Silicon Valley Bank share slump rocks financial stocks

[StraightEdge]

More US banks going down. Financial system in US is in bad condition.

Lehman moment? Trading in First Republic, Signature Bank, other regional banks halted after SVB collapse - The Hindu BusinessLine
First Republic and PacWest Bancorp plunge as fears of contagion grow following the biggest bank failure since 2008 | Business Insider India

 

[BHAN85]

sillicon valley is a bubble, internet free services are useful to get mil intelligence, but that doesnt give money directly.

 

[khansaheeb]

Seems like tethering on another banking meltdown, second bank taken over by US gov:-

https://www.cnn.com/2023/03/12/investing/svb-customer-bailout/index.html

US regulators say SVB customers will be made whole as second bank fails​

By David Goldman, CNN
Updated 8:44 PM EDT, Sun March 12, 2023


New YorkCNN —
In an extraordinary action to restore confidence in America’s banking system, the Biden administration on Sunday guaranteed that customers of the failed Silicon Valley Bank will have access to all their money starting Monday.
In a related action, the government shut down Signature Bank, a regional bank that was teetering on the brink of collapse in recent days. Signature’s customers will receive a similar deal, ensuring that even uninsured deposits will be returned to them Monday.
In a joint statement Sunday, Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and Federal Deposit Insurance Corporation Chairman Martin J. Gruenberg said the FDIC will make SVB and Signature’s customers whole. By guaranteeing all deposits – even the uninsured money that customers kept with the failed banks – the government aimed to prevent more bank runs and to help companies that deposited large sums with the banks to continue to make payroll and fund their operations.
The Fed will also make additional funding available for eligible financial institutions to prevent runs on similar banks in the future.
“Monday will surely be a stressful day for many in the regional banking sector, but today’s action dramatically reduces the risk of further contagion,” Jefferies analysts Thomas Simons and Aneta Markowska said in a note to clients Sunday evening.
Wall Street investors were relieved that the government intervened. Dow futures were up nearly 300 points, or 0.9% late Sunday. S&P 500 and Nasdaq futures were both up 1.3%. Markets had tumbled more than 3% Thursday and Friday as investors feared more bank failures and systemic risk for the tech sector.
US taxpayers will not be on the hook for either facility, the regulators said. But shareholders and holders of unsecured corporate bonds will not be protected by the regulators’ plan.
“The US banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the [2008] financial crisis that ensured better safeguards for the banking industry,” the regulators said. “Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.”

The Fed tries to stave off the next crisis​

The Fed’s new so-called Bank Term Funding Program is designed to prevent the next SVB from collapsing.
In its effort to curb inflation, the Fed sent interest rates surging at a historic pace last year. That means ultra-low-interest Treasury bonds that banks invested in just a couple of years ago crumbled in value. The FDIC reported that America’s banks are sitting on $620 billion of unrealized losses.
SVB sold billions of dollars of those securities at a steep loss last week to obtain enough cash to pay customers’ deposit withdrawals. That worrisome sign triggered a bank run that led to SVB’s collapse Friday.
To prevent a repeat at another bank, the Fed said it will offer banks loans for up to a year in exchange for US Treasury bonds and mortgage-backed securities that have tumbled in value. The Fed will honor the debt’s original value for the banks that take the loans.
And, as it did during the pandemic, the Treasury will also provide $25 billion in credit protection to ensure against banks’ losses. That should help banks easily access cash when they’re in need.
“The Fed ring fenced the SVB disaster and averted a crisis of epic proportions for the banking sector,” said Wedbush Securities’ Dan Ives.”This was a much needed move to avert contagion on the banking sector and consumer confidence. That said the Street knows there is never just one cockroach and investors will be laser focused on other regional banks that need to possibly shore up capital.”

Intervening to restore collapse​

American regulators worked through the weekend on the substantive plan after SVB’s stunning and rapid collapse late last week. Treasury, Federal Reserve and FDIC officials have worked with the Biden administration over the past two days to develop the facilities.
Federal officials spent the weekend pressing for a sale of SVB. The FDIC opened an auction this weekend for bids to acquire the bank, the Treasury Department said in a briefing on Sunday with lawmakers in the California delegation, two sources familiar with the briefing told CNN.
By guaranteeing the deposits, the US government is trying to avoid two potentially risky scenarios from the bank failure fallout, both of which could have dire consequences: Other banks with similar profiles to SVB and Signature could be next to fail if customers lose faith that they will have ample cash to fund their deposits. And the tech companies that kept their cash with SVB could collapse if they were unable to make payroll or fund their operations with the $250,000 worth of deposits per account that the FDIC insures.
As of the end of last year, SVB said it had $151.5 billion in uninsured deposits, $137.6 billion of which was held by American customers. Customers yanked $42 billion from Silicon Valley Bank on Thursday, leaving the bank with $1 billion in negative cash balance, the company said in a regulatory filing.
A bailout of Silicon Valley Bank itself was not under consideration, Yellen said in an interview with CBS Sunday.
“Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out … and the reforms that have been put in place means that we’re not going to do that again,” Yellen told CBS. “But we are concerned about depositors and are focused on trying to meet their needs.”
This story and headline have been updated with additional developments.
CNN’s Phil Mattingly and Alayna Treene contributed to this report.

