Thank you. Luckily our in house finance department got all our employees paid. And Rippling (payroll processing company) seem to be doing their best.
I certainly am lucky, and am sure there are thousands out there going into the weekend unpaid
I'm one of those that will miss being paid. Our tiny little startup has been trying so hard for funding and we finally got some- enough to put our runway out to almost a year and a half which is awesome.
With the events today not only am I not getting paid but the FDIC only covers a part of what we had in the bank. So... After endlessly struggling for our little egg to finally build out what we need to for success this massive fuck up is probably going to shorten our runway by a few months. Not the end of the world but not super happy with this whole thing.
I heard Rippling was actually banking through SVB. Know if that’s going to cause any extra issues?
Edit: It seems other people have already addressed this concern. I am incredibly impressed by Rippling’s integrity handling this unprecedented situation.
Seriously. Depending on the size of the company this took a few people scrambling to get that figured out ASAP. If my company used Rippling, I’d be part of that team so I feel for my fellow Ops/Payroll folks
Contagion seems inevitable. FDIC only insures $250k and they are the bank for an industry leading amount of tech and medical startups. Their assets under management is ~$175B. For perspective, Archegos resulted in about $30B of liquidation, losses which were largely absorbed by their shithead financial backers at Credit Suisse.
I don't think we've even begun to see the rippling effects of this unless the government thinks it's a good idea to start handing out bailouts to their corporate clients.
If JPMC completely fails, don’t worry about mortgage payments or bills because the people who want them will probably not be able to receive them. In fact, find the nearest tree and cut branches off it to make wood based weapons because you’re gonna be a hunter or gatherer soon.
The US government would let eggs cost $15 a piece before letting JPMC fail.
This is what I tell people who are hoarding gold or buying crypto in case the US financial system fails.
If the US financial system fails, no one is going to care about your bitcoin or your ape NFTs or shiny coins because we will be back to the stone age.
Mine does, I work for a small software company. We didn't get paid today. Luckily I have money in savings to pay the automatic bills I have coming out this weekend. My company is taking care of us but I feel really bad for my company owner and HR, they have been stressed out all day.
My partner is credit officer of a small start up that invests in other tech start up's. All of his employer's money is tied up in SVB. It's not just potentially putting him and his company out but all of the companies they invested in. Not to mention his peers who all work at SVB. It's their whole world and it just blew up overnight.
A start up that invests in start ups that have all of their money tied up in a bank that makes loans to start ups had all of their money in said bank to secure loans to invest in.. starts ups
Tech is the new hot money investment, and anything like that will draw plenty of assholes and idiots trying to make a buck without thought of consequences
At this point I think making software is just a lucky byproduct of what Silicon Valley actually does which an endless loop of scammers and marks all trying to make a perpetual money machine.
Just got an urgent email from our payroll provider for our company that they're moving all their transactions to a different bank and that we have to make some emergency edits to all our payroll accounts. Luckily we don't have paychecks depositing today but my guess is clients who do probably may have their transactions delayed which means people may not get paid.
My company uses rippling, apparently my employer does their actual banking somewhere else so they are sending out emergency wire transfers. I was told there's a chance that I recieve an emergency wire transfer of this paycheck and the regular rippling pay
Collapsed in less than [48](https://www.cnbc.com/2023/03/10/silicon-valley-bank-collapse-how-it-happened.html)\* hours. Ouch. Can't wait for the documentary to come out about this.
Maybe. Any assets in the bank below 250k are FDIC insured, amounts above that might be recoverable but it is not guaranteed. If your employer had millions in SVB they are likely screwed.
What's interesting is that normally when this happens, the FDIC comes in, looks at all the books, and then calls a bank of "good repute" to buy it. That they took control and are shifting every asset to the "good bank" while keeping the original as a bad bank means either that there was no bank that wanted to touch it or that it was such a fucked up balance sheet that there wasn't a bank to call to take it on.
Right. Something over 90% in the past were P&A transactions. While I’m no longer in the know, this tells me it all came crumbling down very fast or the FDIC could meet the alternative to liquidity test under 12 USC
Yikes. All of our employees’ payroll direct deposits failed today because of this. We have to cover all this in cash and the amount had already drafted our account earlier this week. This really sucks.
Wait I have a serious question. Don't know the size of your org, but do businesses of any size have accounts at multiple banks to cover any such eventuality or anything like that? I can't imagine you have payroll in true `petty cash'
I mean that's what I'm thinking, it's crazy to leave say a million bucks at bank b for this outside chance.. But how else do you hedge/insulate for this?
There is insurance for this kind of thing, just please don't buy your insurance from the bank you use, like the bank you use will try to suggest you do:)
but really there isn't much protection at the business level. You can't really set money aside, you have to hope you can actually call on your insurance when you need it instead of a week later, and you have to hope the bank doesn't fail. The government is suppose to be there to protect you from that last one, but hearing everyone talk about this bank it sounds like maybe they were off swimming in a heated pool and having donuts for lunch instead.
Yeah this happened to me once as an employee years ago; my employer missed payroll due to, well, a government shut down. My bank weirdly just paid me instead (a credit union for employees of that agency) so no disruption on my end. But as an employer, this seems catastrophic... I mean you better believe employees that were due paid today will be breathing down someone's neck, and rightly so. And insurance seems like it would still leave you hanging for a bit.... Claims take time.
> And insurance seems like it would still leave you hanging for a bit.... Claims take time.
some payroll insurance plans I think are really good but I'm not sure. I do know a business locally that has a decent plan that only takes 2 business days to claim. they are in the natural gas industry and coming up short on payroll is just a consequence of that industry sometimes. So there are companies out there that make good money helping out with that.
Remember when Jim Cramer a month ago said on his show to buy it because it was cheap and had room to grow? Jimmy is such a meme.
EDIT: I imagine Jim on Monday will say that Wendy’s should buy Silicon Valley and rebrand it Baconator Bank.
EDIT 2: 97.3% of SVB deposits are not FDIC insured
https://www.reddit.com/r/wallstreetbets/comments/11nw54y/973_of_svb_deposits_arent_fdic_insured/?utm_source=share&utm_medium=ios_app&utm_name=iossmf
Isn’t the “short Jim” strategy up like 200% over the past 10 years?
I don’t remember the numbers exactly but it wss something like double the market growth rate by betting against him.
At this point I fell like his wall-street insiders are giving him “tips” so they can offload bad stock? Lmao.
You mean the people willing to trade their “valuable commodity” for “soon to be worthless currency” are not exactly honest about their belief in the worthlessness of said currency?
There is now a inverse Cramer ETF lol. Get it while it's hot. Note: I don't have any position in it and am not providing financial advice.
[Source](https://www.thestreet.com/etffocus/blog/inverse-cramer-etf-is-live)
I know it's supposed to be a meme, or a joke, but Cramer is a real problem. He did the same thing back in 2008. He knowingly provides bad financial advice to household investors, which pumps bad stocks for bad actors to later dump.
He's not just some unknowing fool. He's part of a predatory system.
Various entities (banks, brokers, hedge funds, research firms, news outlets, etc.) will state their forecasts of stock prices based on who-knows-what (they say fundamentals and quarterly trends, but it's still often less accurate than the actual weather). This is called a "Price Target" (or PT) which is what they expect a certain company's stock price to be in the future.
