Silicon Valley Techno-Utopianism

xp i have some cash in betterment earning 4%, i am OK with reaping the whirlwind for now. i dunno if i'd move it to marcus per se since goldman lost something like $2b on their retail banking division last year and the future is uncertain. (not saying that you'd lose your money, just that i dunno goldman might sell marcus or something and you might end up banking with like regional bank of the ozarks?) ally bank might be a better destination with less headache long term.

https://www.cnbc.com/2023/02/27/why-goldmans-marcus-project-failed-and-what-it-means-for-ceo-solomon.html

i would worry about goldman selling marcus if it happened. right now they seem like the best best for an emergency fund that pays meaningful interest.

bit worried we're going to find out on monday that ADP or one of the other major payroll providers was with SVB.

seriously doubt that for ADP

I don’t know why everyone doesn’t bank with a credit union, seems like a no-brainer

I mean I suppose startups probably can’t, but human beings.

xxp at least one payroll provider lost the money they had custody of yesterday

Effective immediately & going forward, Rippling payroll runs will process through JPMC. However, pay runs in flight for today out of SVB have not been paid. The latest we heard from SVB this morning was that this was an operational delay and funds will be released.

— Parker Conrad (@parkerconrad) March 10, 2023

My post to our employees. This is dumpster fire. From regulators to SV investors doing nothing to bailout their companies from breaching contracts. pic.twitter.com/ye8W8AkNaq

— Alex Meshkin, GED (@alexmeshkin) March 10, 2023

via read max https://maxread.substack.com/p/what-happened-with-silicon-valley

they could sell it all the treasuries at once, but it would just mean that people wouldn't get all their money since i'm presuming they own less in bonds than they have obligations to their depositors/creditors... aka they're insolvent xp

― 龜, Friday, March 10, 2023 4:38 PM (sixteen minutes ago) bookmarkflaglink

sure they could sell them and they may have already but theyre worth more when held to maturity which is why even tho they have been declared insolvent by the fdic they might be seen as worthy of being bought by some other bank, this is obvs all speculation they might just have nothing be committing fraud or whatever, or maybe they were in a survivable position but got taken out by a bank run

doe

i would worry about goldman selling marcus if it happened. right now they seem like the best best for an emergency fund that pays meaningful interest.

they could sell it all the treasuries at once, but it would just mean that people wouldn't get all their money since i'm presuming they own less in bonds than they have obligations to their depositors/creditors... aka they're insolvent xp

― 龜, Friday, March 10, 2023 4:38 PM (sixteen minutes ago) bookmarkflaglink

sure they could sell them and they may have already but theyre worth more when held to maturity which is why even tho they have been declared insolvent by the fdic they might be seen as worthy of being bought by some other bank, this is obvs all speculation they might just have nothing be committing fraud or whatever, or maybe they were in a survivable position but got taken out by a bank run

yea related info from this piece https://www.netinterest.co/p/the-demise-of-silicon-valley-bank

When banks purchase securities, they are forced to decide up-front whether they intend to hold them to maturity. The decision dictates whether the securities are designated as “held-to-maturity” (HTM) assets or as “available-for-sale” (AFS) assets. HTM assets are not marked to market: Banks can look on nonchalantly as bonds lose value; they remain glued to balance sheets at amortised cost regardless. By contrast, AFS assets are marked-to-market—a purer designation but one that injects an element of volatility into a bank’s capital base. For smaller banks, regulators look through this volatility but for banks with over $700 billion in assets, that volatility directly impacts regulatory capital.

Initially, banks favoured the flexibility that AFS gave them. If conditions changed and they wanted to sell, they could do so without much fuss. Sell even a single bond out of an HTM portfolio, however, and the entire portfolio would need to be re-marked accordingly. Through 2020, around three quarters of banks’ securities portfolios were held as AFS.

But then interest rate expectations started to shift and bond prices began to slide. Having been sitting on mark-to-market gains on their securities portfolios, banks started to see losses emerge. Unrealised gains of $39 billion across banks’ AFS portfolios at the end of 2020 swung to unrealised losses of $31 billion by the end of 2021.

