SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Financial Collapse of 2001 Unwinding
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: robert b furman who wrote (10563)3/12/2023 10:04:48 PM
From: Elroy Jetson1 Recommendation

Recommended By
nicewatch

  Read Replies (1) of 13775
 
Crypto was not a factor with Silicon Valley Bank, although Signature Bank which the FDIC just closed today did a lot of crypto lending.

Close banks early when they still have enough assets to pay depositors. (Of course the shareholders and any debt owners are wiped out.)

Both banks were highly rated by entrepreneurs and Forbes magazine for their willingness to take on risks few banks would take. That alone suggests why they've both experienced very unbank-like problems.

Similarly minded high net worth banks are First Republic (FRC) and Banner Bank (BANR), though both have a deeper bench of banking management. First Republic was previously sold to Merrill Lynch and then spun-off again when Bank of American bought Merrill.
.

The problem these banks are immediately experiencing are unhedged underwater bond portfolios, particularly longer term, which were not hedged. This is a non-bank-like naivete which is matched only by the naivete of their customers who happily left up to billions of Dollars in accounts insured up to $250k.

If these businesses had withdrawn their funds, most would have trigger a default in their enterprise loans. So this was a two-sided delusion where banks and customers ignored banking realities.

These banks tried to cobble an investment bank business model onto banks of regular banking structure, which is incompatible.


Investment banks can operate in this manner because their "depositors" are investors who understand their money is at risk and often cannot be withdrawn for long periods of time.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News