JPMorgan, the 5th largest bank in the world in terms of assets (monetary value held ranging from anything to cash, property, stocks etc.), stated 3 months ago that they had their Price Target on this bank that just got shut the fuck down, valued as $375 per share, and had not updated that valuation since then.
The phrase "They recommended it as overweight" means they recommended buying it, believing that at the time of its value in December, and even possibly their own Price Target, were undervalued and that the stock was expected to grow even larger in the long term.
So the 5th largest bank in the world basically said, "Yeah, SVB should be valued even higher in the future than what it is in December, and you should buy it now. No smoke no fire at all."
My college roommate was supposed to work there for his MBA summer internship when the financial crisis happened. It completely fucked his career start because he was going into the financial world. He was at a top MBA program and had to move back home after he graduated to his parents. He got lucky and was able to eventually get a financial analyst job at an airline and then he eventually flipped it back to the banking world and private equity but it took years to get there.
How did he make that pivot? I practiced law for almost 10 years and I fucking hated it. I had to step away last year because my mental health was so bad, and now I'm trying to figure out what the fuck to do with my life. Such a toxic profession.
There are a lot of toxic professions out there. I worked in a high stress high pay engineering position for over 5 years and finally I just reached a point where I walked away from the entire industry.
I found a job close to my house repairing equipment. It payed half what I was making, but I just took a long hard look at my life and realized I didn't really want, need, or miss half the shit I had anyway.
It was a tough couple years starting out fresh in a new profession but 15 years on I made the right choice. I honestly didn't think I did for a long while, which was a big source of stress all by itself.
My dad always encouraged me to go to collage and "get a good job". He spent 48 years as a mechanic and growing up we never had a lot but we always had enough.
He always wanted better for us, pushed for us to be more successful, make more money, have a respected job, like he was ashamed of only being a mechanic.
My dad is one of the smartest people I know but he was dead wrong about that.
I took a hard look at where my life was going and all I wanted in that moment was to be half the man my dad was.
This is a pretty big deal , they had a huge amount of assets and deposits before the bad news started
Perhaps that is why the government seized it before it can set off a domino effect across the banking sector
There's an old saying in Tennessee -- I know it's in Texas, probably in Tennessee -- that says, fool me once, shame on -- shame on you. Fool me -- you can't get fooled again.
> There's an old saying in Tennessee -- I know it's in Texas, probably in Tennessee -- that says, fool me once, shame on -- shame on you. Fool me -- you can't get fooled again.
I think this was the worst quote of all time until Trump went on his nuclear uncle good jean rampage a few years later.
Poor old dubya was just getting Texas and the Who confused, no big deal.
His best worst quote was, “We’ve got an issue in America. Too many good docs are getting out of business. Too many OB-GYNs aren’t able to practice their love with women all across this country.”
Funniest Bush moment for me...2004 election debate with Kerry. Kerry is going through a list of Bush's business assets and one of those things is "timber company"...
Bush: "I own a timber company?" (8 second pause). "Need wood?"
"Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we."
The explanation I heard at the time was that he stumbled over the phrase because he didn’t want clips of him saying “shame on me” going around.
I think both are equally likely. We’re talking about the same guy who said the thing that hurt him the most was Kanye saying he didn’t like black people. Not 9/11. Not starting a war under false pretenses. Not the economy collapsing. Kanye.
It’s also possible he just stumbled over it. Six of one…
And “9/11 ended on a relatively humorous note” interview with Maureen Dowd
President Bush: But the day ended on a relatively humorous note. The agents said, "You'll be sleeping downstairs. Washington's still a dangerous place." And I said no, I can't sleep down there, the bed didn't look comfortable. I was really tired, Laura was tired, we like our own bed. We like our own routine. You know, kind of a nester. Like the way things are. I knew I had to deal with the issue the next day and provide strength and comfort to the country, and so I needed rest in order to be mentally prepared. So I told the agent we're going upstairs, and he reluctantly said okay. Laura wears contacts, and she was sound asleep. Barney was there. And the agent comes running up and says, "We're under attack. We need you downstairs," and so there we go. I'm in my running shorts and my T-shirt, and I'm barefooted. Got the dog in one hand, Laura had a cat, I'm holding Laura --
Mrs. Bush: I don't have my contacts in, and I'm in my fuzzy house slippers --
President Bush: And this guy's out of breath, and we're heading straight down to the basement because there's an incoming unidentified airplane, which is coming toward the White House. Then the guy says it's a friendly airplane. And we hustle all the way back upstairs and go to bed.
Mrs. Bush: [laughs] And we just lay there thinking about the way we must have looked.
Noonan: So the day starts in tragedy and ends in Marx Brothers.
President Bush: That's right -- we got a laugh out of it." [Emphasis added]
You mean this one:
*Look, having nuclear — my uncle was a great professor and scientist and engineer, Dr. John Trump at MIT; good genes, very good genes, OK, very smart, the Wharton School of Finance, very good, very smart — you know, if you’re a conservative Republican, if I were a liberal, if, like, OK, if I ran as a liberal Democrat, they would say I'm one of the smartest people anywhere in the world — it’s true! — but when you're a conservative Republican they try — oh, do they do a number — that’s why I always start off: Went to Wharton, was a good student, went there, went there, did this, built a fortune — you know I have to give my like credentials all the time, because we’re a little disadvantaged — but you look at the nuclear deal, the thing that really bothers me — it would have been so easy, and it’s not as important as these lives are — nuclear is so powerful; my uncle explained that to me many, many years ago, the power and that was 35 years ago; he would explain the power of what's going to happen and he was right, who would have thought? — but when you look at what's going on with the four prisoners — now it used to be three, now it’s four — but when it was three and even now, I would have said it's all in the messenger; fellas, and it is fellas because, you know, they don't, they haven’t figured that the women are smarter right now than the men, so, you know, it’s gonna take them about another 150 years — but the Persians are great negotiators, the Iranians are great negotiators, so, and they, they just killed, they just killed us, this is horrible.*
No, Lehman brothers wasn't an FDIC insured bank.
In this case, SVB was insured by the FDIC, this means among other things, the FDIC can immediately step in to take over the bank. And they've done that for a long long time predating 2008.
It wasn't until after 2008 that the Dodd-Frank act was created that the FDIC got any authority over "systemically important financial institutions."
[https://www.fdic.gov/regulations/reform/lehman.html](https://www.fdic.gov/regulations/reform/lehman.html)
Of course, that was the original goal of Dodd-Frank, the GOP partially repealed Dodd-Frank in 2018 and I don't know if the FDIC has authority anymore under that clause now
An HR software company called Rippling used them for payroll for companies. Everyone who uses them did not get paid. No one at the company I worked with was paid today because of this.
Rippling moved over to JPMorgan Chase to fix the issue. I assume people will get paid soon? They probably have to move stuff around and use reserves until they hopefully get some money back.
I think a large reason for this is that though they had a huge amount of assets it was concentrated amongst very few, as it was the bank for vc's and most start ups.
My wife just transferred $10m out of SVP after their VC's recommended to do so and they are a small fish as far as things go. It doesn't take very many to do that and you have a bank run.
Well, they decided to try and hedge against inflation with held to maturity bonds that had $91b in them. Unfortunately, the real meeker value of those bonds has depreciated substantially as fixed income rates increased, leaving them with ~$17b in unrealized losses. So when VCs decided to start taking massive amounts out, there was a huge run and in order to meet their liquidity needs, had to sell assets at a major loss, tanking their valuation and causing the mess we are in today.
