Two US Banks Just Failed - What Happened, and What Now?

Patrick Boyle's video on Silvergate: • Bank Runs! What's Goin...
Let's talk about the recent bank runs that ultimately caused Silicon Valley Bank (SVB) and Silvergate to collapse, and what it means for the broader economy/financial system.
DISCLAIMER: Richard does not hold a position in any of the companies mentioned in this video. This channel is for education purposes only and does not constitute financial advice - Richard is not responsible for investment actions taken by viewers. Please seek out a registered advisor if you require assistance (while Richard is a registered portfolio manager at WDS Investment Management, he does not provide advice through The Plain Bagel, which is not affiliated with his employer).

[@ThePlainBagel]

Update: SVB deposits will be available Monday, according to regulators. Signature Bank has also now been taken over by regulators, the second FDIC receivership in three days

[@MrSupernova111]

I thought this bank failure was an isolated event. You care to elaborate? Also, please pin this comment so we can see replies at the top of the comment section.

[@ThePlainBagel]

@@MrSupernova111 whoops, thought it was pinned, my bad. Signature was another crypto-focused bank, so it’s been facing the same pressures as Silvergate (a run on crypto exchanges = a run on their deposits). I’m not aware of another big regional crypto-focused bank, but this is still to a large degree a sector-dependant issue, and larger banks with sector diversity are unlikely to face similar pressure. With how quickly things developed, however, it’s impossible to predict what will happen from here.

[@MrSupernova111]

@@ThePlainBagel . I think you owe it to your subscribers to talk about the underlying issues causing these bank failures: higher interest rates. Many depositors are withdrawing money to invest in CDs and treasurys while the cost of capital for bank rises. In the meantime, the Fed plans to continue raising rates and HTM holdings in balance sheets continue to depreciate. This is a systemic issue. SVB and SBNY are only the first affected (the weakest links out of the bunch). The US government felt the problem was severe enough to bail out these regional banks and find funding to bail out future banks. I'm not asking for predictions. Just a complete and honest picture.

[@MyName-tb9oz]

@@ThePlainBagel, I don't see how this can _not_ have spillover into the rest of the banking system. It's not like the crypto banks exist in a vacuum, is it? Sooner or later it's going to hit other banks, no? I'm surely no expert on the global banking system or even knowledgeable but it just seems inevitable that it won't be isolated. How many average people have now heard this story? How many of them are going to head to the bank in the morning and withdraw most of their money? If this does spread do you really think the FDIC is going to be able to cover every depositor in even a single nationwide bank? It seems highly unlikely.

[@matthewdrews]

@@MrSupernova111 I think you should watch the video again. Richard mentioned interest rates and treasury bonds around 4:20 in the video. I would hope anyone explaining this current issue at this time (banking crisis???) would do so with a level head - even if they THOUGHT this was a systemic issue - would advise against bank runs. After all, the companies did have the money. It was only the panic withdrawals that made the banks no longer liquid. These banks should have been paying attention to their treasury bonds when interest rates went up. I totally agree that this might be a systemic issue. However, if the general public keeps a level head there's no reason to suggest any legit regional bank is at risk. With nearly all being FDIC insured, most of the public will be totally fine even if one of these banks falls. SVB is an outlier in many respects obviously due to its region.

[@ccc3]

Silicon Valley: move fast and break things SBV: breaks Silicon Valley: no, not like that

[@Toonrick12]

It's all fun and games until you're forced to clean up after the bull in the China shop.

[@MissMaserati]

Wondering if they've figured out what's wrong with their favorite buzzword: disruption. I doubt it, I live here with VC idiots, and it's interesting watching their own psychology problem trip them up like this. I think it just speaks to how anxious and terrified they are.

[@reformedchater]

*SVB

[@ccc3]

@@reformedchaterCorrect. Apparently SBF still haunts me

[@LuisSierra42]

@@MissMaserati Well the financial system has truly been disrupted now

[@deannickname]

It literally happened so fast that I wasn't aware there was more than one.

[@klafbang]

Doesn't help that the two failed banks and the third failing one have very similar names.

[@stvjjgcj]

Treu

[@102nightwing]

For Real. It hapened sooo fast.

