$110B assets against $102B liabilities. That's 7.8% more capitalization, one of the lowest I've seen across all banks.
Want to guess how much of those were hold to maturity (HTM) and thus actually market value of 5% - 20% less?
If their portfolio was as conservative as just a 3 year Treasury bond, which has risen 3% in the past year, they would've lost 9% and been insolvent now. But we already know banks like SVB have been going far riskier for yield; 10 year MBS compared to 3y Treasuries...
On March 8th - they had $89 billion in deposits. It's unclear what happened on March 9th, but on March 10th, clients withdrew a further 20% of that balance so ~$19 billion. On March 8th, they had $4.5 billion cash. So they would need to find another $15 billion in assets just to cover the withdrawals from that one day. They had already markedly increased their loan drawdown from FHLB from $3B in 2021 to almost $9B in 2022, so their ability to draw it further in the face of a bank run was definitely impacted.
It's astronomically more likely that their financial condition deteriorated further from there rather than some bizarre anti-crypto conspiracy theory as is apparently favored by commenters here.
We'll get confirmation in the coming week or two as more details on their condition over the weekend are released, which of course is another point in favor of the boring answer.
> They had already markedly increased their loan drawdown from FHLB from $3B in 2021 to almost $9B in 2022
For that matter, I kinda wonder about the risk assessment and loan decision mechanisms of those FHLBs. Even aside from the fact that I don't know how the crypto stuff of Signature would fall under the "housing finance and community investment" that the FHLBs are supposed to provide liquidity for, I can't really imagine how the people who let those loans increase by 6·10⁹$ within just a year could look at where the money would go at Signature and tell themselves "oh that's okay, we're gonna get that money back".
According to The Block: Regulators shuttered Signature Bank to show 'crypto is toxic'.
“They closed us even though there was no good, compelling reason to do that because they wanted to show that banks shouldn't be involved in crypto,” Frank, a Democrat, said in a telephone interview. “We were the kind of poster child for having been involved in crypto."
Also worth noting that it appears Barney Frank helped the effort to nerf Dodd-Frank in 2018 [0] (although I haven't dug deeply into that and from the fact that 3 of the articles supporting this were added today, the wikipedia editor might be injecting a biased view).
While of course true for many reasons (including facilitating the existence of ransomware while providing literally no other offsetting value) that's not why the bank was shuttered. It was shuttered for the same reason SVB and Silvergate were closed. They had long-duration assets but needed capital now to facilitate withdrawals, which they had a lot of because of the crypto downturn. It was their lack of diversification and failure to adequately manage maturity risk. Which Barney is in part to blame. So of course the fingers are pointed in all directions, especially the gubmint.
> that's not why the bank was shuttered. It was shuttered for the same reason SVB and Silvergate were closed
Silvergate was significantly impaired by the crypto blow-ups [1]. That forced them to sell their short-duration, liquid holdings. It also started their stock-price slide [2]. The combination put them in a uniquely vulnerable and continuously degrading position. Signature wasn't as badly hit by the blow-up, but its stock started sliding with Silvergate. Perceptions matter, and when Silvergate folded, non-crypto depositors began pulling money from Signature.
Had Signature not banked crypto, or been publicly affiliated with it, they would have likely survived.
"Objective fact" lol please. Not an objective word in this sentence that you can back up with literally anything. Or we can just take your hyperbole and apply it to literally anything that has any negative sides to it.
Your sputtering rage and denial of the obvious is pretty illustrative of my point about crypto's toxicity and cultish obsessiveness.
Do you have any NFTs or ICOs or shitcoin rug pull scams you want to shill, or are you finally too embarrassed to do that in public under your own account because of the toxicity of crypto?
Why don't you prove it's not toxic by telling us how much and why you love and recommend crypto yourself, and explaining what it's actually good for?
Except there’s truth to it because no one can prove Signature had the same HTM issues as SVB did. Or that whatever outflows they suffered Friday rendered it insolvent.
Love that weird inclusion of "a democrat" in there. It's irrelevant and I have no idea why they thought that was an important factoid, but the oddity of it made me laugh.
Most articles will usually include something along those lines for former politicians, though with a bit more detail. He did co-author the Dodd-Frank reforms, after all, so there's actually relevant context buried in theree.
He sat on the board of the bank; his opinion on this matter is worth less than nothing. I hear Sam Bankman-Fried also thinks FTX did nothing wrong and was also shut down by the government meanies.
