'NOT Trump's Fault' - Govt Rapid Rate Hikes Reduced Bank Bonds' Worth - 'Single Biggest Monetary Mistake In Half a Century'

'The failure of three banks in the last two weeks, including Silicon Valley Bank on Friday and Signature Bank on Sunday, is a saga of utter government incompetence. Call these bank collapses Biden's Banking Busts. The Biden administration has been obsessing on woke causes while banks teeter toward insolvency.

Three days before Silicon Valley Bank collapsed, Treasury Secretary Janet Yellen cautioned that climate change puts the banking industry at risk. Yellen was in la-la land, speculating that future storms and tornadoes could diminish the value of banks' assets.

Weather is a risk, but she was oblivious to the much more immediate problem facing banks -- the plummeting value of the bonds they own. She was heedless to the impending downfall of SVB and possibly several other small banks that had purchased long-term bonds when interest rates were near zero.

In 2022, after doing nothing to tame inflation the previous year, the Federal Reserve hiked rates repeatedly to make up for their previous inaction. Those rapid rate hikes, the most drastic in decades, made the banks' bonds lose value.

A week before Yellen's climate change harangue, Moody's Investors Service already had delivered bad news to SVB that it was about to be downgraded several notches because its inventory of bonds was not worth enough to repay depositors (due to bonds' decreased values due to Fed Rate Hikes).A day before Yellen's loony speech, Federal Deposit Insurance Corp. Chairman Martin Gruenberg also cautioned that the diminishing value of the bonds held by banks meant a $620 billion problem ahead.


The Office of the Comptroller of the Currency, a part of Yellen's Treasury, is responsible for examining the financial condition of banks. It failed to avert the SVB collapse.'


Again, as experts have explained, the Bipartisan legislation Trump signed into law had nothing to do with 3 (now) bank collapses, including the SVB.

Govt incompetence and sudden rapid interest rate increases in an attempt to get Biden's inflation under control destabilized the banks, already on the brink of collapse, pushing them over the edge.




'B...b....but Trump...'
View attachment 766288

No, NOT Trump's fault at all.

Another 'Desperate Finger-Pointing FAIL' by President Joe 'The Buck Stops Here' Biden and his incompetent administration.

You are the one who failed. It was Republicans who passed and Trump signed the legislation to deregulate banks. It freed SVB from having to undergo stress tests. One of the scenarios in the stress test is higher interest rates. Had they been forced to undergo the stress test, their vulnerability would have been revealed. SVB gave heavily to Republicans to ensure they would pass it.

Trump and the Republicans are responsible for this. What they passed should be repealed.
 
The Fed had to do it. But this has been going on for over a year now and the banks had time to adjust to the situation, and should have adjusted to the situation. How long was SVB's risk lead position left open?

They did not. I won't say they were too busy worrying about DEI bullshit to the exclusion of doing their jobs, but I will say they were worrying about DEI stuff to the detriment of doing their actual jobs.

No they were not. DEI had nothing to do with the SVCB collapse. They made bad bets and didn't hedge properly.
 
Again, NO, f*tard. This is the 2nd thread dealing with this issue in which I have poated nunerous sources quoting numerous economic experts. You just proved you haven't read any of them.

It seems you partisan bias is a major reason you are stupid as hell.

Right weing experts who are lying through their teeth.
 
My responses are tailored to tbe IQ of tbe recipient, f*tard. Snowflakes mainly fet memes and emojis because they have proven that is near the limit of what their tiny TDS-suffering brains can process.

I address the emotional / feeling centers of their brains because that is where the vast majotity of information processing goes on with them.

:itsok:

Your IQ is 32 below zero.
 
Inflation is no longer the sole focus for the Federal Reserve, says Kathy Bostjancic, chief economist of Nationwide Mutual.'

Inflation is why the Biden Administration's Fed has rapidly made 7 interest rate hikes...which caused the bonds banks heavily invested in decreased in value, leaving them with not enough cash to cover investor's money.

Biden and Yellen were so panicked and so focused on inflation that they lost sight of what those rapid interest rates were doing, how they were undermining these banks.



If these banks had not been deregulated, it would have been discovered earlier.
 
No 'feelings', no 'emotion', no petty TDS Trump obsession, just put economic FACT:


WHY DID SVB COLLAPSE?

SVB's collapse came suddenly, following a frenetic 48 hours during which customers yanked deposits from the lender in a classic run on the bank.

But the root of its demise goes back several years. Like many other banks, SVB ploughed billions into US government bonds during the era of near-zero interest rates.

What seemed like a safe bet quickly came unstuck, as the Federal Reserve hiked interest rates aggressively to tame inflation.

When interest rates rise, bond prices fall, so the jump in rates eroded the value of SVB's bond portfolio. The portfolio was yielding an average 1.79% return last week, far below the 10-year Treasury yield of around 3.9%, Reuters reported.

At the same time, the Fed's hiking spree sent borrowing costs higher, meaning tech startups had to channel more cash towards repaying debt. At the same time, they were struggling to raise new venture capital funding.

