And now for something really important...SVB failure.

[VitaMan]

According to Garrison Keillor, the mobile home banks will return soon after the long winter, and all deposits are fine.

[Precious_b]

Word is that that Federal Regulators have been warning about the bank for years.


According to Scott Horsley (sp) from Byline, "You know, in hindsight, the problems at Silicon Valley Bank are clear. It had really fast-growing deposits, most of which were not insured. It was overconcentrated in the tech industry, which meant a lot of withdrawals when that industry suffered a downturn. And too much of the bank's money was tied up in long-term bonds, which lost value as interest rates rose. So this was a recipe for trouble. And we now know many of those problems were identified by Fed supervisors years ago but not corrected."

[Texas Contrarian]

We may not be out of the woods for quite some time yet!

I'm afraid the next hammer to drop will involve non-performing CFE mortgages. Regional and community banks hold a disproportionate share of loans on commercial real estate, and many of them will come due later in 2023 and throughout 2024. Office buildings, in particular, have been performing very poorly, especially since the covid- and post-covid eras have spawned a management rethink about the growing number of employees working from home and accommodating their strong desire to continue doing so -- at least for a couple of days out of the workweek in many cases.

Many Class A office building are doing just fine, but thousands of B+ and lower properties are sucking wind. Many owners are exploring the prospects of repurposing them as apartment units, but that will involve wrenching changes and property devaluations.

Look out for the potential damage caused by the aggregate value of marked-to-market portfolios of CFE mortgages sinking like a stone!

[Why_Yes_I_Do]

Yes, indeedy-doo. I've mentioned it in passing recently:
Commercial Real Estate
On the upside

As a nearby example: The Dell complex has been a ghost town for the past couple years. Although they are now building 2 lights-out (few employees) data centers on their grounds. Maybe they could turn the remaining buildings in to homeless camps. But I rather doubt it as they seem to be running large underground fiber optics lines between the vacant buildings.

What is troubling about the commercial side is it's impact to the nearby private housing side of the equation. If say the Dell campus turned into a giant homeless campground - what would be the impact to local housing values, not to mention the local property tax revenues from declining prices? Also, consider the impact to adjacent commercial properties that lost business to the vacant grounds. Things like gas stations, restaurants, stores etc., etc.

Originally Posted by Texas Contrarian

We may not be out of the woods for quite some time yet!

I'm afraid the next hammer to drop will involve non-performing CFE mortgages. Regional and community banks hold a disproportionate share of loans on commercial real estate, and many of them will come due later in 2023 and throughout 2024. Office buildings, in particular, have been performing very poorly, especially since the covid- and post-covid eras have spawned a management rethink about the growing number of employees working from home and accommodating their strong desire to continue doing so -- at least for a couple of days out of the workweek in many cases.

Many Class A office building are doing just fine, but thousands of B+ and lower properties are sucking wind. Many owners are exploring the prospects of repurposing them as apartment units, but that will involve wrenching changes and property devaluations.

Look out for the potential damage caused by the aggregate value of marked-to-market portfolios of CFE mortgages sinking like a stone!

[VitaMan]

More than 90% of the deposits at SVB were uninsured, according to data collected by Wedbush Securities.

This should help to correct the perception presented in this thread that the bank failed because of other reasons besides a stampede bank run to get deposits out.

Especially the political based perceptions.

[the_real_Barleycorn]

Anyone remember the Savings and Loan collapse of the 70s and 80s? Most of the assets of the savings and loan industry was tied up in real estate and homes. Senator Metzenbaum pushed a bill that was passed by the democrats reducing the tax write off of the interest. That made real estate worth less than it was before the new law. All of that wealth just disappeared and the savings and loan industry went with it. All because of a law passed because the lefties in Congress didn't like people having that deduction.

[VitaMan]

The savings and loan collapse was a direct result of deregulation, letting them pay whatever interest rate they wanted to depositors, all guaranteed by the government.

Which itself was a completely idiotic policy and whoever thought and voted for it should have seen the result coming.

This led to completely wreckless lending.

Fueled by endless money at ever increasing interest rates paid to savers.

[the_real_Barleycorn]

Originally Posted by VitaMan

The savings and loan collapse was a direct result of deregulation, letting them pay whatever interest rate they wanted to depositors, all guaranteed by the government.

Which itself was a completely idiotic policy and whoever thought and voted for it should have seen the result coming.

This led to completely wreckless lending.

Fueled by endless money at ever increasing interest rates paid to savers.

And you've never heard of Howard Metzenbaum? How interesting.

[VitaMan]

If you want to research further, review oil markets and prices during that time. That was the main cause of financial problems, and caused real estate values to collapse.

[VitaMan]

Now to get back on the OP thread topic:

Other banks starting to buy pieces of SVB

[the_real_Barleycorn]

So the strategy is to run away?

[VitaMan]

Your off topic discussion has been answered. Note how many banks collapsed during that time.

You can't or don't even want to stay on your own thread topic ?

[the_real_Barleycorn]

Savings and Loans...

[VitaMan]

Thread topic...SVB ?

I also have more experience with banks, savings and loans, and real estate lenders than you ever will have.

You have a lot of boat experience.

[biomed1]

To Discuss/Debate the Original Topic . . .

#27 - Often times in online communities, members may display a tendency towards bringing their conflicts with other members to the board. This will be strongly discouraged and swift effort will be made to put it to rest. Additionally, staff will make every effort to stay uninvolved in conflicts and disputes between members off the board except in such cases where the board becomes directly affected.