yup. 60% right. but you missed some of it. 1) in the zero interest rate environment we didnt care---until we did and we got those 2.5% 'sweeps' and realized they werent so great after all...AND 2) others banks finally fixed their tech to compete with SVB reasonably, remember when Wells and Citi could not even execute a wire? keep em coming auren...
Good post! That is part of the story. The other part is that SVB was also very lenient on terms when things went south and often extended credit when no one else would. This saved many startups but led to SVBs’s ultimate demise, causing colleteral damage to First Republic.
In today’s era of no liquidity (i.e. exits) in sight due to macro-economic factors including risk-off factors including Mr. Putin's war, cutting the burn and working to get to CFBE is the name of the game. Many companies did not - and may not make it or will seek mergers with larger players in their sector.
Mr. Trump accelerated the stress by repealing the Dodd-Frank act.
The Dodd-Frank required banks to have more and better quality reserves in case of down turns. This was overturned in the Trump administration to make banks more profitable. The way banks do this is holding less reserves which is fine until there is a downturn as we saw. https://en.wikipedia.org/wiki/Dodd–Frank_Wall_Street_Reform_and_Consumer_Protection_Act
So, why did anyone stay with SVB at all? Was there ever any benefit? Because they were "trendy" or some such nonsense - are business people really that shallow and gullible?
yup. 60% right. but you missed some of it. 1) in the zero interest rate environment we didnt care---until we did and we got those 2.5% 'sweeps' and realized they werent so great after all...AND 2) others banks finally fixed their tech to compete with SVB reasonably, remember when Wells and Citi could not even execute a wire? keep em coming auren...
Good post! That is part of the story. The other part is that SVB was also very lenient on terms when things went south and often extended credit when no one else would. This saved many startups but led to SVBs’s ultimate demise, causing colleteral damage to First Republic.
In today’s era of no liquidity (i.e. exits) in sight due to macro-economic factors including risk-off factors including Mr. Putin's war, cutting the burn and working to get to CFBE is the name of the game. Many companies did not - and may not make it or will seek mergers with larger players in their sector.
Mr. Trump accelerated the stress by repealing the Dodd-Frank act.
Lots of factors at play.
The Dodd-Frank required banks to have more and better quality reserves in case of down turns. This was overturned in the Trump administration to make banks more profitable. The way banks do this is holding less reserves which is fine until there is a downturn as we saw. https://en.wikipedia.org/wiki/Dodd–Frank_Wall_Street_Reform_and_Consumer_Protection_Act
So, why did anyone stay with SVB at all? Was there ever any benefit? Because they were "trendy" or some such nonsense - are business people really that shallow and gullible?