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

[The_Waco_Kid]

Originally Posted by VitaMan

This thread topic is about SVB.


Lustylad and Bambino want to play their little game of “I gotcha” while ignoring the thread topic. There will be plenty of additional news on this topic and other banks Monday. I’ll try this one more time, and hopefully this thread can move on.


I posted this: “Plus there is private deposit insurance. How do you think Warren Buffett stores his billions of cash ? “
Lustylad posted this in reply: “In other words, you don't know the answer to your own question, do you VM?”


The original post is asking Bambino how he thinks Buffett (Berkshire Hathaway) stores its cash.
There are many types of questions, they usually fall into 1 of 3 categories:

1) - a question to be answered, such as “How many miles it is from downtown Pittsburgh to Schenley Park ?” The person asking is asking someone to provide the answer for them.

2) - a rhetorical question that is not meant to be answered, but as basis for thought

3) - a question for which the person asking the question already knows the answer, often to intimidate a debate


Somehow Lustylad and Bambino think I should know the answer to the original question. Why is that ?
Are they playing their little game of “I gotcha” ? Or can’t they understand what type of question it is ?


Then they continue on:

Lustylad “I'm asking you to elaborate on what you said below”

Lustylad “forcing others to spend unnecessary time googling”

Lustylad “Care to tell us where/how/through whom Warren Buffett insures Berkshire Hathaway's mountain of cash against losses caused by bank/financial institution failure? We'll wait..”

Bambino “I’m still waiting”


The original question is in the category of # 1 or # 2. But not # 3.
Either they don't understand that, or just want to play their little game.

If they are really interested about private insurance for bank depositors, there are several fine educational institutions in Pittsburgh that may be able to help them, such as the University of Pittsburgh and Carnegie Mellon University.

If they are interested in seeing if Berkshire Hathaway carries private deposit insurance on cash they have at various banks, likely that would not be a disclosure made in an annual report, not even in a footnote. You many have to attend one of their annual meetings and ask that question, or send in a letter to Berkshire Hathaway.

is this another VM post "because no one agrees with my thread i'll make it about Buffett post"?

sounds about right. but what does Buffett himself have to say about this?


Warren Buffett's Berkshire Hathaway (BRK. A, BRK.B) reported a a net loss of $22.8 billion in 2022, due to market volatility.


Warren Buffett Says Berkshire Hathaway’s $23 Billion Loss Is an Accounting Fiction

https://observer.com/2023/02/warren-...-2022-earning/


The accounting principles behind Berkshire Hathaway's bruising 2022 earnings are "100% misleading," Warren Buffett said in his annual letter to shareholders.

Turns out Warren Buffett had a terrible year just like everyone else. His investment conglomerate Berkshire Hathaway on Feb. 25 reported a net loss of $22.8 billion in 2022, driven by a nearly $54 billion decline in the value of its stock portfolio. But the 92-year-old investment guru said that figure is highly misleading and doesn’t reflect the true state of Berkshire’s financial performance.


When excluding losses on stock investments, which were unrealized, Berkshire Hathaway actually recorded $30.8 billion in operating earnings in 2022, a record high and 12 percent more than the previous year’s $27.5 billion.


Berkshire Hathaway generates revenue from two pillars of business: subsidiaries it directly owns and control and publicly traded companies it partially owns through equity investment but have no managerial control.
Operating earnings are drawn from businesses directly owned by Berkshire Hathaway, which are concentrated in insurance, railroads and energy sectors, and exclude capital gains or losses from its stock portfolio. However, in the U.S., the Generally Accepted Accounting Principles, or GAAP, require that a company include unrealized capital gains or loses on its equity investments in its total earnings calculation.


In his annual letter to shareholders published on Feb. 25, Buffett said he and Charlie Munger, his longtime business partner, prefer using operating earnings as a measure of financial performance. They urge Berkshire’s shareholders to do the same, Buffett said, because GAAP earnings can fluctuate wildly from one financial period to the next and can mislead investors who have no knowledge of accounting rules.


“The GAAP earnings are 100 percent misleading when viewed quarterly or even annually,” Buffett wrote in the shareholder letter. “Capital gains, to be sure, have been hugely important to Berkshire over past decades, and we expect them to be meaningfully positive in future decades. But their quarter-by-quarter gyrations, regularly and mindlessly headlined by media, totally misinform investors.”



Under GAAP accounting, in 2022 Berkshire earned $112 billion less than the previous year, though Buffett thought it was good year for business, he said in the shareholder letter.

[eccieuser9500]

Originally Posted by VitaMan

A footnote that may interest some, since mark to market of securities is part of this topic:

What was the unrealized loss Berkshire Hathaway had on its investments in 2022 ?

And the answer: easily found by googling

I was going to ask what category your question fell under, but I think Waco answered it.













I think.

[VitaMan]

Originally Posted by The_Waco_Kid

is this another VM post "because no one agrees with my thread i'll make it about Buffett post"?

No

It is a post about lustylad and bambino wanted to make the thread about Buffett and Berkshire Hathaway and diverging from the thread topic and trying to play a little game they enjoy so much.

You should have read the thread before posting.

[Tiny]

Originally Posted by Texas Contrarian

In remarks by the FDIC chair this last Monday, it was related that unrealized losses on assets held by banks now total about $620 billion.

https://www.fdic.gov/news/speeches/2...ce=govdelivery

Originally Posted by eccieuser9500

Got it. I still don't get it.


Fed announces emergency lending facility to shore up US banks

Interesting links gentlemen. Texas Contrarian, I'm assuming that HTM securities would not be marked to market, to determine capital adequacy ratios for regulatory purposes, correct?

