Forbes Magazine: How Trump’s Deregulation Sowed The Seeds For Silicon Valley Bank’s Demise

[Natural Citizen]

The entire tech industry has been built on cheap money over the last couple of decades.

The market itself demands liquidation. In the real world, the market itself always decides outcome. Always. Not bureaucrats.

Play stupid games, win stupid prizes...

 

[Blues Man]

Glass-Steagall didn't stop banks from writing or buying crappy mortgages.

The repeal of Glass Stegall was a primary cause of the 2008 meltdown

 

[LeftofLeft]

Once again, not man enough to man up, and take the blame..... where the blame is due.

Have you ever LEARNED from any mistake in your entire life? Ya gotta admit to them first, not place blame elsewhere.

See below, how easy it is for me to criticize the Democrats on this....

Democrats in the senate that voted for Trump's deregulation bill in 2018, were WRONG to do so!!! The 17 senators voting for it, along with the 50 or so republican senators made the bill filibuster proof.

Now you should try it, with Republicans.... Imo.

I criticize Republicans plenty. On this topic -Banking Regulation-how can I when I’ve seen Democrats over regulate US into a banking crisis when these shit-for-brains thought it was more important to lend based on race vs. risk. Also, no one has yet to answer a fundamental question as to why Democrats didn’t undo Trump Banking policies in more than two years while it only took them hours to regulate up the oil and gas?

 

[Toddsterpatriot]

If you look at Bush's 8 years from 01 to 09, he came in, deregulated everything,

Everything? Can you give any specifics?

 

[Toddsterpatriot]

That’s absolutely backwards

When Fannie and Freddie bought mortgages, how many sub primes were they forced to buy?

 

[Toddsterpatriot]

The repeal of Glass Stegall was a primary cause of the 2008 meltdown

Which portion of Glass-Steagall stopped banks from writing crappy mortgages?

 

[Toddsterpatriot]

The 2018 law changed which banks are considered “systemically important” to regulators. It increased the threshold from institutions holding at least $50 billion in assets to those with $250 billion. That means only the largest banks face stricter regulation, including requirements to maintain certain levels of liquidity and capacity to absorb losses; comply with company- and government-run stress testing; and submit a living will to prepare for potential failure.

Which level of liquidity could SVB have held to survive a bank run?

 

[Lesh]

When Fannie and Freddie bought mortgages, how many sub primes were they forced to buy?

F&F were not forced to buy sub primes. They did it seeking profits. And newsflash...F&F did not cause the bank/housing debacle.

 

[Blues Man]

Which portion of Glass-Steagall stopped banks from writing crappy mortgages?

it wasn't just mortgages that were the problem

Bundling mortgages and selling them on the securities market on the other hand would not have been possible until Clinton deregulated banks, insurance companies and investment firms.

 

[Toddsterpatriot]

It's like we're not supposed to remember the filibuster exists and the majority doesn't rule. Or we're supposed to imagine Republicans will legislate for the good of the US rather than playing games in order to regain power.

It is to laugh.

And so the Dems didn't even try. LOL!

 

[Toddsterpatriot]

Yes it was a BIG ASS BANK.

The deregulation IN 2018, changed the definition of a small and midsize bank from a bank holding $50 BILLION, to a $250 BILLION dollar Bank....as being considered small and not a BIG bank still under regulation.

SVB was a $200 BILLION dollar Bank!!!!

In 2018, SVB was a $50 billion bank.

 

[Lesh]

In 2018, SVB was a $50 billion bank.

Regardless...in 2023 it was a 200 billion dollar bank

 

[Nuthin' Fancy]

Which level of liquidity could SVB have held to survive a bank run?

In the United States, small banks (those with less than $15.2 million in transaction accounts) have no minimum reserve requirement. Banks with $15.2 million to $110.2 million in transaction accounts must hold 3% in reserve. Large banks (those with more than $110.2 million in transaction accounts) must hold 10% in reserve.

These reserves must be maintained in case depositors want to withdraw cash from their accounts. Banks may keep reserves in two ways. They can keep cash in their vault, or they can deposit their reserves into an account at their local Federal Reserve Bank.

 

[Lesh]

In the United States, small banks (those with less than $15.2 million in transaction accounts) have no minimum reserve requirement. Banks with $15.2 million to $110.2 million in transaction accounts must hold 3% in reserve. Large banks (those with more than $110.2 million in transaction accounts) must hold 10% in reserve.

These reserves must be maintained in case depositors want to withdraw cash from their accounts. Banks may keep reserves in two ways. They can keep cash in their vault, or they can deposit their reserves into an account at their local Federal Reserve Bank.

My understanding is that SVB put their reserves on long term instruments that were not "liquid" .

 

[candycorn]

Everything? Can you give any specifics?

Banking for one.

 

[Nuthin' Fancy]

My understanding is that SVB put their reserves on long term instruments that were not "liquid"

More layers of the onion emerges.

 

[Blues Man]

Banking for one.

Specific that was not.

 

[BlackSand]

I want to share with you an article that explains how Trump's deregulation led to the collapse of Silicon Valley Bank, one of the largest banks in the country. The article is here: How Trump’s Deregulation Sowed The Seeds For Silicon Valley Bank’s Demise

The article says that Trump signed a law in 2018 that weakened the rules for banks that were put in place after the 2008 financial crisis. The law was called the Economic Growth, Regulatory Relief and Consumer Protection Act (S.2155), but it did not protect consumers at all. It allowed banks like Silicon Valley Bank to take more risks with their money and hide their problems from regulators.

The law was supported by most Republicans and a minority of Democrats who were fooled by the bank lobbyists. Most Democrats voted against it The Senate passed it by a vote of 67-31, with 16 Democrats voting for it. The House passed it by a vote of 258-159, with 225 Republicans and 33 Democrats voting for it. Trump signed it into law on May 24, 2018.

Now we are paying the price for this Trump law. Silicon Valley Bank failed because it gambled on risky loans and investments that went bad. It also lied about its financial health and hid its losses from regulators and investors. The bank's failure caused a lot of damage to the economy and hurt millions of customers, employees and shareholders. This is why we need to hold Trump and his allies accountable for their actions.

They sold us out to the big banks and put our economy at risk. We need to repeal this law and restore strong regulations for banks that protect consumers and prevent another crisis.

.

Forbes had listed Silicon Valley Bank one of the best banks in America for five years consecutively ... And named it as a "Finacial All-Star".
Silicon Valley Bank was set to receive an award for being one of the Best Banks in America tomorrow.

All that ... Even after Bloomberg News reported Silicon Valley Bank had ...
"mark-to-market losses in excess of $15 billion at the end of 2022 for securities held to maturity".

It's safe to say that Silicon Valley Bank really didn't know crap about Sustainability after all ...
And didn't really have a grasp of the consequences in Zero-Net investments ... Puns intended ...

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[EvilCat Breath]

Bank regulation had no part in these bank failures. It was a lack of liquidity.

 

[BlackSand]

Bank regulation had no part in these bank failures. It was a lack of liquidity.

.

That is true to a point ... No bank can survive a run of the majority of its major investors withdrawing their money.

The problem with Silicon Valley Bank also had to do with the fact that their major investors ... Are known as being a tight-knit group.
The have a reputation for having a "herd mentality" ... And specific to the Silicon Valley Futures and Growth Investments.
They go to the same places ... Have the same financial advisors ... And it is a specific "crowd of folks".

Someone indicates that you might not want to be the first crazy person to take your money out ... But you don't want to be last person to try either ...
Then add the fact that they can move their money from their cell phone ... The bank is going to fail.

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