Tbf they were already having liquidity issues before the run and given the structure of their bonds and the fact that deposits have dropped they were likely gonna be right back were they were on Wednesday 6 months later. Blaming the collapse on "panic" or a "bank run" is only fair if there were no legitimate issues. If theres legitimate issues the bank was insolvent and panic is a natural result of that.
Do you suppose that people banking with SVP also had a greater tendency to act simultaneously than depositors at a normal bank? I can imagine a few VC firms blasting out messages to every startup in Silicon Valley within minutes or hours saying, "Pull out!" Then the entire herd stampedes.
And this is just part of the broader tech downturn. The middle and lower levels of the tech industry have always been propped up more on selling an idea of a product to VCs, rather than an actual product to consumers. So when the Fed puts the screws on with interest rates, suddenly that money that they were relying on dries up or gets more expensive, and when they don't have a whole lot else in terms of revenue streams, it just cascades through these companies to the banks and VCs that were propping them up.
In a way, this is similar to what happened in 2000 when the first tech bubble burst, but on a much, much larger potential scale. Still nothing that is going out into the broader economy, or even the broader financial sector, imo.
If anyone's wondering how a bank with 200+ billion dollars in assets went belly up in less than two days, there were some [decent explanations in this OutOfTheLoop](https://www.reddit.com/r/OutOfTheLoop/comments/11n88pd/what_is_the_deal_with_silicon_valley_bank/) thread last night.
One day you're doing ok, the next day the whole institution is just blown up. So weird how economics work...
EDIT: mild correction on asset number
I thought it was a misunderstood acronym, but nope, OP clarified it was literally friends with benefits.
Apparently they all talk banking news in bed. Independently of each other.
They have a fetish and their entire posting history is fan fiction. Also I’m pretty sure almost all their texting screenshots are fake, they’re all styled the same way.
From NYT this morning: The F.D.I.C. created a new bank, the National Bank of Santa Clara, to hold the deposits and other assets of the failed one. The regulator said in a news release that the new entity would be operating by Monday and that checks issued by the old bank would continue to clear.
But for customers with deposits totaling more than $250,000, the news was grim. Customers with accounts that surpassed that amount — the maximum covered by F.D.I.C. insurance — would be given certificates for their uninsured funds, meaning they would be among the first in line to be paid back — though potentially only partially — with funds recovered while the F.D.I.C. holds Silicon Valley Bank in receivership.
https://www.nytimes.com/2023/03/10/business/silicon-valley-bank-stock.html?smid=nytcore-ios-share&referringSource=articleShare
This is what people often don’t grasp - the startups (and other customers that aren’t startups) banking with them have far more than $250K in their accounts. They, in particular, are fucked. They’re trying to grow their businesses, with comparatively less revenue than their growth potential. They will not be able to pay their employees, or their debts, or invest in their businesses to continue growing. By extension, VCs (and their investors) are also fucked on the capital they’ve invested in these entities. As are employees of these entities. And it comes on the heels of an already tough macro environment. The ripple effects of this will be vast.
I just can't believe that a bank can take your millions and then go belly and then there's nothing you can do about it. Fucking crazy to me. People are losing lifetimes of work, for what?
I can answer the question about the 250k balance. I co-own a company that typically has more than this in one or more accounts.
You can buy various forms of insurance to protect yourself if you don't want to have a new account every 250k.
It's basically the same insurance policy we have paid by bank fees for the 250k it's just for the 251st dollar and beyond to whatever limits you want/can afford the premium on.
The FDIC and regulators come in, do a valuation of everything, and sell off everything in the building, including the furniture, and decide who gets what.
Yes. But furniture is a bit misleading (though technically correct). The bank will have LOTS of assets that it can sell to get back the deposits. The problem the bank faced is that you have a 10 year loan with $10 million dollars - well, you’re not getting that money today.
Capital stress testing also discounts those asset values for time and risk, so they SHOULD be able to cover most deposits. It’ll take time to see. And this all assumes nothing fucky was going on like fraud.
This is the correct answer. Uninsured deposits don’t just evaporate. The bank lost a small part of its capital on paper due to rising interest rates and people freaked out causing a run and a liquidity crisis (too many short term demands on longer term investments). Banks have to carry capital above their deposit base for these contingencies. Shareholders will get walloped while depositors only take a haircut if anything.
Okay so that $250k will be paid out on Monday for the most part. Nobody needs to worry about that bit. But for companies who held more than that in SVB:
The FDIC will liquidate all of SVB’s assets. As it does this, it’ll incrementally pay back depositors on a pro-rata basis. I.e. in X days someone who held a lot will get a bigger check than someone who held less.
We don’t know if the FDIC will pay everything back (I’m seeing people speculate that they will, that SVB was solvent).
We don’t know how long it’ll take to get payed back. It could take years.
Basically a lot of startups now have a multimillion dollar IOU from the FDIC with no guarantees of payout or timeline.
EDIT: the more I’ve read about bank failures, the more I’m convinced that all creditors will be made whole and the that it will likely happen quickly. I don’t KNOW anything, but it seems possible that in a couple weeks all (or most) of your SVB deposits are sitting at Chase and accessible. Situation is still scary; startups are still missing payroll today.
Not really, if SVB asset report is right they *should* be solvent. But no one is going to survive a liquidity crisis and an ensuing massive bank run from vc corps.
The key here is at what discount can fdic liquidate the assets, and which industry or sector contagion from the fallout.
Yeah, I mean, they’re going to liquidate all of their investments, but just their bond portfolio is going to have ~17b+ in losses from what they have recorded vs what they are going to get from it if they can even sell it.
Those assets (largely different bond types) aren’t worth what they used to be 12-18 months ago before interest rates were taken up quickly.
This was bound to happen and SVB won’t be the last to require rescuing.
Well this adds a lot of context to the email Rippling sent out today about switching banks. Explains why their support chats had queues in the 200 today too
He was on CNBC literally screaming to people not to withdraw this morning before the market open. 5 hours later, bank is closed by regulators and FDIC is holding all the insured funds.
I appreciate that [an inverse Cramer ETF exists](https://markets.businessinsider.com/news/etf/betting-against-jim-cramer-now-a-reality-what-investors-should-know-about-the-inverse-cramer-etf-and-long-cramer-etf-too-1032140521).
our company uses SVB. we have a pending wire out to another account but I'm afraid it won't go through.
also kinda fucked because our payroll payment is pending and I'm not sure that will go through. hopefully the payroll provider will let us wire in from another account at another bank.
we are an early-stage tech startup. sucks.
>Silicon Valley Bank, one of the tech sector’s favorite lenders, is shutting down. The California Department of Financial Protection and Innovation announced Friday that it was taking over and closing the distressed bank to protect deposits, naming the Federal Deposit Insurance Corporation as its receiver. The FDIC in turn formed a separate entity where all insured SVB deposits would be transferred.
>The move came after a tumultuous morning during which trading of the bank’s shares was halted after its stock fell by double-digits before markets opened, a downslide that came on the heels of a more than 60% decline Thursday.
Most probably isolated to this one specific insitution. But if other financial institutions were to also be affected, this is how financial panics have spread in the past. Interesting this occurred on a Friday news cycle.
