. Except that it did.

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