Trump-Era Deregulation Deemed a Key Culprit in the Failure of Silicon Valley Bank

[ll74]

Its more than a bad look. It’s terrible policy and market reaction signals that. Apparently the White House and the Fed think the SVB’s investors and tech startups with deposits there are too big to fail and the answer is universal deposit insurance.

It's not a stretch to understand that a panic resulting in a run on the banks would cause an epic collapse.

It's a subjective call. One can easily see that dominoes we're beginning to fall (see second bank failing). It's a risk to let them fall for more than just the banks in the discussion.

 

[BabyBoomer50s]

In a word, yes. Most of them are. They're just not ultra-right wing like most of their Republican colleagues.

I’m sure this will come as a shock to the OP of this thread, but the pre-2018 Dodd-Frank would not have prevented SVB’s failure from their risk-management mistakes. The 2018 law didn’t absolve mid-sized banks of the requirement to conduct quarterly liquidity stress tests to ensure they could weather adverse market conditions. There is simply nothing in the 2018 law that caused the SVB failure. Both large banks and mid-sized banks are still required to hold a liquidity buffer of “highly liquid assets” such as Treasurys and government agency mortgage-backed securities. Dodd-Frank actually encouraged banks to load up on these assets despite their sensitivity to rapidly rising interest rates. Even Barney Frank has acknowledged that.

 

[Chobham]

I’m sure this will come as a shock to the OP of this thread, but the pre-2018 Dodd-Frank would not have prevented SVB’s failure from their risk-management mistakes. The 2018 law didn’t absolve mid-sized banks of the requirement to conduct quarterly liquidity stress tests to ensure they could weather adverse market conditions. There is simply nothing in the 2018 law that caused the SVB failure. Both large banks and mid-sized banks are still required to hold a liquidity buffer of “highly liquid assets” such as Treasurys and government agency mortgage-backed securities. Dodd-Frank actually encouraged banks to load up on these assets despite their sensitivity to rapidly rising interest rates. Even Barney Frank has acknowledged that.

^^^^^^This.

 

[BabyBoomer50s]

What’s not to love about the government’s handling of this mess? Money is flowing into the big banks, an implied promise of universal deposit insurance has been signaled, Silicon Valley startups and their investors have been spared the 10% to 15% haircut that typically accompany uninsured deposits when a bank fails, and best of all, individual depositors and mom and pop businesses get stuck with the tab.

 

[DeluxAuto]

We also had a worldwide pandemic under that failed businessman that he said would vanish like magic during the first stages after it hit our country. Then the economy and society took a bit of a nose dive, to put it lightly.

Hey, if you wanna throw out that presidents own everything under their tenure even if it's beyond their direct power to control, then you best own it all, bish.

"Only a handful of cases. It will go away when the weather warms up."

~Feb. 2019

 

[DeluxAuto]

What’s not to love about the government’s handling of this mess? Money is flowing into the big banks, an implied promise of universal deposit insurance has been signaled, Silicon Valley startups and their investors have been spared the 10% to 15% haircut that typically accompany uninsured deposits when a bank fails, and best of all, individual depositors and mom and pop businesses get stuck with the tab.

Really?

 

[BabyBoomer50s]

Really?

Yes, really. The FDIC‘s Deposit Insurance Fund comes from premiums banks pay to protect small retail customers. It is not intended to backstop bigger depositors with over $250K and greater capacity to weather losses of the typical 10% to 15% if a bank fails. Biden said a special assessment will be levied on banks to recoup the estimated $15 billion or so from the latest bailout. That means you and I get to help pick up the tab.

 

[RobDownSouth]

Its more than a bad look. It’s terrible policy and market reaction signals that. Apparently the White House and the Fed think the SVB’s investors and tech startups with deposits there are too big to fail and the answer is universal deposit insurance.

it's a bit of a special case (yes, yes, "special pleading" and all that...hear me out). Wall street valued the bank as a "tech firm" and not as a "financial institution" which bit them on the ass in retrospect.

Their deposit base was unique: 15.7 billion dollars in only ~35,000 accounts...the bank specialized in managing "burn rate" money for thinly capitalized tech firms who were viable only due to IPO rounds of funding.

