The Silicon Valley Bank Collapse, Explained | WSJ

Thanks for explaining it simply!

The disastrous decision to repeal the Glass-Steagall Act in the late 1990s led to the spectacular failure of huge banks during the financial crisis of 2007–2008. To prevent a future catastrophe, Dodd-Frank and this Act both need to be revived right away. What happened with SVB is just the start of what will happen if nothing is done to address the current problem.

Honestly, I'm unsure if investing is a wise move right now. Take note of how frequently things fail. As I still have some time before I retire, I'm still looking for a better strategy to invest my money despite reading charts and predictions from well-known investors from the past and present. In order to generate passive income, I want to build a solid and reliable portfolio.

I'm sure no CEO will be held responsible for their incompetence

FED: We need people unemployed and bankrupt to calm inflation.. *2 days later SVB goes under* FED: Wait, not THOSE people, only poor and middle class can fail in this economy, as usual

A perfect storm is brewing in the United States. Inflation, bank collapse, severe drought in the agricultural belt, recession, food shortages, diesel fuel and heating oil shortages, baby formula shortages, available automobile shortages and prices, the price of living place. It's all coming together and it could lead to a real disaster towards the end of this year (or sooner). With inflation currently at about 6%, my primary concern is how to maximize my savings/retirement fund of about $300k which has been sitting duck since forever with zero to no gains.

SVB’s real problem was the homogeneity of their depositors. A liquidity crunch in the startup scene meant that pretty much all of their cash was gone. Had they had a more diversified pool of depositors, this wouldn’t have stung as badly.

The ceo & executives effectively cashed in by selling shares & had this bank dissolved in 2 days. When you put your money in the bank THEY own it, they let you use it in the interm. They use it daily to invest & grow THEIR porfolios... not yours.

Who else is feeling the heat of the economy and the unpredictable stock market? Raises hand Yep, that's me with my $730k portfolio made up of bonds and stocks. I've been tossing and turning at night wondering if it's time to liquidate and flee for the hills. Anyone else in the same boat?

The irony is that the bank is getting slammed for being too safe. Generally bonds are one of the safest investments possible. But it's a unique perfect storm of devaluation and withdrawal. Generally these types of financial institutions should be punished for making risky investments with our money, but this isn't it. Regardless, these people have had enough bailouts.

There is not a single bank that could withstand a majority of of customers pulling all their money from their accounts. Most banks don’t have more than 10% capital. Under the right circumstances any bank can fail.

Privatize the gains, then socialize the losses

When you deposit high amount of cash in the bank, you are a investor to the bank not a depositor.

Thanks for explaining it simply! First one I’ve understood :’)

In 2015, Silicon Valley Bank stated that it served 65% of all U.S. startups. In 2022, Silicon Valley Bank began to incur steep losses following increased interest rates and a major downturn in growth in the tech industry, where the bank's liabilities were heavily concentrated.

Thoughtful and articulate synopsis. Thank you.

Why shes not using her real natural voice. Why people think that making the voice more deep and changing the tone is fashionable? Its not. Use your own voice.

Fantastic explanation. Thank you for taking the time to draw it out in such an easy to understand manner.

Banks should not be bailed out. They should take responsibility for terrible decision-making.

Ten executive team members got huge bonuses for taking down the 16th largest bank: Greg Becker, Daniel Beck, Marc Cadieux, John China, Phil Cox, Laura Cushing, Michael Descheneaux, Michelle Draper, Jeffery Leerink, Kim Olsen, John Peters, and Michael Zucker.