Tag: banks

Silicon Valley Bank just crashed so hard that the FDIC had to step in and seize it on a Friday morning before the close of business.

The Federal Deposit Insurance Corporation seized the assets of Silicon Valley Bank on Friday, marking the largest bank failure since Washington Mutual during the height of the 2008 financial crisis.

The bank failed after depositors — mostly technology workers and venture capital-backed companies — began withdrawing their money creating a run on the bank.

The FDIC ordered the closure of Silicon Valley Bank and immediately took position of all deposits at the bank Friday. The bank had $209 billion in assets and $175.4 billion in deposits as the time of failure, the FDIC said in a statement. It was unclear how much of deposits was above the $250,000 insurance limit at the moment.

Notably, the FDIC did not announce a buyer of Silicon Valley’s assets, which is typically when there’s an orderly wind down of a bank. The FDIC also seized the bank’s assets in the middle of the business day, a sign of how dire the situation had become.

But don’t worry. We are cross-the-FDIC’s-heart pinky-swear assured that there is little danger of contagion throughout the financial industry because all of the other banks are absolutely just fine and have totally no issues at all. It’s just a flesh wound, nothing more.

Please continue to consume with confidence and don’t forget to be tolerant and inclusive!

PS: this is what debt-deflation looks like. Billions of dollars in debt-wealth vanishing in an instant.

UPDATE: Wells Fargo customers have reported that their direct deposits were missing from their accounts on Friday morning, according to reports.

DISCUSS ON SG

This is normal. Nothing to see here. Carry on.

Central Bank Liquidity Swap Operations
These swap facilities are designed to improve liquidity conditions in global money markets and to minimize the risk that strains abroad could spread to U.S. markets, by providing foreign central banks with the capacity to deliver U.S. dollar funding to institutions in their jurisdictions. The New York Fed undertakes certain small value transactions from time to time for the purpose of testing operational readiness. The results of the central bank liquidity swap operations and small value exercises of the central bank liquidity swap lines are published on a weekly basis when conducted.

Transfer to Swiss National Bank 10/05/2022 10/06/2022 10/13/2022 7 3.33 3,100,000,000

Now, why would the Federal Reserve be loaning $3.1 billion to the Swiss National Bank? Oh, yeah, I suppose that just might be why.

Credit Suisse Group AG may be facing a capital shortfall of up to 8 billion Swiss francs ($8 billion) in 2024, according to an analysis by Goldman Sachs Group Inc, underscoring the difficulties the troubled lender will face is it approaches what will likely be an extensive restructuring. Given the lender will need to restructure its investment banking operations during a period of “minimal” capital generation, it will face a shortfall of at least 4 billion francs, according to a team of analysts

DISCUSS ON SG

But sooner or later, their amassed leverage – which is the corporate word for debt – was inevitably going to start bringing down the big banks.

Today The Fed is holding an emergency meeting under “expedited procedures.”

The actions to be considered are the discount and advance rate — in other words, interest rates.

The rumored reason is that Credit Suisse may be in trouble — specifically due to writing interest rate swaps, along with a number of other institutions which happens to include pension funds both in the UK and US, none of whom should ever be playing with levered instruments for the simple reason that leverage is everywhere and always speculative.

But of course they are because nobody has ever gone to prison for using leverage as a means to evade requiring the underlying organization to fund pensions adequately with actual money. Why that would cause both firms and governments to have to behave responsibly and we can’t have that.

This sort of act is a ridiculous violation of anything approaching fiduciary responsibility — which is a legal obligation for pension managers, not a suggestion. After all its not their money — its the pensioners’ money and they are charged with prudent management of same, which the use of leverage, especially leverage on a trend 40 years old that cannot reasonably go below zero, is the exact opposite of “prudent.”

Of course the same is true for banks; they have fiduciary responsibilities too, including to the nation as a whole since they have a backstop through the government for depositors. Nobody went to prison last time in 2008 for this crap either, did they?

Never mind that exiting those positions (including at a loss) was clearly prudent in the two years after the US government along with everyone else threw trillions in printed credit into the economy as a result of the pandemic. Anyone with two IQ points to rub together had to expect that to reflect back into inflation and thus higher rates, never mind that its insane to expect that time has no value which is what a “zero rate” policy claims.

Now add to it that the economic report from Friday showed higher core inflation than The Fed and everyone else expected — not lower. In other words the bad news continued, and therefore the only logical “emergency” act is to withdraw even more credit from the system.

The Fed refused to take the bitter medicine that was necessary back in 2008. They bought a lot more time than I would have imagined by kicking the can down the road, and the Covid lockdowns and “emergency spending measures” appear to have given them an additional two years. But now it’s October, historically a month when the debt chickens come home to roost, and two of the world’s biggest banks, Credit Suisse and Deutsche Bank, have managed to get themselves in seriously deep trouble again, because no one ever stops doing what they’re doing when you prevent them from suffering the consequences of their actions.

While both giant banks are too big to be permitted to fail without significant ramifications through their host countries and the demi-global financial system – which now requires the prefix since the BRICSIA nations have their own system – and both are national flagships, the recent destruction of the energy pipelines suggests the hitherto unthinkable possibility that the Fed might not only be willing to let the banks fail, but perhaps even order the Swiss and German governments to refrain from bailing them out in the interest of furthering the Great Reset.

And both current governments are sufficiently corrupt, and sufficiently ignorant of economics, that they might well accept destructive direction from Washington DC on the subject. The fact that the only member of the Swiss Federal Council who has any grasp of economic matters just resigned last week might even be a sign that an unprecedented action – or rather, lack of action – may be in the offing.

This suggests that the next big economics battle will be the nationalization of banks and money vs centralized demi-global banking and a single digital currency for the former West.

DISCUSS ON SG