Reaction to Hasan on the Silicon Valley Bank Collapse

​ @HasanAbi #hasan #SVB #bank #commentary #reaction #politics

Please leave constructive feedback, I`d love to know how best to refine the way that I approach these discussions during streams and want your thoughts on both mine and Hasan`s takes. Thank you!

Three major banks have collapsed as of my research:

Silicon Valley Bank= Massive amounts of money in assets. SVB was a Venture Bank that invested in startups.
SVB had 21 Billion $ in their Bond Portfolio which they sold at a 1.8 Billion $ loss (SVB Portfolio)

Silvergate= 11-12 Billion in assets

Venture= midsize, greater assets than Silvergate. Couldn`t get a good, summarized evaluation of the assets that felt accurate.

SVB wasn`t insolvent (meaning when they can`t pay their debts when demanded.) they were Illiquid (Can't pay their debts, because they don`t have the money at all at the moment due to it being locked up in things like bonds.) They sound similar but tend to run into each other. If a bank is illiquid when money is being drawn out en masse, it can become insolvent if the bank starts needing to sell their assets to pay off what is owed.

Many banks take the safe investments in Treasury Bonds and physical property assets. The Bonds are simply safe because they provide a fairly stable return over time at a steady rate. They are however destabilized if interest rates rise rapidly, like we have seen recently due to problems relating to inflation. A bond that may have yielded 1% at a given yearly rate, the same Bond might start being sold at a 5% at the same year total. Now, YOUR Bond`s value is decreased on the market, and you are making overall less than someone with the same bond but you can`t sell it at an even return. All you can do is keep it to your detriment or sell it for a loss. So in SVB`s case, when people were wanting their money that the bank probably didn`t have on hand, they had to start selling these Bonds at a loss.

The FDIC insures up to 250,000$ per account (taken from the FDIC Q&A section), but at SVB most of their business accounts had SIGNIFICANTLY more money in their accounts than the given amount.

Greg Becker (SVB CEO) lobbied to deregulate HIS OWN BANK!

I attempt to use only 100% NewsGuard Certified for videos to avoid complications, however, those aren`t always as accurate as they portray themselves as. But I did keep above 70% in all articles linked.
Links for Video:

https://www.forbes.com/advisor/banking/how-do-banks-work/
https://capital.com/how-do-banks-invest-money-from-depositors-
https://finance.yahoo.com/news/banks-money-deposit-110024843.html
https://corporatefinanceinstitute.com/resources/capital-markets/what-is-venture-capital/
https://www.forbes.com/sites/alexkonrad/2023/03/10/silicon-valley-bank-closure-vc-startups-reaction/?sh=2c8010a5eda4
https://www.forbes.com/advisor/investing/venture-capital/
https://www.investopedia.com/terms/v/venturecapitalist.asp
https://www.investopedia.com/terms/u/usdx.asp
https://www.usnews.com/news/best-countries/articles/2020-09-11/a-global-anomaly-the-us-declines-in-annual-quality-of-life-report