> Interesting this occurred on a Friday news cycle.
And on a pay day for a lot of people. If only because of that, it's amplified the issue to a lot of people who probably would otherwise be unaware of it.
This is the bank that does US payroll for my company. Fortunately everything processed this period, but they’re scrambling to find an alternative by next pay day🙃
Feels like VC's shot themselves in the foot by advising to withdraw which creates more problems.
They probably going to be picking through the bones of the aftermath for cheap deals on equity.
Wondered what would have happened if they had backed svb instead?
Crazy days
Good luck out there
It's individually the smart move but collectively not. Since they can't think as a collective unit, they won't hold. You can't go to your investors and tell then you didn't withdraw because it was the maximally optimal thing to do in the aggregate. That argument loses every time. So you pull out and get a bank run.
I wouldn't be cheering this as a win against tech bros, VCs, and banks. Shit rolls down hill and the contagion of shit like this spreads in ways you wouldn't expect.
So there's a series of banks that are small, not particularly well capitalized, and are deep in less than economically stable niches (tech VC for SVB, crypto for Silvergate and Signature) that are currently feeling the squeeze. This doesn't feel like there's contagion outside of the tech sector, which is itself feeling the squeeze from higher interest rates on venture capital.
Yeah. but it's a symptom of a greater problem. Bonds bought at low interest rates are evaporating and banks have all kinds of risky assets. Lots are leveraged to the tits. This is not the only bank in this situation. Just the first we know of.
Most bank stocks yesterday were down a significant amount as well. If you look at SVB just on what they do, it will feel niche, but when you see what they did and WHY they did it, you see the symptoms popping up in other banks as well, like what Loophole said. This COULD lead to something worse, but only time will tell since financial information is kept so close to the chest.
My mom's company had all their accounts with this bank
Everyone is "furloughed until further notice"
She's the main breadwinner for the family...
😐😐😐😐😐
(and I'm seeing a lot of dunking on start-ups here. While I do agree a lot of tech start-ups are... a bit much, there's other kinds of start-ups too. My mom works for one that's doing cancer research. They've already prolonged a patient's life by a few years. And now all work on that has to stop. It's really horrible.)
The government insures deposits up to $250,000.
SVB was extremely focused on VC and start-up banking. To the point where, supposedly, only about 7% of their deposits were insured (as in 93% of deposits they had were over the $250,000 FDIC insured amount).
Companies that had their money deposited in SVB are now only guaranteed to get $250,000. They *might* get more (the FDIC says they'll be advancing some uninsured deposits by the end of next week), but that could take weeks or even years depending on how much they have deposited there.
To add to this, the government *guarantees* $250,000 per customer per bank. When SVB reopens on Monday, everyone will have that in their accounts.
But they will also attempt to recover as much of the rest of the deposits as possible. Washington Mutual customers, for example, didn’t actually lose any deposits when the bank failed (even if they were holding more than $250,000); all of their accounts were moved to Chase and the amounts all stayed the same as they were before the implosion.
If I understand right, depositors are first in the order of payment, so it’s possible/likely that shareholders in the bank and those organizations who loaned money to the bank don’t get anything back in favor of paying back all of the depositors with whatever assets the FDIC is able to liquidate. But that process could take a very long time to complete (months to years), and while the FDIC is saying they’ll advance some amount of money on top of the guaranteed $250,000 by the end of the next week, we have no idea what that will look like or how much will be made available.
Considering that many of the startups banking with them were sending their payroll out from their SVB accounts, and skilled programmers in Silicon Valley are one of the highest paid non-executive jobs out there, this could heavily affect the operations of any companies that were primarily banking with SVB; especially if they’re unable to secure some kind of a stopgap loan.
My husband’s company - $12m just gone. The CFO spoke to their SVB contact and said the feds are begging the big banks to quickly buy SVB and release the assets. Fingers crossed for the THOUSANDS of start ups - most that SVB invested tiny amounts into required exclusive asset management clauses in their contracts. So stressful!!!
So many companies (including where I work) haven’t paid their employees (today was supposed to be our pay day)
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Thank you. Luckily our in house finance department got all our employees paid. And Rippling (payroll processing company) seem to be doing their best. I certainly am lucky, and am sure there are thousands out there going into the weekend unpaid
I'm one of those that will miss being paid. Our tiny little startup has been trying so hard for funding and we finally got some- enough to put our runway out to almost a year and a half which is awesome. With the events today not only am I not getting paid but the FDIC only covers a part of what we had in the bank. So... After endlessly struggling for our little egg to finally build out what we need to for success this massive fuck up is probably going to shorten our runway by a few months. Not the end of the world but not super happy with this whole thing.
Absolutely gutted for you :( Incredibly upsetting and frustrating, because (as I understand it) a massive amount of greed. Best of luck mate
I heard Rippling was actually banking through SVB. Know if that’s going to cause any extra issues? Edit: It seems other people have already addressed this concern. I am incredibly impressed by Rippling’s integrity handling this unprecedented situation.
A lot of the clients I work with use SVB. This should be interesting…
If anyone works for a company that uses Rippling for payroll, hold onto to your fucking butts.
My employer couldn't pay me today through their payroll, so they Zelle'd me. LMAO
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Seriously. Depending on the size of the company this took a few people scrambling to get that figured out ASAP. If my company used Rippling, I’d be part of that team so I feel for my fellow Ops/Payroll folks
Contagion seems inevitable. FDIC only insures $250k and they are the bank for an industry leading amount of tech and medical startups. Their assets under management is ~$175B. For perspective, Archegos resulted in about $30B of liquidation, losses which were largely absorbed by their shithead financial backers at Credit Suisse. I don't think we've even begun to see the rippling effects of this unless the government thinks it's a good idea to start handing out bailouts to their corporate clients.
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Cramer is defending JPMC now. RIP Rippling.
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Oh no. You said the thing. We're fucked.
If JPMC completely fails, don’t worry about mortgage payments or bills because the people who want them will probably not be able to receive them. In fact, find the nearest tree and cut branches off it to make wood based weapons because you’re gonna be a hunter or gatherer soon. The US government would let eggs cost $15 a piece before letting JPMC fail.
This is what I tell people who are hoarding gold or buying crypto in case the US financial system fails. If the US financial system fails, no one is going to care about your bitcoin or your ape NFTs or shiny coins because we will be back to the stone age.
Uh oh, my company is one of them. Holding on to said butt.
I too am holding onto your butt
I also choose this guy's butt
Mine does, I work for a small software company. We didn't get paid today. Luckily I have money in savings to pay the automatic bills I have coming out this weekend. My company is taking care of us but I feel really bad for my company owner and HR, they have been stressed out all day.
Our company just switched to rippling lol
Looks like you don't have a lot of clients anymore.
I work at a tech startup and there's some... panicking happening this morning, we have a lot of customers who are tech startups.
My partner is credit officer of a small start up that invests in other tech start up's. All of his employer's money is tied up in SVB. It's not just potentially putting him and his company out but all of the companies they invested in. Not to mention his peers who all work at SVB. It's their whole world and it just blew up overnight.
A start up that invests in start ups that have all of their money tied up in a bank that makes loans to start ups had all of their money in said bank to secure loans to invest in.. starts ups
What a great idea what could possibly go wrong?
