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wackawacka

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Everything posted by wackawacka

  1. Not a banking regulation expert so going to mishmash my wording due to the lack of mark to market that the bank did not have the recognize the loses on the loans until they sold the treasuries. As a result, the capital reserve lose was recognized all at once when they sold the treasuries vs GSIBs who have had to continual mark their books to market resulting in hedging and managing their capital reserve. You see this with JPM who came out months ago saying they would not touch long date treasuries with a 10 foot pole because it was clear that interest rates would rise causing loses on these investments having to be realized. The regional banks did not have to realize these loses because of mark to market rules and were forced to sell because deposit draw down was accelerating. Because SVB deposit base was shrinking so fast (mostly VC money being lite on fire by tech) and lack of new funding from VCs into the ecosystem, SVB had to shore up its capital reserve. The only way to do that was sell its loan book. If SVB had to mark to market, they would had to months ago change their capital reserve sooner and not all at once. Arguably if they had to mark to market and loses were born over time instead all at once, you would not have had the mass panic causing the capital flight. Lots of mistakes were made including how GS handled the equity raise which was comically bad. That does not change the situation where mark to market could have prevented the situation. I don't have the specifics on liquidity but understood that is related but not wholly dependent on mark to market on loan portfolio to test ability to sell assets on reasonable prices to test if a bank can handle reasonably extreme market movements.
  2. Not a defense of SVB, but no regional bank could withstand $54b? in withdrawls so there is merit to the run of the bank argument. With that said, it does not mean the bank was mismanaged and potentially insolvent which is seen in no other bank wanting to buy their assets. Every bank even GS wanted to own SVB but not one of them is willing to acquire their (toxic) assets because as you look into their loan portfolio then you quickly discover how quickly the bank is under water as it was essentially run as a leveraged PE fund.
  3. This is categorically untrue. Globally systematically important banks have to mark their portfolio to market and have liquidity requirements that SVB and other regional banks who have assets under $250b do not. The liquidity requirements alone would have triggered a change in their portfolio approach. Additionally, it would not allowed them to be surprised by loses on long dated treasury as those loses were only realized when sold vs GSIBs have to make their portfolio to market.
  4. Every national retailer wants a banking licenses but blocked due to political reasons. Let retails (e.g., Amazon/Walmart) buy these regional banks.
  5. it changed the threshold from $50b in assets to $250b this was predictable and comical how the regulators have backed themselves into this corner.
  6. Pointless degrees are finally going away. https://www.wsj.com/articles/more-students-are-turning-away-from-college-and-toward-apprenticeships-15f3a05d
  7. I grew up in Houston! You can encourage population density and reverse urban sprawl. It just requires zoning and regulation which I know is heresy in Texas
  8. it needs to have the reach to support local commuters. the issue is how it is sold as likely won't pay dividends for decades as the light rail in houston doesn't actually go anywhere. the problem with most of these plans is longer-term investment so usable for local commuters. if you showed that total cost, it would never pass. it is clear that more roads aren't the answer but politics won't allow for the investment needed for large scale public transit. we should increase gas tax and use that to fund public transit. look at any tier 1 city and notice all the places people want to live or visit has a huge network of public transit. the us has way under invested in that which results in shit hole cities like Houston and LA.
  9. mass transit is a public good - it doesn't have to make economic sense. i rather burn tax dollars than have our city look like the katy freeway More lanes = more demand and same level of congestion. only way cities can solve traffic is investing in public transit.
  10. On a client briefing call with a major bank (e.g., JP, GS), they are ripping SVB.
  11. People keep shitting on Thiel (founders fund) but there was a number of VC funds that pulled all their money and told all their PortCo to do the same. (YC, Coatue, Union Square to name a few...)
  12. Most of the deposits is VC money....
  13. No-CR: There is no political appetite for bail-outs
  14. https://www.ft.com/content/ebba73d9-d319-4634-aa09-bbf09ee4a03b
  15. This wasn't to save SVB but the potential run on regional banks that were expecting huge outflows Monday AM. Lots of noise from law firms and large banks on safety of regionals to FDIC had to do something to stop the Lehman moment.
  16. are we here yet?
  17. 1234
  18. While I am not concerned about depositors mostly if not full whole, this is the short-term issue. Loan docs from VCs are circulating to fund payroll in many circles to help with short-term issue but that assumes you are on good terms with your VC or they are vultures when many are.
  19. I would expect 2 or 3 regional banks to also fail after this...all near to SVB customer base.
  20. Lulz Crytpo being taken down another notch by a bank failure.
  21. - FT Not sure why people are advocating for bail out unless they were caught on the wrong side the trade.
  22. The floor has been set per Bloomberg
  23. City hasn't bounced back. I usually feel a vibe shift when this comes to town. The city actually feels more dead than usual
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