I've read several articles about this, and still don't fully understand what is happening.

"Silicon Valley Bank shares plunged 60% Thursday after disclosing that it needed to shore up its capital with a $2.25 billion equity raise from investors including General Atlantic. The company’s stock was down another 60% in premarket trading Friday."

Was the bank asking their investors to invest more in the company, and that made the investors nervous and they pulled all their money out?

Anyone care to give a Cliff's Notes version of what is going on?

Downgrade in credit rating caused bank run,,,,

Very large venture capital bank,,,

50% of tech startups bank at SIVB,,,,,,,,

A lot of folks not getting paid next week,,,,,,,

Not good for US leading the world in technology,,,,

How big is this going to get??? We wait and see on Monday,,,,,,

Somewhere I read that The Fed stepped in and took control of the bank and said that all insured deposits would be safe. Unfortunately most deposits in the bank were not insured. I didn't even know that there were banks that were not FDIC backed.

I heard it's the 16 biggest bank in the US. Sounds like they gave out to many loans to to many that faild to pay back and they can't cover it so will fail without the tax payers bailing them out. Just my .02 headline skimming opinion on it.

Now my concern is how many other banks are hiding they are in the same boat. 08 version 2.0? Sure would be a good excuse to fire up the printing press again and put off the depression for just a little longer. Be a nice excuse and distraction to over shadow the lies of Jan 6, and the rest of it.

FDIC covers 250 000/individual

97% of deposits where over 250 000

Monday is going to be a big day

Another black monday, least this one can't drag down the fur market, it's been in the toilet since the last black monday back in 1987.

FWIW, I know of a large land developer who just completed a few large lot subdivisions in Texas and Arizona. The builder he had contracted to sell them to just walked away from a 10 million dollar earnest money.
The problem is, the land developer has a 600 million dollar balloon payment he is going to have to default on. Some other bank is going to get hurt on that deal. This tends to have a cascading effect.

Wow. It's happening...

And so it begins.

Found this from Tucker. As usual he does a good job explaining the situation. I had no idea this had happened until this morning. I think you're right spjones, Monday is going to be an interesting day!

You guys are surprised?

I borrowed this from a commenter at the Wall St Journal, but it summarizes what happened pretty well.....

Here's what happened:

The bank took deposits that they were paying effectively 0% interest on. They had billions in such free money. The geniuses at the bank decided "hey, we'll park this money in long term Treasuries, chasing a couple of percent of risk free interest and we'll all get rich with our genius risk-free plan that requires us to do nothing but collect the interest and pay ourselves huge end of year bonuses."

Of course, they failed to consider that the Fed might one day be forced, at economic gun-point, to raise rates. Sorry, Charlie, but the good times don't last forever, and eventually, the piper comes to call. So the Fed started economic tightening, rates went up, and those T-bills went underwater. 30 years is a long time to tell those who have money parked at the bank getting no interest:"be patient". So depositors decided, :hey, I'm done getting fleeced on my parked money, see ya." But, boo-ya, the cash to give those depositors their money back is in long term T-bills that only an idiot would have considered a reasonable mono-strategy. Gulp. All gone, goodbye, thanks for all the fish.

The brain trust who ran the bank took too long to back out of those 30 year sinking securities, and they got what they deserved.

Supposedly, the amount of money in the bank NOT covered by the FDIC $250k maximum is HUGE, which is good for taxpayers, since it means there may be enough equity left in the bank to pay off those who are covered by the insurance. Let's hope.

You do know that the POS who spent BILLIONES on the Demonrat election and his Cripto Currency was all backed by this Bank!!! Demonrats like Maxxine Watters took MILLIONS and this Bank went Bust!!!

"Why did it fail?
In short, SVB encountered a classic run on the bank.
The longer version is a bit more complicated.

Several forces collided to take down the banker.

First, there was the Federal Reserve, which began raising interest rates a year ago to tame inflation. The Fed moved aggressively, and higher borrowing costs sapped the momentum of tech stocks that had benefited SVB.

Higher interest rates also eroded the value of long-term bonds that SVB and other banks gobbled up during the era of ultra-low, near-zero interest rates. SVB’s $21 billion bond portfolio was yielding an average of 1.79% — the current 10-year Treasury yield is about 3.9%."
__________________

If the bank owns these treasuries can they not just sell them for a reduced price and cover some of their depositors payout. Seems these treasuries have not lost all their value, just some?

Yes,
"If the bank owns these treasuries can they not just sell them for a reduced price and cover some of their depositors payout. Seems these treasuries have not lost all their value, just some?"

I think the current value of the banks long term bonds ( mostly in mortgages, think Fannie Mae and Freddie Mac) have declined about 18% in value if cashed out today. The 18% is greater than the 15% liquidity the bank needs for continued operation, so that is causing it to be in the red.

If FDIC covers $250,000 of every depositor, seems the bank may be able to cover the rest? Or can it work that way?

There is more of this scenario than we are being told. There are some very large National developers who are publicly traded that are in trouble. The nature of their business demands they always keep “dirt” flow moving but there are scenario’s to extreme for that, which will fold them as well and all the gazillions of subs they use.
Yellen should have been way out ahead of this and the watching their quarterlies better. Shoes are yet to drop. Keyword “cascading”.

Interesting one current bank I use just last Thursday offered me a crazy good short term interest rate for for any new cash deposit of 250k or better. Day later this happens elsewhere… my radar is up big time for Monday morning and to the contrary I am cashing a lot out of there.

Osky