To staunch the bleed, many banks reclassified AFS securities as HTM. This meant recognising losses upfront, but the switch would protect balance sheets from further losses as bond prices continued to fall. The largest bank, JPMorgan transferred $342 billion of securities from AFS to HTM, taking its weighting of AFS down to 30%. Others followed suit: Across the industry, the weighting of banks’ securities held as AFS shrank from three-quarters to just over half by the end of 2022.

i'm with ally. recommended.

ok this is serious now tv is at stake

From an 8-K just filed: Roku has more than a quarter of its cash at SVB. Roku "does not know to what extent the Company will be able to recover its cash on deposit at SVB."https://t.co/mvvW4GEpX1

— Stephen Nellis (@StephenNellis) March 10, 2023

i’m doing the jack nicholson hand rubbing gif right now

A few friends absolutely roasted today. Terrible.

fwiw as someone very unqualified to speak on this the payroll stuff seems like it’ll resolve itself whenever svb gets un-ddos’d, if they are just acting as a conduit between company’s bank and employee banks for ripple - there is money coming in the door that can’t be touched other than for being sent out the door to employee accounts, but right now the switchboard is fully lit up so they gotta wait.

the companies that are funding payroll through accounts held at svb, however…

i think one problem is that banking infrastructure in the us is literally all in COBOL, perhaps the us government could hire elon to help with a full rewrite?

cobol is nice its just doing its thing

doubt anyones really gonna lose big money on this mb a lil haircut, tho the disruption could be bad for some businesses

379 8-Ks filed today, most declaring exposure to SVB

https://www.sec.gov/cgi-bin/browse-edgar?company=&CIK=&type=8-K&owner=include&count=100&action=getcurrent

the amount of life sciences and tech companies in that list is pretty lol

here is the money 8-k, plucked from the middle of the list https://www.sec.gov/ix?doc=/Archives/edgar/data/0000719739/000119312523067777/d450664d8k.htm

presumably because biotech companies go public earlier (so file 8-Ks) rather than anything to do with SVB's customers being mostly biotech?

it’s because a lot of biotech companies banked with svb. nothing to do with timing of their IPOs

ok but the timing of their IPOs is relevant because if it hadn't happened yet then they wouldn't need to file an 8-K. that's not a list of SVB customers. it's a list of public SVB customers.

why did so many (public) biotechs in particular bank with SVB?

I vaguely remember some conspiracy theory stuff about SVB - like, if you're in the know, you know what that means...

George Soros written all over it

damn that guys everywhere

george if youre reading this please send me a check i will do whatever woke activities you require

kind of a wild situation, doesnt seem ideal

Practically all the founders I know have frozen accounts right now.

Don’t think we ever fully appreciated how integral SVB is to the startup ecosystem.

— Ed Elson (@edels0n) March 10, 2023

Just got an email from Wrapbook, the entertainment payroll service, saying their accounts were with SVB. So, yeah, I think this scenario is more than likely.

— Henry Baker (@econobaker) March 10, 2023

another payroll company

We (Rippling) discovered yesterday that Silicon Valley Bank had unexpected solvency challenges. Just now, we learned that the FDIC had stepped in and effectively shut down SVB.

— Parker Conrad (@parkerconrad) March 10, 2023

"But if you need a few bucks to tide you over, send your paypal address and we'll see what we can muster up.."

My random clicking on the 8-K list only turned up companies with 0-5% of their cash with SVB

Someone link a “we’re fucked” one

too many. Go to make it a drinking game. "I bet Kintara Therapeutics, Inc. has more than 0.5% of their cash in SVB" "I bet more than 2%" "Liar!"

Practically all the founders I know have frozen accounts right now.

Startup princelings deserve to sweat over the weekend.

lol, this includes many of of my closest friends, but yes

They didn’t have to use the bank with “Silicon Valley” in the name

eh, I’m a USAA member so I can’t talk

My credit union technically has “Boeing” in the name but that’s mostly historical at this point

we had a 'startup credit' company approach us, with the unfortunate name of Brex. They sold themselves as an all-new credit card company just for startups (which we're not) but they're actually just Mastercards

Anyway, they're jumping in right now to extend credit to all these poor starving founders so they can afford a little soylent over the weekend

Non-military Navy Federal Credit Union members represent.

ok but the timing of their IPOs is relevant because if it hadn't happened yet then they wouldn't need to file an 8-K. that's not a list of SVB customers. it's a list of public SVB customers.

why did so many (public) biotechs in particular bank with SVB?

I don’t know why everyone doesn’t bank with a credit union, seems like a no-brainer

― G. D’Arcy Cheesewright (silby), Friday, March 10, 2023 1:58 PM (five hours ago)

credit unions are insured via a different acronym ... I actually don't know much about credit union insurance. Some of them are super cool and will refund customers the "foreign" ATM fees if you take cash out of an ATM that isn't for your bank. SF Fire CU does that.

One of the things that the very large omnipresent banks that have their dumb big bank names on everything have going for them is very responsive Fraud departments ... at least the dumb big bank I have my checking account and credit cards with.

I instinctively don't trust "mark to market" because I feel like it's a rationale for making up numbers and claiming that's the market value ... but maybe that's holdover from the mortgage crisis and my instincts are wrong here

mark to market is good when the market is going up and bad when the market is going down, is how i break it down to an extent

it sounds right its a nice phrase

i still think it's a sketchy ass accounting method