Excellent synopsis. I argued l, had the sewage been properly disclosed, it wasn’t, the credit rating firm’s ratings were bogus, the rates should have been much higher, the implosion might not have been so severe. Same for the recent SVB and other tech banks funding the VC expansion and collapse. I worked on a few of these deals. Had they…
Excellent synopsis. I argued l, had the sewage been properly disclosed, it wasn’t, the credit rating firm’s ratings were bogus, the rates should have been much higher, the implosion might not have been so severe. Same for the recent SVB and other tech banks funding the VC expansion and collapse. I worked on a few of these deals. Had they properly conducted their stress tests, they would have properly reserved.
All the smartest guys in the room jumped on this with their Monday morning skills. What’s any collateral worth? The gold standard of the banks, commercial real estate, is under stress beyond any reasonable estimate. The scamdemic had a lot to do with it.
CDOs were the epitome of the "dark market"--which is a wonderfully anodyne term that means "nobody has any clue how to do price discovery on these assets".
The ratings were essentially sold because there really was no rational basis for rating the CDO securities in the first place. What the ratings agencies should have done is refused to rate the securities at all.
SVB was actually a somewhat different situation. SVB ran into a liquidity crunch because it had plowed a substantial chunk of its capital into low-yield securities, only to have interest rates rise. As China is experiencing on a national scale, when yields rise capital flows towards the higher yields. For banks such as SVB, that meant that their deposit base began to erode as customers move more idle cash into higher-yielding money market funds and similar investments, while the value of their holdings of low-yield securities kept dropping.
Deposit outflow coupled with declining portfolio valuations equals liquidity crunch.
There was nothing "dark" about the securities markets which sank SVB. SVB just failed to act early on to mitigate their losses in a rising-interest-rate marketplace.
I agree, and yes that’s the information released, however, they were a large creditor on a project I shut down. I don’t think they reserved anything against this investment. I was new on this project and my head was spinning getting up to speed, I was not surprised at the outcome.
I haven't looked at the state of the banking industry in a while, but it would not surprise me to find that essential capital buffers still are not in place.
One of the most bizarre aspects of Wall Street's behavior in recent years has been its stubborn refusal to acknowledge changing market conditions and to adapt accordingly.
Excellent synopsis. I argued l, had the sewage been properly disclosed, it wasn’t, the credit rating firm’s ratings were bogus, the rates should have been much higher, the implosion might not have been so severe. Same for the recent SVB and other tech banks funding the VC expansion and collapse. I worked on a few of these deals. Had they properly conducted their stress tests, they would have properly reserved.
All the smartest guys in the room jumped on this with their Monday morning skills. What’s any collateral worth? The gold standard of the banks, commercial real estate, is under stress beyond any reasonable estimate. The scamdemic had a lot to do with it.
CDOs were the epitome of the "dark market"--which is a wonderfully anodyne term that means "nobody has any clue how to do price discovery on these assets".
The ratings were essentially sold because there really was no rational basis for rating the CDO securities in the first place. What the ratings agencies should have done is refused to rate the securities at all.
SVB was actually a somewhat different situation. SVB ran into a liquidity crunch because it had plowed a substantial chunk of its capital into low-yield securities, only to have interest rates rise. As China is experiencing on a national scale, when yields rise capital flows towards the higher yields. For banks such as SVB, that meant that their deposit base began to erode as customers move more idle cash into higher-yielding money market funds and similar investments, while the value of their holdings of low-yield securities kept dropping.
https://newsletter.allfactsmatter.us/p/reality-check-svbs-collapse-was-a
Deposit outflow coupled with declining portfolio valuations equals liquidity crunch.
There was nothing "dark" about the securities markets which sank SVB. SVB just failed to act early on to mitigate their losses in a rising-interest-rate marketplace.
I agree, and yes that’s the information released, however, they were a large creditor on a project I shut down. I don’t think they reserved anything against this investment. I was new on this project and my head was spinning getting up to speed, I was not surprised at the outcome.
I haven't looked at the state of the banking industry in a while, but it would not surprise me to find that essential capital buffers still are not in place.
One of the most bizarre aspects of Wall Street's behavior in recent years has been its stubborn refusal to acknowledge changing market conditions and to adapt accordingly.
https://newsletter.allfactsmatter.us/p/wall-street-knows-the-crash-is-coming