Larry Summers: Very Substantial Consequences

[@glennnielsen8054]

A problem with mathematical models used for stress testing is that correlations tend to move towards +1 when there is turbulence in the economy

[@robertleewhitt6241]

The bank SBV had a large drop in deposits because they had many startups customers in Silicon Valley and these start up customers needed money to make payroll > the Bank was holding 10 to 30 year treasury bonds > ( taking a look at their balance sheet ) > SVB had $91 Billion in Treasury bonds valued at only 76 billion Because of the rapid rise by the Fed in interest rates( A $15 billion deficit if forced to sell ) additionally, the balance sheet reveals $73 billion in loans to start up companies which they said was 70% in low risk loans however, 30% of that 73 billion was in high credit risk loans ( 22 billion dollars at high risk ) Then SVB tried to add a stock sale offer on the open market >..> diluting shareholder value < total equity of shareholders was only 16 billion > this scared The Bank’s Specialty customers, so they made a run on the bank to transfer their assets to a larger bank with more stability in their balance sheet ..

[@mikesmacedo]

Very informative - thanks for sharing.

[@miranda9691]

The credit risk was Insane, the stock offering show How dire the situation is, who in his right mind would buy the stock 😂

[@robertlee3805]

@@miranda9691 everyone should read and understand the balance sheet before investing in any company .

[@bdpsingapore]

Of the $73 billion in start up loans. I'd be curious how much of a haircut they are required to take on that for capital purposes. Assuming the treasury portfolio haircut is small, given the credit.

[@robertlee3805]

@@bdpsingapore not sure about that Brian but 30% of that $73 billion is at risk $ 21.9 billion…

[@SuriBayArea]

Lot of respect for Summers, he has been right in calling out the Fed the last 2yrs. I hope he is not implying bank rescue. For once, let the systems work as designed and not bail them out. Wall st has learnt to take extreme risks knowing with certainty the Govt will bail them out with tax money when things go wrong. This needs to stop and it is not a moral lecture.

[@zhengyiyue9223]

THIS EXACTLY stop bailing the stupid banks out

[@usa91191]

There r a lot of bombs in US stock market to show up. Sell stock and buy house and property are the best investment as Bill Gates did in this decade to protect your principal!!!

[@Argentoa]

No, it's just vindictive and illogical thinking. FIFTY PERCENT of all startups (that are backed by vc's) have their deposits there. Not making the depositors whole would mean thousands of employees at startups not being paid next week and it would blow a huge hole in our economy. Not to mention what it would do to our innovation sector. Get your head out of you know where.

[@zhengyiyue9223]

@@Argentoa Powell wants 2 million extra unemployment, that would actually help the cause. No Anthony, VC dont deserve any bail out. No tax payer bail out

[@TighelanderII]

Larry Summers is one of the people responsible for all of the financial trouble we've had since 2000.

[@btrue2day]

He looked like he did the interview from the toilet

[@metabolic_jam]

Lmao 🤣. Laughed too hard at this

[@TighelanderII]

Larry Summers is one of the people responsible for all of the financial trouble we've had since 2000.

[@rrickarr]

Please explain this!

[@TighelanderII]

@@rrickarr I'd say he's one of the main proponents of bank deregulation. He advised Bill Clinton in rescinding FDR's financial safeguards that kept the country crash-free for 70 years. After the safeguards were removed, then we had our first crash. The Dodd-Frank regulations that were put in place after the 2008 Crash weren't as strong as FDR's, yet those were too much for Conservatives, and they got Trump to weaken them, leading to less oversite of banks like SVB.

[@dksharron]

@@rrickarr The Glass-Steagall Act He was working with Rubin under Clinton when they arranged with congress to rescind this act. The Glass-Steagall Act effectively separated commercial banking from investment banking and created the Federal Deposit Insurance Corporation, among other things. It was one of the most widely debated legislative initiatives before being signed into law by President Franklin D. Roosevelt in June 1933. What happened after the Glass-Steagall Act was repealed? Some argue that the repeal of the Glass-Steagall Act of 1933 caused the financial crisis because banks were no longer prevented from operating as both commercial and investment banks, and the repeal allowed banks to become substantially larger or "too big to fail."