Operation chokepoint is a government project to target lawful but disfavored businesses such as pornography by using soft power such as unaccountable regulatory oversight to pressure commercial players such as banks and payment processors to execute their free association right to refuse to do business with these players.
Once locked out of banking they either can't do business or they move to using cryptocurrency and the government then exploits the unconventional payment method to lob money laundering charges at the operation.
Personally, sites like that increase my confidence a bit for those sorts of businesses.
If a company spends a lot on a fancy, flashy site, the implication (for me) is that they're more about marketing and image than they are about whatever their business is. If their business is retail, that's OK. I get it. If their business is handling my money, though, it raises a tiny bit of doubt in my mind about their priorities.
Something about this statement on Berkshire's website is really amusing:
"If you have any comments about our WEB page, you can write us at the address shown above. However, due to the limited number of personnel in our corporate office, we are unable to provide a direct response."
I honestly think that's a point of pride for many financial services.
If you don't want retail consumers, you don't wow retail consumers. You don't provide arbitrary confidence boosters to poor people who could never be in your network and leverage real wealth even if they tried for 100 years. You don't provide arbitrary confidence boosters that change every 2-3 years because anybody can learn the latest layout design pattern.
I think its far beyond having a World Wide Web strategy in 1995 and never revisiting it.
Are just the landing pages that are intentionally kept simple or even the real site behind logins? A bad site typically also reflects low confidence in technological abilities, is that not the case here?
That isn't their intent at all here. You can view archive of the site and see that they were chasing trends, this was just their latest redesign that happened late 2014. Once you get past the cover page, they even had a very trendy full height drawing (that was removed in 2019).
Contrast this to Berkshire Hathaway, no additional scripts (gtag excluded) or frameworks, no plethora of css defined. Now that is defining a strategy and never revisiting it. Including still using adobe pagemill to publish pages.
What specifically? Because they don't use the latest hip UI framework that breaks interoperability in order to appeal to the selfsame 20somethings that advocated for it?
The site works for me, and probably everyone else. My accessibility-enhancing addon is able to detect the interface elements. It's functional, which is almost a four-letter word these days.
>Short for “post hoc, ergo propter hoc,” a Latin phrase meaning “after this, therefore because of this.” The phrase expresses the logical fallacy of assuming that one thing caused another merely because the first thing preceded the other.
(edited as I incorrectly called it ergo proctor hoc fallacy before)
Both lost significant deposits from crypto blow-ups, reducing their liquidity and tanking their stock prices [1]. That left them uniquely vulnerable to both perceptions [2] and rates (as they sold the short-dated, liquid, low-duration assets first to plug the crypto hole).
"The bank’s digital-asset clients represented more than a fifth of its deposit base, and Signature’s executives said in December it would work to shrink that without leaving the space entirely. Earlier this month, the company reported it had pushed out $1.5 billion in funds from crypto platforms in the year’s first two months, while taking in $682 million in regular deposits. By then it was touting all the ways it wasn’t handling crypto in a presentation.
Edit: FWIW, I have no insider knowledge of what was happening at Signature, but there's no one I've talked to in Crypto who was aware of risk at that bank. This is quite in contrast to Silvergate where it was well known that the bank was not healthy.
I was not a signature customer, but at Silvergate, even things as simple as changing an authorized user on an account took months or years to complete. I'm still an authorized user on an account at Silvergate that I haven't worked at in ~4 years (despite many, many customer service requests to be removed including repeatedly signed documents).
So much of why Silvergate failed was simply business execution.
> Let's just be clear, Signature didn't 'collapse', the FED killed Signature to send a message to other banks. Barney Frank straight up says as much
I think you mean the FDIC killed them - and if you can't trust the word of a Boardmember of a bank whose equity just got zeroed out, who can you trust?
Right - it should be a negative symbol that a former regulator with no applicable banking experience is on your board, not a positive one. 20% of the banks deposit base was withdrawn o Friday. I'm guessing the FDIC had a much better view into the bank's health than a bunch of random commenters.
I make no judgement about a former congressman sitting on a board raking in the checks -- it's a valid retirement strategy.
But it is possible he was right. But it's also possible he's wrong, and making these claims similar to those made by Sam Bankman-Fried (woulda/shoulda/coulda) to preempt a deeper investigation.
But yeah, I trust the FDIC more than I trust any member of a board on any bank.
SVB was actually shut down by state banking regulators, not the FDIC or Fed itself (Yellen is the Fed). The state of California then listed the FDIC as the receiver of the bank's assets.