This is from eccieuser's link to the Financial Times,

The Federal Reserve announced a new lending facility aimed at providing additional funding to eligible depository institutions to ensure that “banks have the ability to meet the needs of all their depositors”

....The Fed’s new facility, the Bank Term Funding Program (BTFP), will offer loans of up to one year to lenders who pledge as collateral US Treasuries, agency debt, mortgage-backed securities and other “qualifying assets”.

Those assets will be valued at par and the BTFP will “eliminat[e] an institution’s need to quickly sell those securities in times of stress”, the central bank said. The facility would be big enough to cover all US uninsured deposits, the Fed said.

Now if this had been in place, maybe SVB would have had time to sell equity and would have never gone into bankruptcy. It's not a bad idea, assuming the capital adequacy ratios are set in stone.

However, SVB should have seen this coming. Subtracting unrealized losses attributable to HTM securities from Shareholders Equity, SVB's ratio of common equity to assets at 12/31/2022 would have been negative. Including the preferred shares in equity, it would have been 0.6%. Financial statements came out on 2/24/2023, and they certainly knew about the problem before that. They should have been trying to raise equity capital long before last week.

I wonder how many other financial institutions are in similar shape? The 620 billion in unrealized losses in Gruenberg's statement exceed the banks' net income in 2021 ($279 billion) and 2022 ($263 billion) combined. So they're pretty darn significant.

My uneducated belief is that banks should have to mark their asset portfolios to market. The companies I follow mostly have to use asset impairment tests to write down PP&E, inventories, accounts receivable, everything. And they're not banks, so their equity is not that meaningful unless it's part of their loan covenants. Yeah, cut the banks some slack and give them a year or whatever to come back into compliance with capital adequacy ratios by raising equity capital. But don't ignore reality.

And shame on investors. SVB had a market cap of $16.5 billion after the 12/31/2022 financials came out. That was about 1.3 times book value, when, again, the common equity was negative if you subtracted the unrealized loss from the HTM securities.

Finally shame on Gregory Becker, the CEO, who sold $3.5 million in stock on February 27.

[VitaMan]

Originally Posted by eccieuser9500

I was going to ask what categorie your question fell under, but I think Waco

See above
Thanks for joining in

"Daddy sang bass, Mamna sang tenor, me and little brother just join right in there".

[eccieuser9500]

As if I regularly read the Financial Times

Originally Posted by Tiny

Interesting links gentlemen. Texas Contrarian, I'm assuming that HTM securities would not be marked to market, to determine capital adequacy ratios for regulatory purposes, correct?

This is from eccieuser's link to the Financial Times,

The Federal Reserve announced a new lending facility aimed at providing additional funding to eligible depository institutions to ensure that “banks have the ability to meet the needs of all their depositors”

....The Fed’s new facility, the Bank Term Funding Program (BTFP), will offer loans of up to one year to lenders who pledge as collateral US Treasuries, agency debt, mortgage-backed securities and other “qualifying assets”.

Those assets will be valued at par and the BTFP will “eliminat[e] an institution’s need to quickly sell those securities in times of stress”, the central bank said. The facility would be big enough to cover all US uninsured deposits, the Fed said.

I'm just here to get points.

Hijack?

[VitaMan]

Mark to market requirements and the role they played in the collapse of SVB is likely to be widely discussed in the coming weeks

[The_Waco_Kid]

Originally Posted by VitaMan

No

It is a post about lustylad and bambino wanted to make the thread about Buffett and Berkshire Hathaway and diverging from the thread topic and trying to play a little game they enjoy so much.

You should have read the thread before posting.

i did and Tucker Carlson explained it to you

Originally Posted by VitaMan

Mark to market requirements and the role they played in the collapse of SVB is likely to be widely discussed in the coming weeks

No. what will be talked about is how SVB with it's list of A level Corporate money and A list high net worth private investors mismanaged their holdings resulting in a 4 billion cash shortfall when called in caused them to collapse.



invest woke, go broke.

[Tiny]

Originally Posted by eccieuser9500

As if I regularly read the Financial Times...I'm just here to get points.

Hilarious! Well, don't do a Winn Dixie on us.

Actually on second thought if you're going to come up with another "Happy Mother Fucker's Day thread" then do. When you set out to get banned, you do it with class.

[VitaMan]

Originally Posted by The_Waco_Kid

i did and Tucker Carlson explained it to you

No. what will be talked about is how SVB with it's list of A level Corporate money and A list high net worth private investors mismanaged their holdings resulting in a 4 billion cash shortfall when called in caused them to collapse.

Off your rocker. Go have a cold bert

[The_Waco_Kid]

Originally Posted by VitaMan

Off your rocker. Go have a cold bert

so .. all you know about banks is that when they fail due to their incompetence they shut the doors and stop cashing their customer's checks.


bhahahahhaaa

[eccieuser9500]

Originally Posted by Tiny

Hilarious! Well, don't do a Winn Dixie on us.

Actually on second thought if you're going to come up with another "Happy Mother Fucker's Day thread" then do. When you set out to get banned, you do it with class.

Nothing if not . . .

pure class.

[VitaMan]

Originally Posted by The_Waco_Kid

so .. all you know about banks is that when they fail due to their incompetence they shut the doors and stop cashing their customer's checks.


bhahahahhaaa

What is the purpose of this post ?

You need to read the thread. No one believes you read the thread.

[The_Waco_Kid]

Originally Posted by VitaMan

What is the purpose of this post ?

You need to read the thread. No one believes you read the thread.

if you say so

[VitaMan]

Originally Posted by The_Waco_Kid

so .. all you know about banks is that when they fail due to their incompetence they shut the doors and stop cashing their customer's checks.


bhahahahhaaa

Did you really say that ?

Your post is close to incompetent. I can't say "if you say so".

Because that would be incorrect