[@ChrisNYPilot]

Sorry he is not be totally honest. Fog? Really? Just tell it straight. The economic situation is much more fragile than the government is willing to admit.

[@usa91191]

There r a lot of bombs in US stock market to show up. Sell stock and buy house and property are the best investment as Bill Gates did in this decade to protect your principal!!!

[@bigpicturethinking5620]

Of course it is.

[@eric3434]

Larry: Only three banks have failed in the last 48 hours, clearly its not a systemic problem (yet) 😂

[@usa91191]

There r a lot of bombs in US stock market to show up. Buy house and property are the best investment as Bill Gates did in this decade to protect your principal!!!

[@kekeshuoshuo]

Which three?

[@cvshav]

He looks constipated

[@JewishBanker911]

All is fine.

[@leegilley221]

Wait till friday of next week to see what is really happening. Either the dust will clear or it's just the tip of the iceberg or beginning of a bigger collapse.

[@Csmonk848]

Less then 12 months ago banks were making loans at lower interest rates than they now have to pay out for deposits. That simply does not work and will obviously cause issues

[@usa91191]

There r a lot of bombs in US stock market to show up. Buy house and property are the best investment as Bill Gates did in this decade to protect your principal!!!

[@NICO-Z-TRADER]

Larry Summers and El-Erian were one of the few to call BS on Powell's narrative of transitory inflation last year which led the FED to be behind the curve. So I trust him more than Powell's stances. I am fed up with the FED being so timid in combatting inflation... The new talk about cutting rates is a recipe for disaster and has absolutely no logic. Just another market manipulation.

[@usa91191]

Agree and there r a lot of bombs in US stock market to show up. Buy house and property are the best investment as Bill Gates did in this decade to protect your principal!!!

[@jjohnson5014]

The Fed is inherently conservative as the consequences of their decisions can be economically catastrophic

[@fernandoalves1835]

If you think Larry and El-Erian are good, you need to listen to the Peter Schiff.

[@FogelsChannel]

Summers is a proven market manipulator and liar

[@salvador.garcia]

@@fernandoalves1835 lol, see George Selgin and Larry White.

[@MrTom-kl7hy]

The cheap money gravy train that kept money losing CV "startups" going for years without a clear path to profitability has derailed like a Norfolk Southern freight train. No bailout, FDIC insurance ok, fair division of the banks assets ok, no taxpayer bailout for money losing "startups". Venture capital investors went for moonshot profits, the one in a hundred times they win, they share as little as they can in taxes, when they lose they want us to bail them out.

[@usa91191]

There r a lot of bombs in US stock market to show up. Buy house and property are the best investment as Bill Gates did in this decade to protect your principal!!!

[@Argentoa]

But the VCs had nothing to do with this. This was the result of mismanagement by the bank combined with sharply rising interest rates. This very situation could happen to any of us and in fact many regional banks are potentially in the same position. what happens when it's your bank account?

[@johndingle6293]

Ceo was a loan officer. Who rose to become ceo. He cashed out 2 weeks ago. That was customer's money.

[@usa91191]

There r a lot of bombs in US stock market to show up. Sell stock and buy house and property are the best investment as Bill Gates did in this decade to protect your principal!!!

[@Floridawoodsbanshee]

Will he serve time?

[@johndingle6293]

@@Floridawoodsbanshee no. Perfectly legal. The senior risk officer was busy with woke policies.

[@ramdas363]

The regulation does not work! How can they have failure after failure and each time claim the system got more robust. It's only possible because the average voter understands nothing of this. Banks could be made extremely secure by deregulating the entire space and only regulating what we could call "safe deposits" which have to be 100% backed by real USD or directly held with the Fed for the customer. And this needs to be strictly regulated and controlled by authorities. That's it. Any service beyond deposits must come with a risk disclaimer and then customers can decide for themselves if they want their money to be part of dangerous unsecured loans, swaps, shorts, whatever. As long as there's a choice and a safe place to keep cash it's not a problem.