So I believe this was purely the work of the banking regulators and not the Fed. FDIC called the Fed for help to reduce the contagion, and the Fed agreed. It's possible the Fed didn't have to agree...
Yellen has been intimately involved in the process so I don't think there's too much of a difference right now, especially since they all had a zoom call including hundreds of senators at like 1 in the morning over the weekend.
I'm so fatigued from everything being called "woke." That video is cringy AF, but it isn't 100% representative of who they are/were. For all we know, this was the idea of one person in marketing and it got green-lit for various reasons. Faux News is trying to say the SVB's failure was due to it's "wokeness." The fact that they mismanaged their investments is apparently irrelevant to a business collapsing.
'Everything' isn't being called woke, just the virtue signaling, self congratulatory racialization of just about everything, emotion driven fashion trends and general 'compassionate' incompetence, inevitably resulting in the well known phrase 'go woke go broke'...which is what happened to SVB. I haven't seen what Fox News has been saying on this, how is that relevant?
That’s not woke, they might think they’re woke, but they’re not and suggesting they are is insulting to the actually woke. There’s nothing woke about these morons cosplaying and wasting money on useless, and artistically terrible, productions while on the clock.
But.. that's what woke is now, if it ever was anything different. It's the cosplaying, the signaling. It's very funny that they made the song and dance literal song and dances.
Maybe you don't like that it be like it is, but it do.
Ah, which is exactly what the urban dictionary entry tells you. Funny.
Urban dictionary explicitly states that there are two competing definitions. Much like fascists are trying to redefine critical race theory, ignoramuses are redefining woke because they can’t, or haven’t bothered, to grok intersectionality. To be clear, I think we’re both correct here, though your statement about the cosplaying is not an feature inherent to intersectional research and suggesting such shows your contempt for people doing work you know little of. If anything, pageantry is a time honed pastime of the vested interests so threatened by intersectional research, whose practitioners, by necessity, cannot rely on their audiences to understand the nuances of pageantry in the same way that Fox News can reliably evoke feelings from childhood by fear mongering about illegals destroying the world their viewers grew up in.
This is an interesting comment, in the same way that it is interesting to watch tucker Carlsons lawyers define woke on the record. What is peak woke to you? To me it passed long ago, as soon as normies started ignorantly appropriating it to be used antithetically to its roots.
What’s this usual playbook of redefining words you speak of?
It’s not my word, that’s how words work, and the language you use around possession of inanimate objects colors the rest of your comments in an unsavory light.
Oh that's amazing. Reading your comment, at first I didn't notice there was a 's' at "videos".
They're all great. This made my day.
A company producing videos like that deserves to die a painful death. Just like the 80% drop in Meta stock was a good slap for the horribly dystopian video they produced with the bunny losing its job then finding comfort in the metaverse.
I'd like a tracker finding companies producing similar videos so I could both have a good laugh and short them to death!
> A company producing videos like that deserves to die a painful death.
Why be such a hater?
The videos are stupid, and funny. I liked them (or at least the two I've now see). Marketing money gets spent on far worse things, including stuff that is actively harmful to the world.
It's not like the genre of silly bank commercials is something new-- banking is inherently pretty unexciting, so a commercial played straight is really boring and predictable. "We're trustworthy, you can tell by the vast landscapes we're showing with shaking hands".
The criticism would be justified if the video was like some wolf of wall-street coke fueled money mania or something. But a bunch of mostly ordinary looking people singing some cheesy pro company song? Nothing wrong with that.
I generally find people being genuine-- and sometimes that means awkward-- to be more trustworthy than a highly polished marketing machine that might be covering up for god knows what.
Looks like usual banal corporate marketing. I’m not sure what’s woke about it or why it implies that the bank will fail. Are there hidden woke words in the song lyrics?
NGL I dig a management team that doesn't take themselves too seriously. It's simply awkward advertisement; you'll see much worse on any local tv station.
Let's look at their balance sheet: https://www.cnbc.com/quotes/SBNY?tab=financials
$110B assets against $102B liabilities. That's 7.8% more capitalization, one of the lowest I've seen across all banks.
Want to guess how much of those were hold to maturity (HTM) and thus actually market value of 5% - 20% less?
If their portfolio was as conservative as just a 3 year Treasury bond, which has risen 3% in the past year, they would've lost 9% and been insolvent now. But we already know banks like SVB have been going far riskier for yield; 10 year MBS compared to 3y Treasuries...
Also, this thread for evidence of the clown show running the bank https://twitter.com/GRDecter/status/1635322707746357254