[@jorgealvarado7946]

@Willie Jonathan scammer Alert

[@FuToo]

​@williejonathan9222oh my! How can I pay you to teach me...🤡

[@anthonyrussell5718]

It was a very bad decision to remove the Glass-Steagall Act in the late 1990s, which led to the spectacular failure of huge banks during the financial crisis of 2007-2008. To prevent another disaster, Dodd-Frank and this statute both need to be reestablished right away. Else what happened with the Dollar recently is only the beginning of what will happen if nothing is done to address the current situation.

[@roseroland1998]

I believe SVB was making an effort to reorganize their bond portfolio. Yes, they would lose money if they sold their low-yielding bonds. But, they were trying to make up for it by repurchasing bonds on the open market at the higher interest rate.

[@louisairvin3052]

@thelastunicorn1987 I've been able to scale from $50K to $189k in this red season because my Financial Advisor figured out Defensive strategies which help portfolios be less vulnerable to market downturns.

[@Curbalnk]

@@louisairvin3052 've been looking into the potential of speaking with consultants lately. I require direction because I am an adult, but I wonder how really beneficial their services might be.

[@louisairvin3052]

@@Curbalnk Finding financial advisors like KAITLIN ROSE STERNBERG who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.

[@Curbalnk]

@@louisairvin3052 Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.

[@jonathangilmore3193]

I appreciate an adult review of these bank failures without the “click bait” nonsense driven by KZbin profitability algorithms! Grounded, sensible, even review of a concerning financial matter. Thank you.

[@julesjoyx]

YUP. I got sick of combing through click bait “shocked face” thumbnails. So fake and off putting. This was a breath of fresh air.

[@CooManTunes]

Perhaps, you shouldn't be such aloser who clicks on everything in sight. Blaming 'KZbin profitability algorithms' is just a fancy way of calling yourself amoron.

[@somanayr]

I never thought about how harmful a bank monopoly could be, but having one bank that controls half of a sector’s capital seems hazardous

[@cgo225]

Agreed, but SBVs clients were businesses, and SBV also offered competitive rates to their commercial depositors, otherwise those businesses would have transferred their deposits elsewhere. This gave SBV a further problem, needing to sell off assets and borrow in order to keep funding the attractive rates they were paying their depositors..... For my part, this mainly sits with directors and risk managers of SBV, but also the risk managers of the depositors and investors.

[@diegojines-us9pc]

wow you just caught on TOO BIG TO FAIL. remember 2008? they passed laws to stop this from happening again. and trump cancelling some of them laws, and why is it happening again. when laws are changed back to the good old ways.

[@ZhangZhongyi]

I don't think it 'controls' the sector. Even though it serves half of the companies in it, one company can have more than one banks.

[@scasey1960]

VCs created & tolerated this risk

[@FormerMushroom]

Having an institution that can print and decide interest rates for the short term is too 😬

[@adrenalinejunky789]

One of the only financial KZbinrs that actually knows what he’s talking about and gives us straight facts and no bs clickbait. Thank you good sir!

[@matttran7161]

Dude has a real job so he's not dependent upon clicks. If anything it incentivizes him not be a click bait farmer because this very public content reflects on his ability to do his real job. YT is a poison pill and he knows it.

[@JayPatel-ls6wn]

He actually IS a real professional, working as an analyst for an investment management company in Ottawa.

[@tre-moon-dous6122]

Was just about to write the same thing until I saw your comment

[@wayneanthony6831]

Try Patrick Boyle as well

[@rinodb83]

A true legend

[@pauldacus4590]

What's so strange about SVB is how _fast_ things went from "Business as Usual" to "Bank Run". In the 2008 GFC, companies that were going down were telegraphed by the stock market, sometimes for months in advance. This thing imploded in 48hrs.. I think the speed that this happened is what is unnerving people. And the bank stocks that have fallen hard in the past day or two could make depositers pull their money in a self-reinforcing cycle.

[@500dollarjapanesetoaster8]

It's a bit like the movie Margin Call, where the CEO character is alerted to the massive exposure and says we have 3 ways to win on a deal: be first, be smarter, or cheat. He says I don't cheat, but we can be first. Sell everything. He who panics first, panics best, in this case. FDIC insurance is really meant for individuals, not businesses, so most of the customers will be facing serious losses. Fun fact: there is probably only 3% cash floating around for all of the bank deposits there are. So if things get weird, you have to end up being in the first 3% to demand money to get the full amount.