[@miranda9691]

Sorry we cant have that

[@TighelanderII]

Gawd. Regulation does work. Larry Summers and his friends got rid of the last of it in the late Nineties. Notice how we didn't have a crash for 70 years while FDR's financial safeguards were in place? Regulation does work, and we need it back.

[@5dayMovingAverage]

SIVB: wassup yo! SOFI: come see me at 5!

[@andre-le-bone-aparte]

BAILOUT The People In Ohio, Let the Startups and VC's fail

[@briangasser973]

These start ups are as American as Ohio. Your comment is silly when these are the new companies that will be leading America in its cutting-edge industries to compete globally.

[@ardentdfender4116]

The week ahead will be the most interesting to pay attention to. I'm just the average peon with a job and just kinda paying attention to things. This is something for sure to pay attention and watch over the next week and few weeks how it will all play out.

[@andre-le-bone-aparte]

A Top 20 Bank Fails... no big deal, right!?

[@usa91191]

There r a lot of bombs in US stock market to show up. Sell stock and buy house and property are the best investment as Bill Gates did in this decade to protect your principal!!!

[@glennnielsen8054]

It is thought-provoking that there is a budget deficit with a strong labor market. Washington should face the realities and cut spending.

[@femvetusa5263]

Have you taken a look at Bidens proposed budget??

[@sparkybuchta8717]

To your suggestion.., Joe Biden says ..” hold my beer”

[@glennnielsen8054]

@@sparkybuchta8717 And freedom disappeared.

[@roberteastern2397]

I doubt he’s telling the truth! It’s all going to fail. To much debt, and growing.

[@revamp777]

The CEO sold $2 million in stock last week, one of Micheal Bloomberg beat friends , democrat donors .

[@usa91191]

There r a lot of bombs in US stock market to show up. Sell stock and buy house and property are the best investment as Bill Gates did in this decade to protect your principal!!!

[@TighelanderII]

Yeah, but it's the Conservatives that really wanted unstable banks.

[@Ccrippie]

Bailing a bank out will allow other banks to do riskier investment strategies or sell it to others who are willing to at inflated rate. Ie Savings & loan crisis

[@H.U.ManAtWork]

Don't bail out the banks, again, again, again ...

[@jkigtehuioropsdfjoaw]

Question is can they bail banks without printing money and can excacerbate the inflation problems???? It looks like they have to make this bank fail or else the move to fight inflation will be futile

[@TheRiiiight]

"Important part of the economy" Apparently a part of the economy that has no respect for money or risk.

[@usa91191]

There r a lot of bombs in US stock market to show up. Sell stock and buy house and property are the best investment as Bill Gates did in this decade to protect your principal!!!

[@corporatemaq]

So should we the people, Bail these greedy banks out?

[@usa91191]

There r a lot of bombs in US stock market to show up. Buy house and property are the best investment as Bill Gates did in this decade to protect your principal!!!

[@flashoflight8160]

Why does the market disagree? This interview feels like Dick Fuld of Lehman saying the market is wrong and six months later Lehman is eating dirt.

[@ramdas363]

While I agree he's wrong, the market doing anything is not really an argument either. It can become a self fulfilling prophecy if enough people believe in a crash and start selling.

[@thegodhead]

The Fed needs to up their game and raise a full basis point next time. 🍿

[@usa91191]

There r a lot of bombs in US stock market to show up. Buy house and property are the best investment as Bill Gates did in this decade to protect your principal!!!

[@metabolic_jam]

Basis point is a hundredth of a percent. Maybe you mean 100bps?

[@thegodhead]

@@metabolic_jam you’re right. Full percent, is what they need to raise. *Correction 100 basis points.

[@Wolfcamp555]

A full 1%.

[@hwccheng]

Oh shit is written all over his face 😂 the poor guy

[@kveldgorkon4611]

Scott Shay, chairman of the doomed Signature Bank, co-hosted a company seminar last October in which employees were instructed for more than an hour on using gender-neutral pronouns such as “Ze” and “Hir.”