Another unique factor of their portfolio is how interconnected their deposit base was....everyone knew someone else (which is okay) but together they all acted with a "herd mentality" and given the absence of financial pros in their customer infrastructure, it caused a classic bank run once the herd panicked.

The bank filled a very niche market: startup tech firms that most established banks would not touch. As such, their portfolio was much riskier than most but their market valuation did not accurately reflect the risk. Failed bets on the bond market wiped them out.

 

[DeluxAuto]

Yes, really. The FDIC‘s Deposit Insurance Fund comes from premiums banks pay to protect small retail customers. It is not intended to backstop bigger depositors with over $250K and greater capacity to weather losses of the typical 10% to 15% if a bank fails. Biden said a special assessment will be levied on banks to recoup the estimated $15 billion or so from the latest bailout. That means you and I get to help pick up the tab.

No, it doesn't.

 

[HisArpy]

Are you trying to tell us that if an asteroid hits the planet its not Trump's fault after all? That changes everything.

No, it would totally be Trump's fault for hypocritcally allowing the asteroid to illegally cross the planetary atmospheric boundary despite closing the border to "brown immigrants." No asteroids are "illegal." They're entitled to human rights and equal protection too you know...

 

[Bdm20]

No, it would totally be Trump's fault for hypocritcally allowing the asteroid to illegally cross the planetary atmospheric boundary despite closing the border to "brown immigrants." No asteroids are "illegal." They're entitled to human rights and equal protection too you know...

We really need to re-elect Trump. If we ask him, it’s certain we’ll find out that he, and he alone, can save the world from a planet ending asteroid strike.

 

[HisArpy]

View attachment 2218617

This is the mindset of individuals who need a cop on every corner reminding them to not break the law. Because if they weren't being constantly reminded, some people would rush to do exactly that if they thought they could get away with it no matter how much it hurt someone else.

As a reminder; the law doesn't require you to adhere only to the bare minimum standard which is what the law states is necessary, you determine if your intended actions are acceptable or not at that level of conduct. Not because the law requires you to act to a higher level of reasonable care, but because doing the right thing demands it of you even if the law allows you to be a slacker.

 

[HisArpy]

We really need to re-elect Trump. If we ask him, it’s certain we’ll find out that he, and he alone, can save the world from a planet ending asteroid strike.

I'm sure that you believe you're being funny.

However history proves that, under Trump, we managed to go from no Covid vax to a Covid vax in just a few months. And, if you believe "the science," that vax "saved the world."

So, technically, Trump already did it once and if he did it once he can do it again.

 

[Bdm20]

I'm sure that you believe you're being funny.

However history proves that, under Trump, we managed to go from no Covid vax to a Covid vax in just a few months. And, if you believe "the science," that vax "saved the world."

So, technically, Trump already did it once and if he did it once he can do it again.

Sadly, it’s not funny. It is absolutely something he would say to get elected.

Bless your heart

 

[Rotadom]

This is the mindset of individuals who need a cop on every corner reminding them to not break the law. Because if they weren't being constantly reminded, some people would rush to do exactly that if they thought they could get away with it no matter how much it hurt someone else.

As a reminder; the law doesn't require you to adhere to the minimum standard, you determine if your actions are acceptable or not. Not because the law requires you to act in a certain way, but because doing the right thing demands it of you even if the law allows it.

Did you mean to quote me with this response? FYI, no one puts much stock in your legalese.

 

[HisArpy]

Sadly, it’s not funny. It is absolutely something he would say to get elected.

Bless your heart

It's like you don't even see yourself...

 

[HisArpy]

Did you mean to quote me with this response? FYI, no one puts much stock in your legalese.

Why yes, I did mean to quote you. Mostly because you're the one who posted the linky.

It's cute that you seem to believe that no one listens to a lawyer. Not that you're completely wrong because a lot of people don't listen to their lawyers, but you believing that it's universal as to my opinions is cute. Delusional, but still cute.

 

[ll74]

This is the mindset of individuals who need a cop on every corner reminding them to not break the law. Because if they weren't being constantly reminded, some people would rush to do exactly that if they thought they could get away with it no matter how much it hurt someone else.

As a reminder; the law doesn't require you to adhere only to the bare minimum standard which is what the law states is necessary, you determine if your intended actions are acceptable or not at that level of conduct. Not because the law requires you to act to a higher level of reasonable care, but because doing the right thing demands it of you even if the law allows you to be a slacker.

