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Replies: 7
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110%er [3650]
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Ring of Honor [22319]
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The Conservative Nazi says “No Student Loan Forgiveness For You”
Mar 12, 2023, 10:08 AM
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Albeit I’m not really in favor of student loan forgiveness! And that is a weak attempt at diversion from original point which I agree.
And finally, playing with house money is always fun regardless of game.
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Associate AD [831]
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Re: The Conservative Nazi says “No Student Loan Forgiveness For You”
Mar 12, 2023, 11:29 AM
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Albeit I’m not really in favor of student loan forgiveness! And that is a weak attempt at diversion from original point which I agree.
And finally, playing with house money is always fun regardless of game.
Student loan forgiveness, IMHO, should be as accessible as any other loan forgiveness (through personal bankruptcy). People can blow their cash on whatever, create the inability to pay their debts, and go through personal bankruptcy. Student loan debt follows one to the grave.
(I know that we're off topic here.)
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Oculus Spirit [43168]
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I agree and the lenders should be allowed to address
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Mar 12, 2023, 11:49 AM
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risk assessment when applying interest rates to student loans. Gender studies, psychology and history majors are a greater risk of default and should pay higher interest rates than engineers accountants and physicians.
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Orange Phenom [14755]
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I am admittedly way out of my wheelhouse when discussing
Mar 12, 2023, 11:19 AM
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banks and their business... But.. In layman's terms from what I've been reading is that SVB had two problems that in tandem crushed them:
The first issue is that SVB dealt almost exclusively with tech firms who have a habit of continuously rolling over large debts where they are not paying off their debt but simply taking out new debt to pay off the old.
The second (and biggest issue) is that when SVB took in large deposits from venture capital clients they disproportionately invested in long term treasury securities at very low rates - believing that rates would not go up as fast as they did. When their tech firm clients started losing money, they began to withdraw large sums of cash which SVB did not have readily available, so SVB had to start selling their Treasury notes at large losses caused by the Fed raising interest rates, which in turn lowered the value of SVB's long term low yield notes. Panic ensued and more depositors started yanking money out of SVB until the well went dry and the FED shut SVB down.
To me it looks like SVB did a poor job of investing the money that their customers deposited with the result being business failure. I'm fairly certain the folks that deposited $ Millions into SVB understood most of it was uninsured. As such - did they not keep track of what SVB was doing with their deposits? Did any of them raise concerns to the SVB leadership? Anyway - we now have a bunch of folks (mostly rich folks) all jumping on the Government SVB bailout bandwagon with worries that other uninsured banks will suffer a similar fate due to panic withdrawals.
I don't know - just seems to me we need to let SVB fail so that other banks learn the Government isn't going to bail you out for making bad decisions otherwise there is no real penalty for bad bank leadership/board decisions.
Hoping that one of you financial gurus on the board can give a better, more informed analysis of what happened and what should be done about it.
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Associate AD [831]
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Re: I am admittedly way out of my wheelhouse when discussing
Mar 12, 2023, 11:41 AM
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We shouldn't have rolled back Dodd-Frank in 2017!
This is a weird case as this isn't a mom and pop bank, but one that venture capitalists largely use.
That said, one hates to see businesses unable to meet payroll because of the actions of SVB. We need to protect those folks, IMHO, while being sure that none of the management of SVB walks away with a single red cent, which is not the way these things usually happen, unfortunately.
I think Mitt is right on this one.
https://twitter.com/mittromney/status/1634669060402081792
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Orange Phenom [14755]
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So far Janet Yellen is saying "no bailout" and until someone
Mar 12, 2023, 1:13 PM
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can make a better argument for a bailout than the ones I've seen, I agree with her. For the most part I share your sentiments though I'm not read up enough on the Dodd-Frank roll back to know how much it could have prevented SVB from making some bad investment decisions.
Either way these SVB executives and the SVB board need to have their pay and compensation frozen until all the depositors have been paid. No golden parachutes for these SVB clowns while depositors are out $ millions...
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110%er [3650]
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I’m no finance guru
Mar 12, 2023, 2:31 PM
[ in reply to I am admittedly way out of my wheelhouse when discussing ] |
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but everything you have described follows what I’ve read as well. They didn’t hedge against the probability that interest rates would rise, so it seems they had no risk management, and not a single one of their clients, nor the bank’s regulator did any due diligence.
How can a company like Roku for example, with $495 million in exposure not have some clue as to what was on the banks balance sheet. When you are making an uninsured deposit of notable size, you are essentially making a loan to the bank, so you should be aware of the risk as well, it’s hard to believe no one could anticipate that this would happen, yet here we are.
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