[@devonp5079]

In other words, bailout

[@sebastianstanko3684]

No bailouts this time, also the ECB in europe already said 'no bailouts anymore' so rugpull, now ask yourself he is talking about lessons and regulation, where does the money go? XRP,hbar,xlm,qnd

[@asetr2970]

If you bail them out you're essentially going into hyper inflation. It's over... They will use this as an excuse to create a CBDC

[@eddieyang7970]

Same thing happened to China last year, with government bailout. Will happen in the usa too, the usa government will not allow more bank runs, only way to prevent more bank run is a bailout

[@Whitemink32]

Interesting that CNBC and Bloomberg both haven’t posted any new videos since yesterday

[@ReginaJune]

😂 all I can hear is Britney Spears singing - Whoops I did it again…. Ftx. Is it me or would you say the whole point of being a financial institution is the point of accessing reliable capital and so you don’t have to carry a billion dollars in your pocket? You’d think management and accounting of that type of business- especially if it’s publicly traded…. Wtf? Did someone switch the Folgers to Auhuasca today?

[@DKK]

Oh well, start handing out those pink slips

[@aerohk]

Should we sell all stocks now?

[@Wildboy789789]

No dude, your stocks are tied to real companies, a bankrupt bank transfers all your shares to you... if you sell youll be holding cash, and cash can be lost very easily... also in a real depression do you really want paper money?

[@nathanielschroeder1321]

Russia and China dumping Dollars equal less demand. Increasing debt ceiling increases inflation but the Fed said Congress better do it. The Fiat debt system is failing and they have their next system lined up but first they have to get the people ready to accept it.

[@bruteht4655]

They bought treasures at near 0%, because there was nowhere else to put their deposits. Now those Bonds are negative, and they have to sell for a loss. This is the Feds fault 100%.

[@Ozzie12]

Yes but the fault was from too low rates.

[@user-bw4jp3sp2u]

I don't think so. The inflation was essentially caused by the enormous government spending, and the Fed is simply wiping the ass.

[@lambertois11]

Come-on man, take a step back and think! The real root cause is not the Fed! The Silicon Valley Bank was the victim of a classical bank run. The Silicon Valley Bank did not have a diversified client base; their clients were manly start-up tech companies. Most of these start-up techs are zombie companies. When the news of the bank problem spread in the Silicon Valley community, everyone rushes in to withdraw their money! There are many banks that bought treasures at near 0%, and they do not have a run. The other learning from this event is the start-up tech companies are very high risk!

[@madarchod312]

Yep. Fed and jpow is to blame. When inflation was raging in 21 he didn't raise rates and banks had to take risk to make any money in inflationary environment

[@lambertois11]

Why the management of the Silicon Valley Bank bought long term 10 years treasuries? This is very bad risk management! When the interest rate is near 0% you must buy short term treasuries !! Clearly the Silicon Valley Bank top management are responsible!!!

[@dementeduncle]

Can we service our debt with a 6% interest rate?

[@Floridawoodsbanshee]

We could print it?

[@Floridawoodsbanshee]

We could revalue gold up to 50,000.00$

[@dementeduncle]

@@Floridawoodsbanshee Or the world will revalue the USD to gold and we won't be consulted. I sure hope the US has the gold we claim to hold.

[@Floridawoodsbanshee]

@@dementeduncle they sold the gold. If they had the gold they would not hesitate allowing independent audits. The last audit was 1957

[@ildeupereirafilho4247]

No bailout for the rich geeks, that’s capitalism, when they succeed, they are geniuses... now they have to accept the failure!

[@theeverydayalpha]

Not to sound like a vulture but I’m seeing opportunities to buy property at knockdown prices. I missed out on 2008 BUT I have enough liquid this time around to pick up a bargain or two. It is what it is

[@1800cc-Dead-Meat]

@ 2:34 that's democrat speak for a bail-out. Just sayin'

[@mnm2007]

SOCIALISM FOR THE RICH!

