If they have the solution, why are banks still failing?

[Fiatless]

The stock of Silicon Valley Bank, one of the biggest banks in the US collapsed to 65% before trading was halted. This is the largest bank failure since the 2008 financial crisis.
The bank's parent failed to get a buyer making the California Department of Financial Protection and Innovation close Silicon Valley Bank and appointed the Federal Deposit Insurance Corporation as receiver. Customers were scared and began to pull out their funds to avoid unforeseen circumstances.

Economists are warning that the fall of SIVB might spread and have a bad effect on the entire banking sector. The shares of many banks in the US and Europe dropped because of this incident.  According to Reuter U.S. banks have lost over $100 billion stock market value in two days, with European banks losing around another $50 billion in value.

I have always seen bad news about the cryptocurrency industry making headlines in national and international newspapers. The government and bankers criticize the industry and portray the banks as the only remedy to the financial problems of the world. SVB recorded six straight quarterly losses, why didn't these financial gurus fix the bank? Yet they claim to be the only solution.




https://www.investors.com/news/silicon-valley-bank-liquidity-crisis-sends-shockwaves-through-financial-industry/
https://www.reuters.com/business/finance/us-bank-stocks-add-losses-regulators-shutter-svb-financial-2023-03-10/

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[mk4]

SVB recorded six straight quarterly losses, why didn't these financial gurus fix the bank? Yet they claim to be the only solution.

Because it really isn't the job of the economists or 'gurus' to prevent a certain bank from going insolvent — it's the CEO, the team in general, and the board of directors' jobs.

[Fiatless]

SVB recorded six straight quarterly losses, why didn't these financial gurus fix the bank? Yet they claim to be the only solution.

Because it really isn't the job of the economists or 'gurus' to prevent a certain bank from going insolvent — it's the CEO, the team in general, and the board of directors' jobs.

But some of these CEO and board of Directors claim that they have wealth of experience in financial matters. The way they attack cryptocurrency firms will make one believe that they have all the solutions and are infallible.

[mk4]

But some of these CEO and board of Directors claim that they have wealth of experience in financial matters. The way they attack cryptocurrency firms will make one believe that they have all the solutions and are infallible.

I'm going to argue that they do have the knowledge and experience — until they get too greedy and try to maximize revenues of the company. Greed is that one thing that can royally fuck someone up regardless of knowledge/experience, and no one is 100% safe from it. Hence, bitcoin > banks.

[Faisal2202]

The stock of Silicon Valley Bank, one of the biggest banks in the US collapsed to 65% before trading was halted. This is the largest ban....

That's some sad news for crypto market. As market is in red mode now maybe this is one of the reason but single bank's failure should not effect the whole banking and finance system either its fintech. no oubt fuds spread out to manipulate alt to make quick money. but i think this incident might have open the eye of mentioned gurus. and they might come to a point accepting btc and blockchain. But until then no doubt both sectors have there own pros and cons with limitations that we are being solved over time and will improvise. but If experts of both sectors come to an agreement that could benefit both than the time of improvising might decrease and payment system might streamline more efficiently. Well i am amazed with the mentality of people who portray banks as only remedy while bank is the one that losses "$100 billion stock market value in two days" haaha. well i think they just ignored that. and will try to find ways to make crypto dirty but literate people know the difference and understand who is responsible for these crisis.

i must say, gurus and expert of finance are only hire by banks to make there decisions more stable and accurate but it does not mean that they will be hundred percent accurate. so i must say they are humans too and can make mistakes by misjudging the potential of cryptocurrency and there own banking system.

CNBC reported the company sought a buyer after being unable to raise capital in a Thursday offering. However, deposit outflows are outpacing the sales process as customers race to withdraw funds, making it difficult for buyers to value the bank and making any potential deal less attractive.

source

The real question is what causes these investors or peoples to withdraw there money. like if we take example of ftt then there were fuds all over the internet and we can easily find that out things are crystal clear to understand. but here what caused this hyper shrinking deposit. well that might be the good question. Well if people in crypto trust the infrastructure that much and even in any condition they stand along it by not withdrawing assets/btc from exchanges to fiat. Well the transactional data also helps crypto analysist to mark down the outflow of assets from crypto exchanges to fiat which also act as indicator to make future decision of either holding or holding with patience. But in banking system there is not transactional outflow data provided unless authorities with permissions make it public.