[@boxtodragon]

Essentially the bank didn't shut it self down, the government swooped in and try to contain it because it had no confidence that svb is going to have enough in it to cover the hole created by selling the treasure bond confirming their losses, if banks are allowed to hold the line like Michael B they would in this case, but that's not legal for banks. Who's to blame? Rising inflation, so yeah Joe Biden and the left wing in house sponsoring someone else's war in the 3 digital billions, but no plan for inflation.

[@TheLastLineLive]

This is definitely not a natural decline, it is manufactured. Whoever manufactured it is the benefactor.

[@TheSilentpulse]

@@500dollarjapanesetoaster8 i think the 3% cash flow number is like 10 years old or more. i doubt we have even 1% in cash, rather go into the 0,1% region

[@sheeplepinoy2224]

@@TheLastLineLive sounds archaix

[@patfase]

I've been following this story closely and researching since it first popped up before the bank run. This is one of the best pieces I've seen to date. Appreciate the level headed view.

[@Karearearea]

I was listening to the all in podcast and they made the point that the real tragedy is not that investors are losing money - it’s that small start ups and businesses, that were managing their money responsibly up until yesterday, suddenly have their accounts frozen. Suddenly all these businesses cannot pay their employees, cannot pay their suppliers and contractors, all because they had a bank account with the wrong bank. That means that there will be a lot of tech workers who suddenly will not be getting paid this month, through no fault of their own, nor the company they work for. And if you’re not getting paid, since people won’t be able to afford their rent or mortgage, etc Edit: Update - the Fed is bailing out all the depositors! So the startups will get the money in their bank accounts back

[@johnsmith-ir1ne]

A fellow all in Fan!! Here's an upboat 👍😁

[@tybarker5038]

Surely there are protections in place to get these employees paid. This is insane!! Wild times we are living through.

[@poisonpotato1]

What % of startups fail? Isn't it like 90% why do we have to bail them out too...

[@flipsyder]

3:10 Silvergate Bank 6:18 Silicon Valley Bank 8:29 What Now? 10:20 Effects on Economy and other Financial Institutions 11:11 Points to Consider

[@gematriagoon]

Watch Monday and the ides of March.

[@TargaWheels]

Weird how both of them can be labeled ""SVB".

[@eugenetswong]

Paul, thanks!

[@stuartridgeway]

OVER 586 BANKS CLOSED IN THE USA THIS YEAR. NOW THIS. AND BANK OF AMERICA AND WELLS FARGO. PEOPLE ARE SHOWING EMPTY ACCOUNTS. DIRECT DEPOSIT FOF PAYDAY. ACCOUNTS STILL EMPTY!!! WHILE THEY SEND HUNDREADS OF BILLIONS TO UKRAINES MILITARY, THAT DOES NOT HAVE ONE. ALL OUR MILITARY AMMO. WEAPONS. TO ???? AND ITS NOT IN THE MILITARY HANDS OF USA. AND THIS CH. IS SAYING WE ARE OK!!! OMG. REALLY??!!! WILL NOT BE BACK TO THIS CH. VERY BAD INFO

[@jesusguerrero752]

First republic bank is next good luck guys

[@tinalear]

Dear Patrick, I know nothing about high finance--but I have money in banks and I know that when people get really scared, it causes trouble. Your video helped bring the nuance, and more "plain and simple" information to help people like me. Blessings to you, my friend.

[@Thisismyyoutubechannel69]

Patrick? Or Richard?

[@elizabethdouglas4730]

It hurt that banks are crashing.

[@elizabethdouglas4730]

I will try and invest in stocks and crypto.

[@javierarturo9168]

Success depend on the action or step you take to achieve it. Show me a man who has no investments I will tell you how soon he will go broke. Investment is building a safe Heaven for the future....

[@sophiaalex802]

To earn more you need to have multiple diversified means of income so investing is a way to earn more money once it is profitable...

[@johnnymaxwell8284]

If you find a way multiply your money one day you’ll wake up and realize that the money you thought you had is gone .investment is the key!!!

[@angelamorris478]

@@johnnymaxwell8284 I agree with you friend investing is the key to maintaining your financial longevity and not just investment , but an investment with guaranteed profitability..