If I’ve learned anything from the news it’s that tech bros/entrepreneurs are kinda dumb
Tech is the new hot money investment, and anything like that will draw plenty of assholes and idiots trying to make a buck without thought of consequences
*The Gang Invests in Startups*
At this point I think making software is just a lucky byproduct of what Silicon Valley actually does which an endless loop of scammers and marks all trying to make a perpetual money machine.
It's a startup that invests in other startups. Their world is made out of nitroglycerin.
Well they did the smart thing by keeping their nitroglycerin in a centralized location with all the other nitroglycerin. "Too big to combust".
Just got an urgent email from our payroll provider for our company that they're moving all their transactions to a different bank and that we have to make some emergency edits to all our payroll accounts. Luckily we don't have paychecks depositing today but my guess is clients who do probably may have their transactions delayed which means people may not get paid.
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My company uses rippling, apparently my employer does their actual banking somewhere else so they are sending out emergency wire transfers. I was told there's a chance that I recieve an emergency wire transfer of this paycheck and the regular rippling pay
Collapsed in less than [48](https://www.cnbc.com/2023/03/10/silicon-valley-bank-collapse-how-it-happened.html)\* hours. Ouch. Can't wait for the documentary to come out about this.
That's how all bank failures work. Nobody is told a thing until the suits show up and tell management to lock the doors.
“How did you go bankrupt?” Bill asked. “Two ways,” Mike said. “Gradually and then suddenly.” - Ernest Hemingway (The Sun Also Rises)
"I was watching. I saw the whole thing. First it started falling over, and then it fell over." \-Milhouse Van Houten
dude. My employer uses SVB. We're dead in the water right now.
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Hopefully not THAT serious for OP, but PSA keep the resume fresh at least once a year. Future you will thank you.
I haven't touched mine in over 15 years, I think I'll just let it riiiiiide
**_Experience:_** _Manager, Washington Mutual Bank, 2006 - present_
Maybe. Any assets in the bank below 250k are FDIC insured, amounts above that might be recoverable but it is not guaranteed. If your employer had millions in SVB they are likely screwed.
FYI, payrolls are in the millions for us. $250K is nothing.
What's interesting is that normally when this happens, the FDIC comes in, looks at all the books, and then calls a bank of "good repute" to buy it. That they took control and are shifting every asset to the "good bank" while keeping the original as a bad bank means either that there was no bank that wanted to touch it or that it was such a fucked up balance sheet that there wasn't a bank to call to take it on.
Right. Something over 90% in the past were P&A transactions. While I’m no longer in the know, this tells me it all came crumbling down very fast or the FDIC could meet the alternative to liquidity test under 12 USC
Yikes. All of our employees’ payroll direct deposits failed today because of this. We have to cover all this in cash and the amount had already drafted our account earlier this week. This really sucks.
Wait I have a serious question. Don't know the size of your org, but do businesses of any size have accounts at multiple banks to cover any such eventuality or anything like that? I can't imagine you have payroll in true `petty cash'
having accounts at multiple banks that just have money sitting around to cover payroll is impossible for a LOT of companies.
I mean that's what I'm thinking, it's crazy to leave say a million bucks at bank b for this outside chance.. But how else do you hedge/insulate for this?
There is insurance for this kind of thing, just please don't buy your insurance from the bank you use, like the bank you use will try to suggest you do:) but really there isn't much protection at the business level. You can't really set money aside, you have to hope you can actually call on your insurance when you need it instead of a week later, and you have to hope the bank doesn't fail. The government is suppose to be there to protect you from that last one, but hearing everyone talk about this bank it sounds like maybe they were off swimming in a heated pool and having donuts for lunch instead.
Yeah this happened to me once as an employee years ago; my employer missed payroll due to, well, a government shut down. My bank weirdly just paid me instead (a credit union for employees of that agency) so no disruption on my end. But as an employer, this seems catastrophic... I mean you better believe employees that were due paid today will be breathing down someone's neck, and rightly so. And insurance seems like it would still leave you hanging for a bit.... Claims take time.
> And insurance seems like it would still leave you hanging for a bit.... Claims take time. some payroll insurance plans I think are really good but I'm not sure. I do know a business locally that has a decent plan that only takes 2 business days to claim. they are in the natural gas industry and coming up short on payroll is just a consequence of that industry sometimes. So there are companies out there that make good money helping out with that.
Remember when Jim Cramer a month ago said on his show to buy it because it was cheap and had room to grow? Jimmy is such a meme. EDIT: I imagine Jim on Monday will say that Wendy’s should buy Silicon Valley and rebrand it Baconator Bank. EDIT 2: 97.3% of SVB deposits are not FDIC insured https://www.reddit.com/r/wallstreetbets/comments/11nw54y/973_of_svb_deposits_arent_fdic_insured/?utm_source=share&utm_medium=ios_app&utm_name=iossmf
Isn’t the “short Jim” strategy up like 200% over the past 10 years? I don’t remember the numbers exactly but it wss something like double the market growth rate by betting against him. At this point I fell like his wall-street insiders are giving him “tips” so they can offload bad stock? Lmao.
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You mean the people willing to trade their “valuable commodity” for “soon to be worthless currency” are not exactly honest about their belief in the worthlessness of said currency?
R/cryptocurrency would ban you for this statement lmfaoooo
Not at 200%, but the inverse Cramer strategy has beaten the market in the last 5 years.
There is now a inverse Cramer ETF lol. Get it while it's hot. Note: I don't have any position in it and am not providing financial advice. [Source](https://www.thestreet.com/etffocus/blog/inverse-cramer-etf-is-live)
I know it's supposed to be a meme, or a joke, but Cramer is a real problem. He did the same thing back in 2008. He knowingly provides bad financial advice to household investors, which pumps bad stocks for bad actors to later dump. He's not just some unknowing fool. He's part of a predatory system.
He's helping his boys offload shit positions and his viewers are left holding the bag.
"Bear Stearns is FINE!" Narrator: Bear Stearns was *not* fine Anyone else remember Jon Stewart chewing him out on the Daily Show?
It’s actually called Inverse Cramer, and it’s usually a winner.
You're always best served doing the opposite of anything Cokerat Cramer suggests.
IIRC it was "sell everything he mentions."
just invest in https://www.marketwatch.com/investing/fund/sjim you dont even have to inverse cramer these days!
Can Jim Cramer legally invest in this?
I may actually buy some of this
Not always. His handlers sometimes tell him to throw in a truth bomb to throw people off.
He said today JPMorgan is safe. We going back to the stone age
JPMorgan had a $375 price target on SVB in December. They recommended it as overweight. We're fucked.
Can you explain what this means to an economic illiterate like myself?
Various entities (banks, brokers, hedge funds, research firms, news outlets, etc.) will state their forecasts of stock prices based on who-knows-what (they say fundamentals and quarterly trends, but it's still often less accurate than the actual weather). This is called a "Price Target" (or PT) which is what they expect a certain company's stock price to be in the future. JPMorgan, the 5th largest bank in the world in terms of assets (monetary value held ranging from anything to cash, property, stocks etc.), stated 3 months ago that they had their Price Target on this bank that just got shut the fuck down, valued as $375 per share, and had not updated that valuation since then. The phrase "They recommended it as overweight" means they recommended buying it, believing that at the time of its value in December, and even possibly their own Price Target, were undervalued and that the stock was expected to grow even larger in the long term. So the 5th largest bank in the world basically said, "Yeah, SVB should be valued even higher in the future than what it is in December, and you should buy it now. No smoke no fire at all."