Regulation isn't there to force companies to obey the law. They are there to protect the consumers and the public.

 

[Dribble]

Abuses won't decrease or end at all as long as the electorate doesn't give enough fucks to hold them accountable.

The reason they don't participate isn't because they are hurt or abused. They don't participate because they don't care enough.

Not the majority of those I talk to. They don't like being lied to. Or marginalized. Maybe it is different in Florida?

It really is simple. You want the youth vote. Sit down with them. Include them in the conversations. Treat them as adults...which they are. Work together to solve issues. I can't speak for the Republican Party, but I can speak about the Democratic Party in my State. They view the youth as stupid. Furthest thing from the truth.

 

[Dribble]

It's more complex than simply blaming Trump, or blaming de-regulation.

Both were at fault. The banks made poor investment decisions, and the government- whoever was in charge (look it up; I'm not pointing fingers at anyone) made the stupid mistake of deregulating the banks.

Winner winner.

 

[adrina]

Not the majority of those I talk to. They don't like being lied to. Or marginalized. Maybe it is different in Florida?

It really is simple. You want the youth vote. Sit down with them. Include them in the conversations. Treat them as adults...which they are. Work together to solve issues. I can't speak for the Republican Party, but I can speak about the Democratic Party in my State. They view the youth as stupid. Furthest thing from the truth.

Hmmm usually adults don't need their hand held to take care of their responsibilities.

If the youth want to be taken seriously as an electorate then they have to BE an electorate.

I've gone round and round on this bullshit over and over again. People do what they care about. And most don't seem to care about the country. But they sure go after the squishmallows.

 

[Dribble]

Hmmm usually adults don't need their hand held to take care of their responsibilities.

If the youth want to be taken seriously as an electorate then they have to BE an electorate.

I've gone round and round on this bullshit over and over again. People do what they care about. And most don't seem to care about the country. But they sure go after the squishmallows.

They have. And they were back-stabbed. That isn't on them. People don't put their hand in the fire just to be burned. They are smart enough to know how to get around all the Republican laws being passed without any problem. And they are.

 

[adrina]

They have. And they were back-stabbed. That isn't on them. People don't put their hand in the fire just to be burned. They are smart enough to know how to get around all the Republican laws being passed without any problem. And they are.

No they didn't. Record turnout for them for the GENERAL was 31% for the 2020 election. The second was for the 2022 midterms was 27%. And this was AFTER Roe fell. They couldn't even be fucked to be roused to beat their record to defend their futures from the absence of Roe.

They have never actively participated in real numbers. Primaries? Less than 15% for them. For the last midterm they didn't even crack 30% - and it was considered record setting.

Hint: Active participation is not once every four years or so. That is ALL they have done.

What fantasy land do you live in where you view that as being an electorate? That's not even a blip.

 

[BabyBoomer50s]

I lived and worked in Silicon Valley for decades and although I moved out of state last year, I am still close to the valley’s tech and political climate. The prevailing sentiment of the governor and local elected officials who have commented on the SVB issue is the bailout is A-OK. Sand Hill is the defacto capital of the Bay Area. Working folks are clueless, few vote, and those who do generally trust the judgment of their elected representatives.

 

[Lazaran]

Bottom line: The deregulation initiated by republicans, overwhelmingly supported by republicans, and signed into law by a corrupt, orange, traitorous, republican, contributed directly to the SVB scandal.

The corrupt orange traitor’s republican Fed appointees also bear a lot of the blame.

The CEO of SVB who lobbied for the deregulations is a straight up con man imho.

So weird how SVB was approaching the 50 Billion in assets threshold of mandated scrutiny, then lobbied for a bill that raised the threshold to 250 billion, then collapsed at 212 Billion- almost the maximum sweet-spot where they weren’t subject to mandated scrutiny.

The SVB executives $84 million in stock sales over the last two years is troubling, and the CEO’s $3.6 million in stock sales right before the collapse calls for jail time imho.

It’s also infuriating that the corrupt orange traitor’s and the republican’s tax cuts for the wealthy and corporations plan allowed the scam to be even more rewarding for the culprits.

SAD!!!