[@David.Marquez]

It's truly a momentous occasion when I can get something explained by Patrick Boyle and The Plain Bagel in quick succession

[@dmytrosurname1609]

Ben Felix, please *Fingers crossed

[@sebytro]

I was literally eating a bagel when I saw this video pop up on my feed.

[@ChineseKiwi]

Wall Street Millennial's video goes into the financials far more in depth as well.

[@pkwithmeplease]

l000l patrick boyle the dude who makes over 100k a year off youtube but still begs for peatron lol that guys a scammer.

[@kickassandchewbubblegum639]

it wasnt people doing bank runs tho...thats not why this is happening...bank runs are a symptom of the problem... the problem is greed and hubris....all the ceos took their money out weeks before this so its not the bank runs doing this...thats the narrative of the far left....reality shows otherwise we had this problem in 1929 and it surprises me nobody talks about 1929 right now...they only bring up 08 which wasnt that far back...this is more akin to 29 than 08 were going to see bread lines and soup lines... if you look at the bank sell off its all 60 70 80 in the red..monday wil be a dark dark blood bath of sell offs...its going to be nasty af...

[@patriciaa4451]

I feel like I'm living in the montage at the beginning of a movie about a financial collapse.

[@jmitterii2]

LOL! No, that was nothing. This is going to be even more spectacular.

[@Doge_Of_Wallstreet]

More like a civilizational collapse. Soon we all be driving muscle cars and wearing cool leather suits.

[@Studeb]

They all start the same, because nobody is ever held responsible. It makes no sense for them to follow the law, cause that makes them less money and they are always bailed out anyway. In 12 years we will be saying the same thing, and so many people will be completely stunned that it happened.

[@jz4461]

​@Studeb What? These banks are taken over by the FDIC, and all their assets are sold off to pay back their customers. The stockholders lose all their money, and all employees lose their jobs. I get that this system isn't perfect, but the CEO and stockholders are NOT getting a handout from the government.

[@nothingisawesome]

thats pretty dramatic lol. especially for an event we'll likely forget about in a week

[@wealthbytes]

Thanks for putting this out. This was a very good, clear, and non-panic video that breaks it down. Well done!

[@allensu9363]

It seems like the root of the problem was SVB’s failure to hedge interest rate risks with duration. It makes me wonder if other banks also messed up their durations too.

[@catriona_drummond]

Absolutely. I wonder what their risk management was doing ALL THROUGH 2022, were they on holiday. The central banks actually reacted pretty slow first, to the inflation. If you held bonds, you could see this coming from a mile away. They could have hedged or diversified. And shifted to more class A liquidity assets, as they were already losing lots of deposits during 2022 as the balance sheet in the video showed. Running out of cash and class a in a bank run is no shame, but not preparing, is. But I guess, hedging, diversifying, restructuring the portfolio costs money and takes the cherry off the top of your profitability and off your bonuses too. So you just go on, drive it into the ground and scramble to get your bonus, hours before getting shut down. Perfectly executed. A beautiful lecture in American Manager Capitalism.

[@souvikrc4499]

@@catriona_drummond No doubt that SVB's top execs dropped the ball on risk management. The top execs ignored warnings from employees to buy shorter term bonds, and instead doubled-down on high yielding assets. And SVB's CEO, Greg Becker, lobbied Congress back in 2018 to exempt banks like his from Dodd-Frank regulations, saying: “Without such changes, SVB likely will need to divert significant resources from providing financing to job-creating companies in the innovation economy to complying with enhanced prudential standards and other requirements...Given the low risk profile of our activities and business model, such a result would stifle our ability to provide credit to our clients without any meaningful corresponding reduction in risk.”

[@reviewchan9806]

Let this be a lesson that these "people" aren't financial geniuses. They just got to their position by bribes, nepotism, and connections. And then virtue signal about how smart they are for pulling their own bootstraps while the rest of us work.

[@ancillarity]

​@Catriona I am guessing they were just way too specialized, and their whole business model is specialization. It's too hard for them to specialize. So the fact that they failed can be argued as simply capitalism at work.

[@hanliu7451]

Not necessary the duration. They could have done enough receive float to keep the book short, but still won’t stop deposit running off. Liquidity issue, given concentrated customer base. Things went wrong 3 years ago when surge deposit coming in, and they decided to invest in bond market.

[@TrampyPulsar]

Considering the massive downsizing across the tech sector in the past 3 months it makes sense that a bank who's entire pool of funding is in tech would experience a massive bank run.