That forced companies to draw down on deposits held by SVB to fund their operations and growth.


What sparked the bank run?


While SVB's problems can be traced back to its earlier investment decisions (investments in govt bonds BEFORE the Fed stateted raising interest rates in an attempt to tame Biden's inflation), the run on the bank was triggered Wednesday when the lender announced that it had sold a bunch of securities at a loss and would sell $2.25 billion in new shares to plug the hole in its finances.

That set off panic among customers, who withdrew their money in large numbers.

The bank's stock plummeted 60% Thursday and dragged other bank shares down with it as investors began to fear a repeat of the global financial crisis a decade and a half ago.

By Friday morning, trading in SVB shares was halted and it had abandoned efforts to raise capital or find a buyer. California regulators intervened, shutting the bank down and placing it in receivership under the Federal Deposit Insurance Corporation, which typically means liquidating the bank's assets to pay back depositors and creditors
."



What sparked the bank run?

The speedy bank run has raised questions about the fragility of financial institutions in a digital environment marked by easy cash withdrawals and the spread of information on social media and other spaces online, where panic among a few can grow into a stampede for the exit.

Such a possibility, known as a digital bank run, heightens the risk of a sudden, widespread cash withdrawal, especially among a group of depositors who share an industry and social ties -- like the depositors in Silicon Valley Bank, experts told ABC News.

"This was the first Twitter-fueled bank run," Rep. Patrick McHenry, R-N.C., the chair of the House Financial Services Committee, said in a statement days after the fall of Silicon Valley Bank.

The group of depositors in Silicon Valley Bank was made up of a relatively small set of venture capital firms, tech startups and other large investors.

After a woeful financial report last Wednesday set off concern, some of the depositors discussed their reactions in WhatsApp and Slack groups devoted to startups, the Wall Street Journal reported.

Meanwhile, several prominent venture capitalists and other major investors voiced their concern on Twitter, amplifying fears of a collapse.

Michael Burry, an investor best known for predicting the subprime mortgage crisis in 2008, warned in a now-deleted tweet: "It is possible today we found our Enron."

On Thursday, shares of Silicon Valley Bank fell 60% in response to concern about the bank's distressed financial position.

By the early afternoon, the sudden decline of the bank took over online discussions among startup founders, according to entrepreneur Alexander Torrenegra.

"All of my chats with tech founders in the US light on fire with what's happening," Torrenegra recounted on Twitter. "Obviously, we have a bank runoff. Surreal."

Founders Fund, a venture capital fund led by billionaire investor Peter Thiel, withdrew all of its deposits that day, Bloomberg reported.

 
If only we had something in place to catch this sort of thing before it became a problem.
Its called hiring competent people who know what the hell they're doing.

That leaves Biden and Yellen out.
 
So far there has actually been 4 - 5 link-/article-supported reports and documented analysis on the SVB collapse by actual economists / experts in this thread spelling out exactly what the conditions and factors were that caused the run on tbe SVB and its collapse... NONE of them provided by snowflakes

Then there are the plethora of biased, extremely emotional, ignorant, unsupported highly opinionated comments by liberal self-appointed experts who deem themselves to be more educated, intelligent, and qualified than the actual recognized economic experts.

Wow....tough choice....who to believe?!

I think I will stick with the recognized, highly educated, degree-earning, published, highly paid economic experts...

... rather than ignorant, emotional, Trump-obsessed, 'Get / Blame Trump'-focused, Biden-Democrat f*tard snowflakes on this board.

I am sure if pressed on their own backgrounds and expertise these snowflakes would sound a lot like Biden ... how they finished at the top of their economics class ... with honors ... and 3 degrees.

:cool:
 
"Yellen admitted Biden’s inflation crisis ultimately led to the banking crisis.

“My understanding is that the bank, to meet liquidity needs had to sell assets that it expected to hold to maturity and given that the interest rate increases that have occurred since those assets, including treasuries – and government-backed – mortgage-backed securities they had lost market value."
-- Treasury Secretary Janet Yellen
@ Finance Committee Hearing earlier today.







 
FROM THE WALL STREET JOURNAL:
By Julie Bykowicz
March 13, 2023 4:50 pm ET

____________

Former D-Barney Frank convinced Democrats to join in the Bipartisan efgort to pass legislation that eased banking regulations / restrictions Trump signed into law.

"Lawmakers including then Sen. Heidi Heitkamp (D., N.D.) and Sen. Tom Carper (D., Del.) cited Mr. Frank’s assessment as a reason they felt comfortable voting for the bill."


Frank also defended Trump.and tbe legislation from Democrat claims that it was Trump's or the fault of the legislation he signed into.law tbat caused tbe SVB collapse:


"Mr. Frank, who has earned more than $2.4 million in compensation from Signature Bank since 2015, rejected the idea that the regulatory change abetted to Signature’s collapse.