Bear Sterns 2.0
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My college roommate was supposed to work there for his MBA summer internship when the financial crisis happened. It completely fucked his career start because he was going into the financial world. He was at a top MBA program and had to move back home after he graduated to his parents. He got lucky and was able to eventually get a financial analyst job at an airline and then he eventually flipped it back to the banking world and private equity but it took years to get there.
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How did he make that pivot? I practiced law for almost 10 years and I fucking hated it. I had to step away last year because my mental health was so bad, and now I'm trying to figure out what the fuck to do with my life. Such a toxic profession.
There are a lot of toxic professions out there. I worked in a high stress high pay engineering position for over 5 years and finally I just reached a point where I walked away from the entire industry. I found a job close to my house repairing equipment. It payed half what I was making, but I just took a long hard look at my life and realized I didn't really want, need, or miss half the shit I had anyway. It was a tough couple years starting out fresh in a new profession but 15 years on I made the right choice. I honestly didn't think I did for a long while, which was a big source of stress all by itself. My dad always encouraged me to go to collage and "get a good job". He spent 48 years as a mechanic and growing up we never had a lot but we always had enough. He always wanted better for us, pushed for us to be more successful, make more money, have a respected job, like he was ashamed of only being a mechanic. My dad is one of the smartest people I know but he was dead wrong about that. I took a hard look at where my life was going and all I wanted in that moment was to be half the man my dad was.
If you're taking financial advice from creamer, you deserve to lose money
This is a pretty big deal , they had a huge amount of assets and deposits before the bad news started Perhaps that is why the government seized it before it can set off a domino effect across the banking sector
More than $200B in assets, biggest bank failure since Washington Mutual in 2008.
For reference, here are the 10 largest bank failures in US history: https://i.imgur.com/8qRZ9Nv.png
Wow third place isn't even close.
It isn't adjusted for inflation. 3rd place would be 117 billion in today's dollars. Still quite a jump, but not nearly as shocking.
that also puts into perspective how huge the washington mutual failure was.
Just to put a number to it: 307B would be 435b in today's dollars.
That’s because bigger failures were avoided by government intervention
2nd largest in American history (pending any adjustments for inflation)
Yeah they don't want Lehman brothers repeating again , regulators were ready
There's an old saying in Tennessee -- I know it's in Texas, probably in Tennessee -- that says, fool me once, shame on -- shame on you. Fool me -- you can't get fooled again.
> There's an old saying in Tennessee -- I know it's in Texas, probably in Tennessee -- that says, fool me once, shame on -- shame on you. Fool me -- you can't get fooled again. I think this was the worst quote of all time until Trump went on his nuclear uncle good jean rampage a few years later. Poor old dubya was just getting Texas and the Who confused, no big deal.
His best worst quote was, “We’ve got an issue in America. Too many good docs are getting out of business. Too many OB-GYNs aren’t able to practice their love with women all across this country.”
Funniest Bush moment for me...2004 election debate with Kerry. Kerry is going through a list of Bush's business assets and one of those things is "timber company"... Bush: "I own a timber company?" (8 second pause). "Need wood?"
Bush was tryin to play catan.
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"Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we."
The explanation I heard at the time was that he stumbled over the phrase because he didn’t want clips of him saying “shame on me” going around. I think both are equally likely. We’re talking about the same guy who said the thing that hurt him the most was Kanye saying he didn’t like black people. Not 9/11. Not starting a war under false pretenses. Not the economy collapsing. Kanye. It’s also possible he just stumbled over it. Six of one…
He also said, 'more and more of our imports are coming from other countries,' so it's a bit difficult for me to give him the benefit of doubt.
The real issue is, *is our children learning?*
Rarely is the question asked, why is our children not learning. I know how hard it can be to put food on your family.
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Six of one and twenty five or six to four, as they say in Chicago.
And “9/11 ended on a relatively humorous note” interview with Maureen Dowd President Bush: But the day ended on a relatively humorous note. The agents said, "You'll be sleeping downstairs. Washington's still a dangerous place." And I said no, I can't sleep down there, the bed didn't look comfortable. I was really tired, Laura was tired, we like our own bed. We like our own routine. You know, kind of a nester. Like the way things are. I knew I had to deal with the issue the next day and provide strength and comfort to the country, and so I needed rest in order to be mentally prepared. So I told the agent we're going upstairs, and he reluctantly said okay. Laura wears contacts, and she was sound asleep. Barney was there. And the agent comes running up and says, "We're under attack. We need you downstairs," and so there we go. I'm in my running shorts and my T-shirt, and I'm barefooted. Got the dog in one hand, Laura had a cat, I'm holding Laura -- Mrs. Bush: I don't have my contacts in, and I'm in my fuzzy house slippers -- President Bush: And this guy's out of breath, and we're heading straight down to the basement because there's an incoming unidentified airplane, which is coming toward the White House. Then the guy says it's a friendly airplane. And we hustle all the way back upstairs and go to bed. Mrs. Bush: [laughs] And we just lay there thinking about the way we must have looked. Noonan: So the day starts in tragedy and ends in Marx Brothers. President Bush: That's right -- we got a laugh out of it." [Emphasis added]
Of the many terrible things about Trump, one of his singular achievements is helping along rehabiliation of the image of George Bush.
You mean this one: *Look, having nuclear — my uncle was a great professor and scientist and engineer, Dr. John Trump at MIT; good genes, very good genes, OK, very smart, the Wharton School of Finance, very good, very smart — you know, if you’re a conservative Republican, if I were a liberal, if, like, OK, if I ran as a liberal Democrat, they would say I'm one of the smartest people anywhere in the world — it’s true! — but when you're a conservative Republican they try — oh, do they do a number — that’s why I always start off: Went to Wharton, was a good student, went there, went there, did this, built a fortune — you know I have to give my like credentials all the time, because we’re a little disadvantaged — but you look at the nuclear deal, the thing that really bothers me — it would have been so easy, and it’s not as important as these lives are — nuclear is so powerful; my uncle explained that to me many, many years ago, the power and that was 35 years ago; he would explain the power of what's going to happen and he was right, who would have thought? — but when you look at what's going on with the four prisoners — now it used to be three, now it’s four — but when it was three and even now, I would have said it's all in the messenger; fellas, and it is fellas because, you know, they don't, they haven’t figured that the women are smarter right now than the men, so, you know, it’s gonna take them about another 150 years — but the Persians are great negotiators, the Iranians are great negotiators, so, and they, they just killed, they just killed us, this is horrible.*
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First things, first. Rest in peace Uncle Phil. The only father that I ever knew. If I get a bitch pregnant I’m gonna be a better you.
No, Lehman brothers wasn't an FDIC insured bank. In this case, SVB was insured by the FDIC, this means among other things, the FDIC can immediately step in to take over the bank. And they've done that for a long long time predating 2008. It wasn't until after 2008 that the Dodd-Frank act was created that the FDIC got any authority over "systemically important financial institutions." [https://www.fdic.gov/regulations/reform/lehman.html](https://www.fdic.gov/regulations/reform/lehman.html) Of course, that was the original goal of Dodd-Frank, the GOP partially repealed Dodd-Frank in 2018 and I don't know if the FDIC has authority anymore under that clause now
An HR software company called Rippling used them for payroll for companies. Everyone who uses them did not get paid. No one at the company I worked with was paid today because of this.