 

[khansaheeb]

https://www.cnn.com/2023/03/13/business/svb-fallout-consumer/index.html

Is my money safe? How secure is the banking system? Your Silicon Valley Bank fallout questions, answered​

By Ramishah Maruf, CNN
Updated 5:07 PM EDT, Mon March 13, 2023
















Video Ad Feedback
Hear what former Goldman Sachs president thinks should happen in response to SVB collapse
02:44 - Source: CNN
New YorkCNN —
The question on so many bank customers’ minds in the aftermath of Silicon Valley Bank’s stunning collapse: Is my money safe?

What is happening?​

A bank run on Silicon Valley Bank led the Federal Deposit Insurance Corporation to take control of the bank Friday in the second-largest bank failure in US history.
The FDIC insures depositors up to $250,000, but as many larger companies used SVB as their bank, they had a lot more than that in their accounts. US customers held at least $151.5 billion in uninsured deposits by the end of 2022, SVB’s latest annual report said. Foreign deposits reached at least $13.9 billion and are also uninsured.


How does a bank collapse in 48 hours? A timeline of the SVB fall
But before markets opened this week, the Biden administration took an extraordinary step, guaranteeing that SVB customers will have access to all their money starting Monday, even uninsured deposits.

Do I have to worry about cash I stored in my bank?​

In short, if you have less than $250,000 in your account, then you almost certainly have nothing to worry about. That’s because the US government insures the first $250,000 in eligible accounts.
Many SVB customers had much more than $250,000 deposited and now that they can’t get their money, some companies are struggling to make payroll.

Should I pull my money out of my bank?​

It doesn’t make sense to take all your money out of a bank, Jay Hatfield, CEO at Infrastructure Capital Advisors and portfolio manager of the InfraCap Equity Income ETF, said. But make sure your bank is insured by the FDIC, which most large banks are.
“I don’t think people should panic, but it’s just prudent to have insured deposits versus uninsured deposits,” Hatfield said.

But if I don’t run to pull my money out of the bank now, won’t it disappear?​

Your money is most likely not going anywhere.
Everyday consumers, on the whole, are unlikely to be affected. But the collapse is a good reminder to be aware of where your money is held, and not to have it all in one place.
“The first bank failure since 2020 is a wake-up call for people to always make sure their money is at an FDIC-insured bank and within FDIC limits and following the FDIC’s rules,” Matthew Goldberg, a Bankrate analyst, said.
The FDIC has different resources on its site. The “bank suite” tool offers a list of FDIC-insured banking institutions and the Electronic Deposit Insurance Estimator calculates the insurance coverage of different deposit accounts at banks.
Hatfield’s advice was to split up your money between banks, so each one had a maximum of $250,000.
“Why not? If you have a million, why not have four accounts and have them insured,” Hatfield said. “Why worry about it?”

Is this 2008 all over again?​

The banking sector should be, theoretically, more stable due to the regulatory reforms put in place after the crisis in 2008.
The government’s actions this weekend also try to prevent the next SVB from happening, further stabilizing the sector after a chaotic week. Rising interest rates meant cheap Treasury bonds SVB and other banks invested in years ago crumbled in value – last week’s bank run was triggered by SVB selling those securities at a steep loss to to help pay customers’ deposit withdrawals after people started pulling their money out of the bank.


Reuters: US regulators are working to bail out SVB customers
T he Fed also said it will offer bank loans for up to a year in exchange for US Treasury bonds and mortgage-backed securities that lost value. The Fed will honor the debt’s original value for the banks that take the loans.
The Treasury will also provide $25 billion in credit protection to ensure against banks’ losses, which should help banks easily access cash when they’re in need.
“The Fed ring-fenced the SVB disaster and averted a crisis of epic proportions for the banking sector,” said Wedbush Securities’ Dan Ives.

Can the US federal government contain the panic?​

Over the weekend, action from the government was expected to prevent a wider crisis that would lead to more bank runs.
“If they do that, that will stop this panic from spreading to other banks and solve many of the problems, at least in the short term,” Economist Richard Duncan said Sunday. “If we start to see a significant banking panic, and this is going to have much wider repercussions throughout the US economy.”
SVB was among the top 20 American commercial banks, with $209 billion in total assets at the end of last year, provided financing for almost half of US venture-backed technology and health care companies.