“Nobody has shown me any evidence of systemic or other kinds of fraud that would have been prevented” without the 2018 rollback, Mr. Frank said.
"



"Mary Miller, a former Treasury official under President Barack Obama, has been on SVB’s board since 2015. “Her investment and regulatory knowledge as well as cultural alignment will enable Mary to add unique perspective and insight,” the board’s chairman at the time said in the announcement of her appointment."

-- Ms. Miller couldn’t be reached for comment.
:auiqs.jpg:


"All seven of Silicon Valley Bank’s registered lobbyists last year previously held government positions, according to public records."
- As both the hiring of these people and the collapse of SVB prove, its not WHAT you know, its WHO you know.


 
Silicon Valley Bank (SVB) and Signature Bank New York (SBNY) donated a combined sum of $71.5 million to the Black Lives Matter (BLM) movement, according to a new database released by the Claremont Institute.

SVB forked over a whopping $70,650,000 to BLM while, while SBNY gave $850,000.

Other big-name corporations listed in the BLM donor database included: CitiGroup and Facebook, which each gave over $1 billion, Amazon (almost $170 million), Apple ($100 million), and American Express ($50 million), among dozens of others.

SVB declined to comment when asked by Just The News about the purposes and financial prudence of its donations
.'

BLM responded by saying the suggestion that SVB's donations to black causes may have caused / contributed to its collapse is the very definition of 'white supremacy'.

:shok:



 
'The failure of three banks in the last two weeks, including Silicon Valley Bank on Friday and Signature Bank on Sunday, is a saga of utter government incompetence. Call these bank collapses Biden's Banking Busts. The Biden administration has been obsessing on woke causes while banks teeter toward insolvency.

Three days before Silicon Valley Bank collapsed, Treasury Secretary Janet Yellen cautioned that climate change puts the banking industry at risk. Yellen was in la-la land, speculating that future storms and tornadoes could diminish the value of banks' assets.

Weather is a risk, but she was oblivious to the much more immediate problem facing banks -- the plummeting value of the bonds they own. She was heedless to the impending downfall of SVB and possibly several other small banks that had purchased long-term bonds when interest rates were near zero.

In 2022, after doing nothing to tame inflation the previous year, the Federal Reserve hiked rates repeatedly to make up for their previous inaction. Those rapid rate hikes, the most drastic in decades, made the banks' bonds lose value.

A week before Yellen's climate change harangue, Moody's Investors Service already had delivered bad news to SVB that it was about to be downgraded several notches because its inventory of bonds was not worth enough to repay depositors (due to bonds' decreased values due to Fed Rate Hikes).A day before Yellen's loony speech, Federal Deposit Insurance Corp. Chairman Martin Gruenberg also cautioned that the diminishing value of the bonds held by banks meant a $620 billion problem ahead.


The Office of the Comptroller of the Currency, a part of Yellen's Treasury, is responsible for examining the financial condition of banks. It failed to avert the SVB collapse.'


Again, as experts have explained, the Bipartisan legislation Trump signed into law had nothing to do with 3 (now) bank collapses, including the SVB.

Govt incompetence and sudden rapid interest rate increases in an attempt to get Biden's inflation under control destabilized the banks, already on the brink of collapse, pushing them over the edge.




'B...b....but Trump...'
View attachment 766288

No, NOT Trump's fault at all.

Another 'Desperate Finger-Pointing FAIL' by President Joe 'The Buck Stops Here' Biden and his incompetent administration.
Source: Op-ed by Trump adviser Betsy Mccaunaghey Trump Names Serial Misinformer Betsy McCaughey To Economic Advisory Council
 
"Yellen admitted Biden’s inflation crisis ultimately led to the banking crisis.

“My understanding is that the bank, to meet liquidity needs had to sell assets that it expected to hold to maturity and given that the interest rate increases that have occurred since those assets, including treasuries – and government-backed – mortgage-backed securities they had lost market value."
-- Treasury Secretary Janet Yellen
@ Finance Committee Hearing earlier today.









And almost anyone knew rates were going to rise but those who financed the bank under these conditions are supposedly our best and brightest and did get their bonuses before being ushered out the door.

Any first year economics student could have seen the house of cards the bank(s) were built on. Something so often trumps wisdom though. Greed.
 
Building upon my statements above we have this statement.

“Basically, they took 90% of the depositors' money and bet it long on 10-year Treasuries right when the Fed was raising rates. Yes, only an idiot banker would do that. But that's what they did, massive risk,” said O’Leary, who is sarcastically nicknamed “Mr. Wonderful” for his abrasive persona on Shark Tank.

Silicon Valley Bank crisis a result of ‘idiot management,’ Kevin O’Leary says

Now any first year economics student would know this. Anyone with even a lick of sense would know not to do this. So, why was it done? Was it done to try and stop the Fed from raising rates? Banks working against the best interests of the country?

Or were they really this stupid with no one invested anywhere or regulating this bank being every bit as clueless?

Either way would not surprise me.
 

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