[@spechund7109]

If you think this is limited to niche techy startups which seems to be the prevailing narrative that is being put out there regarding this, you will have a major surprise very soon ;)

[@spechund7109]

@Vincent Wisehoon but the diminishing returns for tech started way before this bear market. Those startups getting a ton of money at the beginning was due to easy money fiscal policy more than tech still having a lot to offer. People and investors had more money than they knew what to do with, so they invested it all in the idea of the next big thing. Rinse and repeat. Spigot gets turned off, the industry that naturally got the most speculative money also is the first to have it pulled. Straightforward

[@spechund7109]

@Vincent Wisehoon I'm talking about people seeing too big to fail banks experiencing bank runs. This is not some tech bubble backlash more than it is actually the final death throes of fractional reserve banking. Do you seriously think that SVB's monetary management was any more risky than say Bank of America, or (insert any big name American bank here)? They're all over leveraged, and trying to use the same tricks to be able to keep paying their creditors, except with the rate hikes, it's all finally coming to a head. This is not about big tech. This is a banking issue. Last time I checked, there's no difference between Warren Buffett depositing 500 million in a bank or some startup. People make it sound as if having banking clients that are silicon valley "startups" suddenly makes the banking model riskier. That's completely false, same old bank takes your deposits then loans that out and borrows against it.

[@Smol_Eri]

@@spechund7109 tech in general is screwed. Companies, in a true capitalist soceity, cannot exist without making money. Sillicon valley is a system that needs to rot and die. I feel TERRIBLE for the working class who pray that a system built off lies can sustain them, and wish we had enough blue collar jobs, and other non-tech jobs they had skills in to collect each and every one of them and provide a living for them. Though sadily we've become too married to profitless shells of companies which are basiclally a bunch of collage kids going "wouldn't it be cool if we stuck everyones brains into a headset and called it VR. Shit will never be profitable, but damn it would be cool." they hype it up to a bunch of VC firms they go "huh that could posisbly work, here's some cash" and all these people get hired while the initial founder "makes their exit" as soon as someone like facebook buys it up and goes "ok look, we know we haven't turned a profit in the entire lifespan of the newest generation BUUUUUUUT this time it's legit. I hope the scammers at the top burn, I hope the working class (this includes white collar people who are at say 80k a year with kids and aren't actively involved in the scam) can find all of the success in another field. But my nihilist side knws it will be more of the same. The tax payers getting fucked, the workers getting fired, and no one seeing a DAY inside a non-gucci jail for their crimes. gotta love oligarchies

[@choccolocco]

So it had nothing to do with crypto?

[@kgk4L96]

What I really, really always appreciate this channel is how level headed it is.

[@davekal]

Literally just subbed to the channel for this reason.

[@usa9116]

US bank run start now!! Withdraw yr money and invest in house and property is the safest invest.

[@zczar333]

Great video. It’s so refreshing to hear economic news in a concise, straightforward way without the drama. Plus, I always learn something new with each video. Thank you!

[@method341]

Holy crap, I remember buying Silvergate in 2020 and sold it at $120. I felt like an idiot for selling too early after seeing it go to $200 but I'm glad I stayed away from it after watching it implode the past twelve months. I would imagine a lot of HODLers got burnt.

[@moccamixer]

Why would you be an idiot if you earned money 🤷🏻‍♂️

[@RN-zb7li]

@@moccamixer cuz they felt like they could've earned more had they sold at 200

[@TheGreyGhost_of43rd]

@@moccamixer🤦‍♂️ not to good with human thoughts and feelings huh

[@ConfusedKev]

GG WP

[@harrywoodman2988]

Celebrate getting out when you did, that was wise. Hype is a very dangerous thing to believe in!

[@lordofthegame5268]

Thank you for explaining what happened without the sensationalism that is plaguing this topic. Its so important to have a trustworthy and knowledgable source

[@jakejrly1508]

SVB probably brought bonds of these risky startups and loaned them money to pay back the bonds. These startups are not profitable and revenue drying up, they are going back to SVB for more cash or loans/bonds. This create a vicious cycle of borrower/lender sell off. Top management of SVB knew this months ago and tried to use the worthless bonds or notes as collateral. No other banks want a piece of these junk loans or bonds. The Fed is trying to get rid of their own junk bonds. This is just part of the zombie companies going BK due to very low rates the past 10 years.

