He also conveniently left out the part where he voted for the 2018 deregulation that contributed to SVB’s failure.
Do you have evidence of that? Dems were a part of that legislative change. Its a convenient scapegoat but I haven’t read anything explaining how those changes actually caused SVB’s failure.
Frank of Dodd-Frank actively lobbied for that change. A Democrat. He was on the board of Signature Bank that just failed.
They should have known sooner and prevent the collapse. Things rarely happen overnight. MSN
One group of companies apparently can’t move their monies to bigger banks. Federally chartered banks are prohibited from doing business with the cannabis industry. They’re stuck.
They don’t have millions in any FDIC bank. A few states have set up state accounts, but for the most part they are a cash business. In Colorado, many have ATMs just outside the businesses. They can’t take credit cards. They often have to pay their employees in cash.
And they often get targeted by smash and grab thieves!
While I’m not a fan of either Democrats or Republicans, it’s very unlikely the new banking rules in 2018 would have passed, or even been up for a vote, if not for the fact that Republicans controlled the presidency and both houses of Congress.
“Over the past week, an observation by Matt Klein, a financial journalist, has gotten passed around quite a bit. “This was more a case of a ‘bank-run by idiots’ rather than a ‘bank run by idiots,’” he wrote, referring to the collapse of Silicon Valley Bank.
But why choose? Everyone involved in this looks terrible. Regulators did nothing, even though Silicon Valley Bank’s woes had been widely noticed. Bank managers failed at the basic work of hedging against the risk of interest rates rising. Midsize banks, including Silicon Valley Bank itself, successfully lobbied Congress and the Trump administration to be exempted from the regulations attached to too-big-to-fail banks. Venture capitalists sparked a needless panic that annihilated an institution central to their own industry. The Federal Reserve ignored inflation for too long, and the whiplash of its response has become a risk factor all its own.
I don’t think all these people — many of whom performed quite well before in crises and amid uncertainty — are, or suddenly became, idiots. Here’s a more generous interpretation: Change makes fools of us all, and we are living through an era of change. Three changes, in particular, are worth thinking about right now.”
I could be wrong, but do not think so…corps can open accounts at Treasury Direct or Fidelity and then simply by short term tbills…very simple to do and it definitely takes no level of sophistication to make a simple ladder with X maturing each week…
Individuals and corporates can both do this.
The regulators knew SVB was in trouble and they did……?
isn’t it the job of the Fed office in SF to be looking at teh local books?
And this was the only restriction? And what does a citation achieve? Are there penalties for non compliance?
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.
And this seems like a complete conflict of interest:
“Some of the concerns center on the fact that the bank’s chief executive, Greg Becker, sat on the Federal Reserve Bank of San Francisco’s board of directors until March 10. While board members do not play a role in bank supervision, the optics of the situation are bad.
“One of the most absurd aspects of the Silicon Valley bank failure is that its CEO was a director of the same body in charge of regulating it,” Senator Bernie Sanders, a Vermont independent, wrote on Twitter on Saturday, announcing that he would be “introducing a bill to end this conflict of interest by banning big bank CEOs from serving on Fed boards.””
Since we can’t change past events, it’s extremely important to learn from it with this - and the citations that led to nothing.
Anyone as excited as I am for Powell’s announcement today?
25bps? 50? WWPD?
Which banks offer more than 250K insurance?
This is what I meant in my earlier post that the accountants have been “managing” the interest rate risks at many of the banks.
These are the things accountants are expected to do…maximize asset valuations, think creatively about how they record transactions, etc… to the limits (and interpretations) of the rules/laws. I’m not talking about those who break the law/accounting rules, as the line is often (but not always) clear.
This is (partially) why we have some huge Fortune 500 companies paying zero income taxes each year. I worked in accounting/finance for a Fortune 100 company at the beginning of my career. The VP of Tax was among the most highly paid employees because he was brilliant at making sure the company legally maximized valuations and minimized taxes…he was constantly being courted by other firms. I don’t know about this company today, but for decades they paid NO federal corporate income tax.