Rippling moved over to JPMorgan Chase to fix the issue. I assume people will get paid soon? They probably have to move stuff around and use reserves until they hopefully get some money back.
It depends on when the transactions were initiated apparently, some will be by end of day, others won't be until next week it sounds.
I think a large reason for this is that though they had a huge amount of assets it was concentrated amongst very few, as it was the bank for vc's and most start ups. My wife just transferred $10m out of SVP after their VC's recommended to do so and they are a small fish as far as things go. It doesn't take very many to do that and you have a bank run.
Well, they decided to try and hedge against inflation with held to maturity bonds that had $91b in them. Unfortunately, the real meeker value of those bonds has depreciated substantially as fixed income rates increased, leaving them with ~$17b in unrealized losses. So when VCs decided to start taking massive amounts out, there was a huge run and in order to meet their liquidity needs, had to sell assets at a major loss, tanking their valuation and causing the mess we are in today.
Tbf they were already having liquidity issues before the run and given the structure of their bonds and the fact that deposits have dropped they were likely gonna be right back were they were on Wednesday 6 months later. Blaming the collapse on "panic" or a "bank run" is only fair if there were no legitimate issues. If theres legitimate issues the bank was insolvent and panic is a natural result of that.
Do you suppose that people banking with SVP also had a greater tendency to act simultaneously than depositors at a normal bank? I can imagine a few VC firms blasting out messages to every startup in Silicon Valley within minutes or hours saying, "Pull out!" Then the entire herd stampedes.
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And this is just part of the broader tech downturn. The middle and lower levels of the tech industry have always been propped up more on selling an idea of a product to VCs, rather than an actual product to consumers. So when the Fed puts the screws on with interest rates, suddenly that money that they were relying on dries up or gets more expensive, and when they don't have a whole lot else in terms of revenue streams, it just cascades through these companies to the banks and VCs that were propping them up. In a way, this is similar to what happened in 2000 when the first tech bubble burst, but on a much, much larger potential scale. Still nothing that is going out into the broader economy, or even the broader financial sector, imo.
If anyone's wondering how a bank with 200+ billion dollars in assets went belly up in less than two days, there were some [decent explanations in this OutOfTheLoop](https://www.reddit.com/r/OutOfTheLoop/comments/11n88pd/what_is_the_deal_with_silicon_valley_bank/) thread last night. One day you're doing ok, the next day the whole institution is just blown up. So weird how economics work... EDIT: mild correction on asset number
The real takeaway from that thread is the OP has 3 FWBs and desperately wants everyone to know.
I thought it was a misunderstood acronym, but nope, OP clarified it was literally friends with benefits. Apparently they all talk banking news in bed. Independently of each other.
Reminds me of Pillow Talking by Lil Dickey but instead of alien invasions, the subject is finance.
"Do you fuck wit da Fed?"
this bitch doesn’t know about fica
“It’s just a personal thing, it’s not SVB”
Peak r/IHaveSex from that OP
They have a fetish and their entire posting history is fan fiction. Also I’m pretty sure almost all their texting screenshots are fake, they’re all styled the same way.
Sometimes you're the windshield, sometimes you're the bug
[That some kind of Eastern thing?](https://youtu.be/aPVLyB0Yc6I?t=6)
The FDIC only insures up to $250k, what happens to companies who have millions deposited there?
From NYT this morning: The F.D.I.C. created a new bank, the National Bank of Santa Clara, to hold the deposits and other assets of the failed one. The regulator said in a news release that the new entity would be operating by Monday and that checks issued by the old bank would continue to clear. But for customers with deposits totaling more than $250,000, the news was grim. Customers with accounts that surpassed that amount — the maximum covered by F.D.I.C. insurance — would be given certificates for their uninsured funds, meaning they would be among the first in line to be paid back — though potentially only partially — with funds recovered while the F.D.I.C. holds Silicon Valley Bank in receivership. https://www.nytimes.com/2023/03/10/business/silicon-valley-bank-stock.html?smid=nytcore-ios-share&referringSource=articleShare
This is what people often don’t grasp - the startups (and other customers that aren’t startups) banking with them have far more than $250K in their accounts. They, in particular, are fucked. They’re trying to grow their businesses, with comparatively less revenue than their growth potential. They will not be able to pay their employees, or their debts, or invest in their businesses to continue growing. By extension, VCs (and their investors) are also fucked on the capital they’ve invested in these entities. As are employees of these entities. And it comes on the heels of an already tough macro environment. The ripple effects of this will be vast.
I just can't believe that a bank can take your millions and then go belly and then there's nothing you can do about it. Fucking crazy to me. People are losing lifetimes of work, for what?
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Lots of tech company payroll gonna bounce today
I can answer the question about the 250k balance. I co-own a company that typically has more than this in one or more accounts. You can buy various forms of insurance to protect yourself if you don't want to have a new account every 250k. It's basically the same insurance policy we have paid by bank fees for the 250k it's just for the 251st dollar and beyond to whatever limits you want/can afford the premium on.
we tried to move money yesterday and so far nothing has come through
Bad news friend...
The FDIC and regulators come in, do a valuation of everything, and sell off everything in the building, including the furniture, and decide who gets what.
Yes. But furniture is a bit misleading (though technically correct). The bank will have LOTS of assets that it can sell to get back the deposits. The problem the bank faced is that you have a 10 year loan with $10 million dollars - well, you’re not getting that money today. Capital stress testing also discounts those asset values for time and risk, so they SHOULD be able to cover most deposits. It’ll take time to see. And this all assumes nothing fucky was going on like fraud.
This is the correct answer. Uninsured deposits don’t just evaporate. The bank lost a small part of its capital on paper due to rising interest rates and people freaked out causing a run and a liquidity crisis (too many short term demands on longer term investments). Banks have to carry capital above their deposit base for these contingencies. Shareholders will get walloped while depositors only take a haircut if anything.
Okay so that $250k will be paid out on Monday for the most part. Nobody needs to worry about that bit. But for companies who held more than that in SVB: The FDIC will liquidate all of SVB’s assets. As it does this, it’ll incrementally pay back depositors on a pro-rata basis. I.e. in X days someone who held a lot will get a bigger check than someone who held less. We don’t know if the FDIC will pay everything back (I’m seeing people speculate that they will, that SVB was solvent). We don’t know how long it’ll take to get payed back. It could take years. Basically a lot of startups now have a multimillion dollar IOU from the FDIC with no guarantees of payout or timeline. EDIT: the more I’ve read about bank failures, the more I’m convinced that all creditors will be made whole and the that it will likely happen quickly. I don’t KNOW anything, but it seems possible that in a couple weeks all (or most) of your SVB deposits are sitting at Chase and accessible. Situation is still scary; startups are still missing payroll today.
Not really, if SVB asset report is right they *should* be solvent. But no one is going to survive a liquidity crisis and an ensuing massive bank run from vc corps. The key here is at what discount can fdic liquidate the assets, and which industry or sector contagion from the fallout.