SVB employees received bonuses hours before bank shutdown, reports say
Every bank has losses on their securities and uninsured deposits. US banks were sitting on $620 billion in unrealized losses (assets that have decreased in price but haven’t been sold yet) at the end of 2022, according to the FDIC.
Still, there’s no need to panic yet, say analysts.
“[Falling bond prices are] only really a problem in a situation where your balance sheet is sinking quite quickly… [and you] have to sell assets that you wouldn’t ordinarily have to sell,” said Luc Plouvier, senior portfolio manager at Van Lanschot Kempen, a Dutch wealth management firm.
Most large US banks are in good financial condition and won’t find themselves in a situation where they’re forced to realize bond losses, said Gruenberg.
A bailout of Silicon Valley Bank itself was not under consideration, Yellen said in an interview with CBS Sunday.
“Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out… and the reforms that have been put in place means that we’re not going to do that again,” Yellen told CBS. “But we are concerned about depositors and are focused on trying to meet their needs.”
Steps the government took over the weekend also quelled fears of SVB turning into a full-blown crisis.
“Monday will surely be a stressful day for many in the regional banking sector, but today’s action dramatically reduces the risk of further contagion,” Jefferies analysts Thomas Simons and Aneta Markowska said in a note to clients Sunday evening.
CNN’s David Goldman, Nicole Goodkind and Allison Morrow contributed to this report.

 

[khansaheeb]

Investor who called Lehman collapse predicts the next big US bank failure

Robert Kiyosaki, who originally forecasted the Lehman 2008 crisis, predicts the next bank to collapse in the Silicon Valley Bank contagion will be Credit Suisse.

finance.yahoo.com

Investor who called Lehman collapse predicts the next big US bank failure​

Inflation is ‘the gorilla in the room’ amid SVB collapse, federal spending: Rep. Steil
going to be looking
into Silicon Valley Bank

Scroll back up to restore default view.
Kristen Altus
Mon, March 13, 2023 at 11:07 AM PDT·3 min read



The Wall Street analyst and investor who called the 2008 Lehman Brothers’ collapse has revealed what bank he thinks will hit insolvency next amid Silicon Valley Bank (SVB) closure shockwaves.
"The problem is the bond market, and my prediction, I called Lehman Brothers years ago, and I think the next bank to go is Credit Suisse," the Rich Dad Company co-founder Robert Kiyosaki said on "Cavuto: Coast to Coast" Monday, "because the bond market is crashing."
Just days after SVB, the California-based bank primarily used by tech industry companies and startups, declared bankruptcy, New York-based Signature Bank announced it would be shutting down to protect consumers and the financial system.
Similarly to SVB, Signature Bank was popular among crypto companies. The institution provided deposit services for its clients’ digital assets but did not make loans collateralized by them.
FIRST REPUBLIC SHARES PLUNGE ON S.V.B. CONTAGION FEARS
The closure announcement came in a joint statement from the U.S. Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC). The regulators said SVB clients will have access to their money starting Monday, at no expense to the American taxpayer. Similar recourse will soon be provided to Signature Bank clients, regulators also claimed.
READ ON THE FOX BUSINESS APP
Kiyosaki further explained how the bond market – the economy’s "biggest problem" – will put the U.S. in "serious trouble" as he expects the American dollar to weaken.
"The U.S. dollar is losing its homogeny in the world right now. So they're going to print more and more and more of this," the expert said while holding up a dollar bill, "trying to keep this thing from sinking."
He further expressed concern over pension plans and individual retirement accounts (IRAs) in the current market environment, adding the American taxpayer will be hit hardest by bank bailouts.
"My generation, the boomers, we're trying to retire. So this is the perfect storm in many ways," Kiyosaki said. "Like I said, again, I think the Fed and the FDIC signaled they're going to print again, which makes stocks good. But this little silver coin here is still the best, it's 35 bucks, so I reckon anybody can afford $35, and I'm concerned about Credit Suisse."
Amid hyperinflation and printing more money, Kiyosaki advised exploring or buying into silver and gold investments during a volatile market.
"The Fed and the FDIC is signaling hyperinflation, which makes gold and silver even better because this thing here is trash. They're going to spread more and more of this fake money, and that's what the Fed and the FDIC is signaling: we're going to print as much of this as possible to keep the crash from accelerating. But they're the guys who are causing it," the market expert said.
On "Mornings with Maria," best-selling author and The Bear Traps Report founder Larry McDonald warned of similarities between the SVB collapse and Lehman Brothers, which Kiyosaki originally forecasted.
"And what I saw inside of Lehman and what we just learned over the weekend as to the way this bank was managing itself," the expert continued, "it's just bloodcurdling irresponsibility and the Fed enabled it. And then when they juiced rates up higher, they're essentially just blowing up these bad actors."
READ MORE FROM FOX BUSINESS
FOX Business’ Bradford Betz contributed to this report.