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| Economy |
| SVB collapse: Bank fallout shines spotlight on $620 billion hole in banking sector |
| 2023-03-16 |
| [WashingtonExaminer] Fallout from the Silicon Valley Bank collapse has directed attention to a $620 billion ticking time bomb in the banking system that has the potential to spell doom for the financial system. SVB's meltdown was partly caused by a chasm between its assets and what they were worth in the market. Eventually, SVB sold some of those assets, spooking investors and triggering a run on the bank. But SVB isn't alone, as banks across the United States were sitting on $620 billion in unrealized potential losses at the end of last year, per the Federal Deposit Insurance Corporation. That hole illustrates why authorities at the Federal Reserve, the Treasury Department, and the FDIC were so eager to stave off contagion or panic spread from SVB's demise across the banking sector. The reason for this predicament is that banks compiled a plethora of bonds and treasuries during times when interest rates were hovering near zero. But now, the Federal Reserve has begun jacking up rates in an effort to combat inflation, which has caused many of those assets to plunge in value. Read the rest at the link More from Investor's Business Daily: Biotech Stocks And The SVB Collapse — Here's What We Know The collapse of Silicon Valley Bank will leave early-stage biotech companies in a funding dearth, experts said this week. But big-name biotech stocks will emerge largely untouched. Silicon Valley Bank, under the SVB Financial Group (SIVB) umbrella, was the bank of choice for many early biotech companies. Its failure shows the cracks in the fundraising model for early-stage biotech companies, says Robert Cote, founder and chief executive of Cote Capital. Now, many of those companies are on the brink of defaulting on their loans, he said in an interview. Mina Tadrus, founder and chief executive of Tadrus Capital, says these firms will need to find alternative sources of cash — all while competing against other companies in the same straits. "The increased competition for funding could lead to higher valuations and more stringent terms, making it harder for smaller startups to access capital," Tadrus said in an email to Investor's Business Daily. "The fewer investment opportunities could mean fewer exit opportunities (initial public offerings or acquisitions) and lower returns for investors in venture-backed businesses." Meanwhile, biotech stocks are trying to claw back from a dive last week amid SVB's demise. On the stock market today, IBD's Medical-Biomed/Biotech industry group closed 1.3% higher after a 2.1% jump on Monday. Read the rest at the link |
| Posted by:badanov |
| #7 So the Fed is causing these failures? |
| Posted by: Sock Puppet of Doom 2023-03-16 20:26 |
| #6 btw, turns out there was a lot of China Commie money in SVB - above the $250k limit they will get their $$ back |
| Posted by: lord garth 2023-03-16 18:13 |
| #5 "unrealized potential losses" This is double weasel-wording. "Unrealized"--which means that they will be un-unrealized as soon as interest rates start back down again and their bond portfolios stabilize. Panicking over monthly or quarterly swings is just dumb. "Potential" means that it may never happen (see above comment on the interest rate cycle.) 'Nuff said. |
| Posted by: Tom 2023-03-16 13:47 |
| #4 I encourage Mike Lindell to buy the bank for pennies on the dollar. No real reason for him to do it. I just want to see some heads explode. |
| Posted by: Super Hose 2023-03-16 12:04 |
| #3 Couple zingers. Say....is that the amount which has been donated to Ukraine? |
| Posted by: swksvolFF 2023-03-16 11:53 |
| #2 |
| Posted by: Frank G 2023-03-16 06:33 |
#1 — Sal the Agorist (@SallyMayweather) March 16, 2023 |
| Posted by: badanov 2023-03-16 00:48 |