$SIVB if you missed the news in the last week you might not have heard that a top 20 bank in America has failed its stock valued at 18 billion dollars is now worth zero to not only share holders but those with preferred stock class and lending to the bank any debt per the Treasury for the United States Janet Yellen. Multiple other banks have also failed this last week.
This is different from the bank bail outs of 08 with the too big to fail well known issues. I would like to see the way that this is paid by banks this time with special assessment to the FDIC deposit insurance fund that was announced not be allowed to be passed down to customers through new fees to customers this is yet to be stated from anyone that I know of with conditions but I will say this has just happened this week.
The news of the bank failure would be hard to escape this as this was the topic as it should be on the Sunday morning shows and special episodes over the weekend on CNBC and others. If you were on Linkedin you might have had a different view then myself. You see I have lots of bank contacts including risk managers as I deal with bank foreclosure properties and have for well over a decade.
The main feedback I seen from smaller regional banks in the risk management departments was outrage literally people that are normally posting stats and figures just unleashed on the responsibility of the banks risk management department or lack of sound moves and the banks board members for signing off on the not mark to market of their commercial backed mortgages cmbs you heard that right mortgage back securities again but that wasnt the only problem with unknown risk of commercial mortgages being walked away from and allowed to go to bankruptcy one example here of whats been going on all this year https://activerain.com/blogsview/5762819/blackstone-reit-in-the-headlines-with-withdraw-limits along with the SVB took full value on extended long term bonds before they actually matured. Ceo for 5/3 Bank talked about their bonds at fifth third are offered "available for sale" they also have lines of credit available etc Fifth third bank Timothy Spence today on CNBC called it "hide to maturity" which really stood out to me. This is saying without saying they were hiding their losses on their books.
"If you google interest rates go up bond prices go down" in a nutshell if you buy a bond today to hold 30 years and say you get 30.00 a year on that 1,000 but the next issues of bond increases 1% then people would want to buy the new bond giving higher interest so if you wanted to liquidate or needed to because of a run on a bank your bond would be sold for less than the 1,000 you purchased it at was the best breakdown I had seen given in the breakdowns.
A full review by the federal reserve Michael Barr has just been announced that is due May 1st
"We need to have humility, and conduct a careful and thorough review of how we supervised and regulated this firm, and what we should learn from this experience,” Barr said. https://www.federalreserve.gov/aboutthefed/bios/board/barr.htm
The events surrounding Silicon Valley Bank demand a thorough, transparent and swift review by the Federal Reserve. - Chair Jerome Powell
FDIC tried to find a buyer for this specialized bank but found no buyer, reports are coming out that they will again try to auction off assets now.
Agreed I have more on this topic coming on more post just didnt want to make it too long. Its really something to me too see the breakdown and how many knew this was a problem that was just sitting there.