[BenCodie]

People might not yet realize it, but this is the start of the contagion. Prepare for the dominoes to begin falling around the globe. Prepare for bank closures, prepare for large amounts of money being injected into the money system to bail-out the larger "too big to fail" banks, prepare for rocket-high inflation and prepare for a harder way of life. This is a monumental event and marks the start of the next global financial crisis. If you aren't prepared, get prepared. If you don't hold Bitcoin, it's not too late to start holding some as a safeguard. These things don't happen in an instant but they sure do happen quickly. I give it 3-12 months before things start to go severely belly up...I wonder how they are going to deal with it this time. My presumption? Expedite CBDC's, ban cash, and eventually mint the sh*t out of it until confidence in the US dollar runs out and becomes worthless.

[Maus0728]

What's funny is that, on their twitter account, just 4 days ago, SVB twitted that they are

Proud to be on @Forbes' annual ranking of America's Best Banks for the 5th straight year and to have also been named to the publication's inaugural Financial All-Stars list

And now what?

- https://twitter.com/SVB_Financial/status/1632818336391213059?t=E3JtoDRGK_HgGo613tHVAA&s=19

[tabas]

It's terrible to see another collapse, they're all connected. There goes the Silvergate bank, this SVB and as in almost all markets have come to this despite that we've been experiencing collapse since last year. But on this particular thing with SVB, I am feeling bad for those start ups that have been reliant to them because they're the major source of those seed and crowd funding of many start ups and that's why the collapse has connection to many retail, start up and tech companies.

[kryptqnick]

Wow, that's got to affect the tech companies a lot. I suppose many probably had insurance and will get their money, and those that weren't will allegedly get some compensation as well, but this really shows, once again, that bankruptcy is a real risk, and keeping your money in a bank means giving it away and hoping it will be kept safely for you without any guarantees that this will be the case. I hope the bank had plenty of assets and the clients will be adequately compensated.
But yes, such cases should motivate people to see the benefit of Bitcoin and being able to use a non-custodial wallet.

[Bestdss]

When it comes to investment the human factor will always come to play which involves FEAR, when ever you see people panicking over their investment their must have been a negative news that triggered the Fear making people to either their funds or sell off shares. This is the same case with cryptocurrency, when their is a particular FUD, you see the market going down immediately.
My major interest is why most economic crash comes from the USA, yes I know they are among the world powers but why does it look like they control the world Economically, they drag everyone down when an action emenates from them.

[speedy963]

It's nothing new that banks try to antagonize crypto due to their opposite aspects and service they provide. They make themselves look good coz, how else could their users trust them if they don't even themselves and their service?

The fall of SVB is unprecendented since they're one of the pioneers in crypto industry correlated to their infamous connection to web related developments. For sure there're so many experts here when it comes to financial analysis and economy, so I'll just read what interesting opinions you could offer to the table.

Right now the market is not even stabilized and there still a big chance that it'll fall down or maybe up, but one thing is for sure and there would be people taking advantage on this ruckus.

[NeuroticFish]

I have always seen bad news about the cryptocurrency industry making headlines in national and international newspapers. The government and bankers criticize the industry and portray the banks as the only remedy to the financial problems of the world. SVB recorded six straight quarterly losses, why didn't these financial gurus fix the bank? Yet they claim to be the only solution.

The bankers will advertise their companies. The government will advertise the central bank (or treasury) and their own currency. What you expect, really?

[1] Is fiat that good? Then why is there inflation?
[2] Are central banks that good? A company having only one product (fiat) and (by point 1) seeing that their only product is not so great, I will say no.
[3] Are commercial banks that good? Well, the fact some go bankrupt tells they're far from that.
[4] Is crypto perfect? Nope, but it's a pretty good alternative. It would be much better if those with businesses built around fiat would give crypto a fair chance, but reality is usually not so fair.

[Gyfts]

SVB wasn't even mismanaged. I doubt when this gets reviewed there would be any legal finding of misconduct unlike with FTX.