[@ayenewwolde4393]

since covid monetary and fiscal printed money in trillions propping up capital market . what's worrying me is derivatives.

[@Floridawoodsbanshee]

You are not supposed to talk about that. That's for another day?

[@sebastianstanko3684]

Just tell all the people they are going to have to bail these compagnies out.

[@michaelmckay8719]

It’s a transitory soft landing all is fine…

[@R1GAMBLER]

too juu to fail

[@sltho]

Anchor sounds like Jon Stewart

[@hussienalsafi1149]

🥲🥲🥲🥲🥲🤠🤠😎😎😎

[@illegalsmirf]

I love the new Bloomberg logo. It is very DEI-compliant.

[@1800cc-Dead-Meat]

Pink is the new green

[@garycollingwood4002]

" IT'S ALL OVER AMERICA " 💩

[@cato451]

Meh. Boring little fintech bank. Bye.

[@bruteht4655]

18th largest bank by assets. Meh

[@cato451]

@@bruteht4655 exactly

[@ZoomRyder]

Terrible interview, provided zero substance and was clearly not prepared to answer questions.

[@BowBeforeTheAlgorithm]

This is not the time for moral hazard lectures or learning lessons from this?? Are you really serious? Now is precisely the time for that kind of talk. Other banks need to take note and look at their own operations more closely.... especially at this crucial juncture.

[@TighelanderII]

Conservatives always repeat the, "This is not the time..." defense when one of their policies create a crisis, (as they are planned to do).

[@ericmason6806]

HEYYYYYY! How's 'bout that SMART MONEY 💰? These guys really aren't that SMART!!!?

[@TarikSammour]

Buy some Bitcoin while you still can. Take your cash out of the banks.

[@sebastianstanko3684]

yes because BTC is perfect for crossborder payments and instant settlements!! please get out of your btc bubble and start being realistic

[@btrue2day]

BTCrap

[@ekoboyz757]

buy bitcoin if you want to lose your money even faster

[@elms2103]

lmao, regard

[@bobwreck3775]

you mean xrp

[@velob11]

No room for talk of morale hazard. There will be time for that later…🍌

[@kveldgorkon4611]

Get woke, go broke’: Silicon Valley Bank's top woman executive, LGBTQ+ activist gets targeted for lender's failure, Financial Risk Management at SVB’s UK branch, Jay Ersapah, has been accused of prioritizing pro-diversity initiatives over her actual role. While Ersapah acted as the CRO for Silicon Valley Bank in Europe, Africa, and the Middle East, she organized a range of LGBTQ+ initiatives, including a month-long Pride campaign and "safe space" catch-ups for staff.

[@samuelsunmonu]

This is really dumb. Tech is a male dominated industry…

[@kashphlinktu]

Yes, of course it was the gays that made the bank fail. Jfc

[@TighelanderII]

Oh, puhlese! I suppose "wokeness" time-traveled to the past and created the 2008 Crash too?

[@kveldgorkon4611]

@@TighelanderII Scott Shay, chairman of the doomed Signature Bank, co-hosted a company seminar last October in which employees were instructed for more than an hour on using gender-neutral pronouns such as “Ze” and “Hir.”

[@kveldgorkon4611]

@@kashphlinktu Scott Shay, chairman of the doomed Signature Bank, co-hosted a company seminar last October in which employees were instructed for more than an hour on using gender-neutral pronouns such as “Ze” and “Hir.”

[@walkinlove930]

Government lies and this guy is a joke😂😂😂😂😂😂😂

[@contemplating1015]

All caused by the FED and increasing interest rates the way they have.

[@Viking-ry8vo]

building back better...

[@michaelmcdonald4442]

I just love it when communist gives advice on the economy. The world needs ditch diggers too ya know.

[@kashphlinktu]

Ah yes everyone you don’t like is a communist. Tell me more

[@Agent-cu5pv]

Go to the bank and withdraw a quarter of million to start the bank run tomorrow......lol.

[@usa91191]

There r a lot of bombs in US stock market to show up. Sell stock and buy house and property are the best investment as Bill Gates did in this decade to protect your principal!!!