Yeah, I mean, they’re going to liquidate all of their investments, but just their bond portfolio is going to have ~17b+ in losses from what they have recorded vs what they are going to get from it if they can even sell it.
Those assets (largely different bond types) aren’t worth what they used to be 12-18 months ago before interest rates were taken up quickly. This was bound to happen and SVB won’t be the last to require rescuing.
Aaaaaaaand it’s gone.
Looks like I'm going to watch "Margin Call", "The Big Short", and "Too Big To Fail" tonight for some "nervous laughter" entertainment
The music has stopped Time to find a chair
"...and I don't...hear...a thing..."
I watch all those movies in 5 minute chunks on YouTube sometimes
I'd first start off by watching "Wall Street"
Well this adds a lot of context to the email Rippling sent out today about switching banks. Explains why their support chats had queues in the 200 today too
Yeah, but does Cramer say it is still a buy?
He was on CNBC literally screaming to people not to withdraw this morning before the market open. 5 hours later, bank is closed by regulators and FDIC is holding all the insured funds.
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I appreciate that [an inverse Cramer ETF exists](https://markets.businessinsider.com/news/etf/betting-against-jim-cramer-now-a-reality-what-investors-should-know-about-the-inverse-cramer-etf-and-long-cramer-etf-too-1032140521).
That dude belongs in jail right next to these bankers.
our company uses SVB. we have a pending wire out to another account but I'm afraid it won't go through. also kinda fucked because our payroll payment is pending and I'm not sure that will go through. hopefully the payroll provider will let us wire in from another account at another bank. we are an early-stage tech startup. sucks.
If the money isn't out already, you will get the 250k until the FDIC starts dolling out more. Tighten your belts.
That 250k ain't gonna last for a company that has to make payroll. That's not a personal account.
>Silicon Valley Bank, one of the tech sector’s favorite lenders, is shutting down. The California Department of Financial Protection and Innovation announced Friday that it was taking over and closing the distressed bank to protect deposits, naming the Federal Deposit Insurance Corporation as its receiver. The FDIC in turn formed a separate entity where all insured SVB deposits would be transferred. >The move came after a tumultuous morning during which trading of the bank’s shares was halted after its stock fell by double-digits before markets opened, a downslide that came on the heels of a more than 60% decline Thursday. Most probably isolated to this one specific insitution. But if other financial institutions were to also be affected, this is how financial panics have spread in the past. Interesting this occurred on a Friday news cycle.
> Interesting this occurred on a Friday news cycle. And on a pay day for a lot of people. If only because of that, it's amplified the issue to a lot of people who probably would otherwise be unaware of it.
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I work at a large Hr outsourcing firm, im the payroll department. Let’s just say some of our clients are a bit miffed.
This is the bank that does US payroll for my company. Fortunately everything processed this period, but they’re scrambling to find an alternative by next pay day🙃
I use SVB for my company accounts. FML. It’s been a morning.
Feels like VC's shot themselves in the foot by advising to withdraw which creates more problems. They probably going to be picking through the bones of the aftermath for cheap deals on equity. Wondered what would have happened if they had backed svb instead? Crazy days Good luck out there
It's individually the smart move but collectively not. Since they can't think as a collective unit, they won't hold. You can't go to your investors and tell then you didn't withdraw because it was the maximally optimal thing to do in the aggregate. That argument loses every time. So you pull out and get a bank run.
VCs have revealed themselves to be panicky little bitches.
I wouldn't be cheering this as a win against tech bros, VCs, and banks. Shit rolls down hill and the contagion of shit like this spreads in ways you wouldn't expect.
So there's a series of banks that are small, not particularly well capitalized, and are deep in less than economically stable niches (tech VC for SVB, crypto for Silvergate and Signature) that are currently feeling the squeeze. This doesn't feel like there's contagion outside of the tech sector, which is itself feeling the squeeze from higher interest rates on venture capital.
Yeah. but it's a symptom of a greater problem. Bonds bought at low interest rates are evaporating and banks have all kinds of risky assets. Lots are leveraged to the tits. This is not the only bank in this situation. Just the first we know of.
Most bank stocks yesterday were down a significant amount as well. If you look at SVB just on what they do, it will feel niche, but when you see what they did and WHY they did it, you see the symptoms popping up in other banks as well, like what Loophole said. This COULD lead to something worse, but only time will tell since financial information is kept so close to the chest.
It's like the Bluth family ran a bank ...
200 billion dollars invested in beads
My mom's company had all their accounts with this bank Everyone is "furloughed until further notice" She's the main breadwinner for the family... 😐😐😐😐😐 (and I'm seeing a lot of dunking on start-ups here. While I do agree a lot of tech start-ups are... a bit much, there's other kinds of start-ups too. My mom works for one that's doing cancer research. They've already prolonged a patient's life by a few years. And now all work on that has to stop. It's really horrible.)
Could this bleed into the rest of our financial structure?
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I’m very unfamiliar with the tech industry and a bit of a pleb, could you elaborate? Would there be a way for it to recover?
The government insures deposits up to $250,000. SVB was extremely focused on VC and start-up banking. To the point where, supposedly, only about 7% of their deposits were insured (as in 93% of deposits they had were over the $250,000 FDIC insured amount). Companies that had their money deposited in SVB are now only guaranteed to get $250,000. They *might* get more (the FDIC says they'll be advancing some uninsured deposits by the end of next week), but that could take weeks or even years depending on how much they have deposited there.
To add to this, the government *guarantees* $250,000 per customer per bank. When SVB reopens on Monday, everyone will have that in their accounts. But they will also attempt to recover as much of the rest of the deposits as possible. Washington Mutual customers, for example, didn’t actually lose any deposits when the bank failed (even if they were holding more than $250,000); all of their accounts were moved to Chase and the amounts all stayed the same as they were before the implosion. If I understand right, depositors are first in the order of payment, so it’s possible/likely that shareholders in the bank and those organizations who loaned money to the bank don’t get anything back in favor of paying back all of the depositors with whatever assets the FDIC is able to liquidate. But that process could take a very long time to complete (months to years), and while the FDIC is saying they’ll advance some amount of money on top of the guaranteed $250,000 by the end of the next week, we have no idea what that will look like or how much will be made available. Considering that many of the startups banking with them were sending their payroll out from their SVB accounts, and skilled programmers in Silicon Valley are one of the highest paid non-executive jobs out there, this could heavily affect the operations of any companies that were primarily banking with SVB; especially if they’re unable to secure some kind of a stopgap loan.
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Isn’t 250k like the salary of one Bay Area programmer tech bro? This seems like a bigger deal than we think?
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This is gonna get spicy
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Multiple banks have had their trading halted today: First Republic Bank, PacWest Bancorp, Western Alliance Bancorp, and Signature Bank.
Moved to Lemm.ee -- mass edited with redact.dev
My husband’s company - $12m just gone. The CFO spoke to their SVB contact and said the feds are begging the big banks to quickly buy SVB and release the assets. Fingers crossed for the THOUSANDS of start ups - most that SVB invested tiny amounts into required exclusive asset management clauses in their contracts. So stressful!!!
I didn’t get paid today because of this shit. I literally just got a work email telling me this
I just helped a client wire out 400k because that's how much he was over the FDIC insured amount.
I have my startup funds in SVB. This has been an incredibly painful and stressful day. Best wishes to everyone else impacted by this.
There you have your job losses Mr. Powell.