SVB had banked on U.S. treasury bonds for a sizeable chunk of their portfolio and were ripped when the federal reserve starting raising interest rates. They started trying to raise capital desperately and it caused a panic and everyone ran to withdraw their balances simultaneously. The fact is that this type of situation can happen to literally any bank if every customer decides to withdraw their cash. If the banking institution isn't to secure emergency funding, within a day the entire institution collapses.

SVB recorded six straight quarterly losses, why didn't these financial gurus fix the bank? Yet they claim to be the only solution.

Because it really isn't the job of the economists or 'gurus' to prevent a certain bank from going insolvent — it's the CEO, the team in general, and the board of directors' jobs.

Interestingly enough, the Chief Administrative Officer of SVB was also an exec member for Lehman Brothers before it collapsed. He now has two blunders under his resume.

[el kaka22]

First of all silicon valley bank was not one of the biggest banks in the world, definitely not biggest in the nation neither, there are ones with trillions of dollars in it. Secondly, this is basically because they were forced to pay more and that did not existed in forms of profit so they were losing money left and right.

If you tell a bank with 1 trillion dollars in it, to give 5% to the customers, that means 50 billion dollars, if they can't make that profit and make only 30 billion in revenue, then they just effectively lost 20 billion dollars, consider the operational cost of running that bank must be at least another 10-20 billion and you have yourself a bankrupted one.

[Unbunplease]

It may well be that the purpose of the grand banking scam we are witnessing is to reduce the total number of banks around the world. The fewer conventional - private - banks, the greater the role of state banks. Perhaps the state has decided to take back the leading role?

[Hydrogen]

   
If they have the solution, why are banks still failing?

Basic and fundamental principles can adequately describe reasons behind most banks failing.

1.  Many financial institutions rely upon a forecast of steady growth to maintain viability of their business model. This is similar to the US real estate industry prior to the 2008 subprime mortgage crisis. Many real estate firms created higher risk business models based on consistent growth. In the expectation that the market would never decline. This led to big crashes in real estate when an unexpected downturn occurred.

2.  Risk and reward are fundamentally correlated in finance. This leads to financial institutions in sectors which are historically deemed "safe" accruing larger amounts of risk in an effort to generate higher potential rewards. Banking is considered a "safe" industry. Which often leads to many banks taking on greater amounts of risk, in an effort to generate greater profits. This approach over time, if left unchecked, can lead to instability and unsustainability.

3.  Recession, inflation and economic downturn often produce spectacular crashes. Many businesses and financial enterprise would forecast only a 0.02% chance of economic contraction occurring. Which would leave many unprepared in the event that it occurs.

[Desmong]

I see banks like the stoke market and the regular market that anything cam happen to. We need to understand that banks are not just there because they have the power. They are holding our funds so if we decide to remove all our funds then the bank is going to collapse just like the silicon valley that had lasted for more than 40 years in existence.

[Captain Corporate]

They let the volatility hit the customers and not the CEO's, the difference in bitcoin is that it goes down the same for everyone and goes up the same for everyone. You may not be the richest person in the world, or you could be Elon Musk, in the end if bitcoin goes down %10 then it goes down the same for everyone. I guarantee you that these bankers who lost the money of so many, and even caused trouble for nearly a billion people total, will not get the right punishment, it is going to be chalked to just "bad management" and moved on. That is why it will be repeated time and time after again since the punishment is non existent.

[morggin]

These bank failures seem to be very nicely timed for the rollout of CBDCs. I suspect if this is the case most countries that are doing CBDCs will not want to have too many of other countries' CBDCs because that country will be able to easily manipulate them thus creating a redemption risk.  I can see this forcing them to resort to falling back on BitCoin instead.  FYSA it will be legal for banks to start holding crypto on their balance sheets starting in Jan 2025.  

[gaston castano]

yes I guess because they always think they are right, and what they have planted for so long has slowly started to fade since the advent of crypto. it only took a few years for crypto to have developed so far, maybe it's still vague, but more clearly, maybe in the future crypto will develop even more rapidly.
bank always againts crypto because they cant control it, so that will be different if they have control to it.