[@alexdasliebe5391]

Billions of dollars isn’t worth sensationalizing, that’s for trillions.

[@kickassandchewbubblegum639]

it wasnt people doing bank runs tho...thats not why this is happening...bank runs are a symptom of the problem... the problem is greed and hubris....all the ceos took their money out weeks before this so its not the bank runs doing this...thats the narrative of the far left....reality shows otherwise we had this problem in 1929 and it surprises me nobody talks about 1929 right now...they only bring up 08 which wasnt that far back...this is more akin to 29 than 08 were going to see bread lines and soup lines... if you look at the bank sell off its all 60 70 80 in the red..monday wil be a dark dark blood bath of sell offs...its going to be nasty af...!!!!

[@MrSupernova111]

I recommend the Financial Times or the Wall Street Journal unless, of course, you mean that you want to be hand fed information instead of seeking it on your own.

[@lordofthegame5268]

​@@MrSupernova111 Why the insult? I just said I appreciate the explanation

[@aaronhartman9793]

You nailed it Bagel - I work at SVB and my #1 focus now is to help my clients land on their feet. I can say that my own loan book was of utmost quality

[@kadeshbailey5149]

First time watching. Good video and shows the benefit of a diversified portfolio with an understanding of risk. If this video is an indicator of the research you put in your videos, good job! Keep it up.

[@grapetoad6595]

With SVB, I was envisioning normal people doing a run on the bank, but then I realised it was *investors* withdrawing billions. Got to love them. Edit: I wonder how many bonuses the bank executives are still going to get despite running the bank into the ground

[@MrSupernova111]

You should be asking how many people will be fired because their firms lost most of their cash held at SVB. Many of those firms won't be able to make payroll. But I supposed you don't care about that.

[@royce9018]

normal people would need to show up in numbers of roughly the population of Rhode Island as a whole to make a difference.

[@Seneric]

@@MrSupernova111 No, you dont get it. This NEEDS to happen. People need to learn that banks are NOT to big to fail, and they should be FAR more scrutinous with who they park their money with, how exposed they are, and what risks they carry. Its about damn time people stop treating capitalism and the stock exchange like its the goddamn casino.

[@marianhunt8899]

Eye watering amount no doubt.

[@jacobarcher923]

​@@Seneric 2008 should have taught people that, any crash will be promptly forgotten as soon as someone finds a way to make money in a dodgy way again

[@bc-guy852]

Thanks Richard - well done! I appreciate 'less fluff' in order to get this produced quickly. I am not in the finance industry nor am I a Tech Start-up so this is just 'general information' to me. This is developing so fast - and has such powerful implications for the future of MANY financial organizations - that I thought there was only one bank that failed - names too close and SO FAST! Thank you!

[@deepeshdaya2383]

Love your work Richard, you one of the few people whose videos I look forward to and learn so much from. Thank you again and I hope your cup of success always runneth over.

[@LoboLakerGaming]

Awesome explainer, thanks. I have a semi-working knowledge in financial lingo with my degree and work but I was worried it would be too technical for me. Thanks for keeping it mainline enough so that I can send to some of my less financially inclined friends!

[@snaggiz]

Ironic how a Swedish company called Alecta (who manage occupational pensions) actually shifted investment strategy relatively recently into focusing more on American banking which included, unfortunately, SVB. Apparently, individual people will barely notice a difference, if any at all on their pensions. But this highlights how remarkably large the reach the effects of these kinds of events has. There’s a dangerous amount of trust in these institutions to act responsibly and intelligently.

[@sarowie]

It is a very funny argument from investment bankers that when they "earn" money, they need bonuses. And when they perform "above average" on shrinking market, they need bonuses. And when they screw up "it makes a barely noticeable difference". I mean, to some extend, you need risk diversification and risk diversification naturally means taking on risks, but... how can investment bankers "earn" an above average salary, then bonuses on top and then claim "responsibility" while at the same time claiming "market forces" being in control of every down turn (ignoring the very fact that collectively, "investment bankers" are "the market forces")?

[@JeffreyJefferson]

@@sarowie because people are biased and don't want to attribute their success to luck.

[@barbecueribs8130]

@@sarowie It doesn’t sound like you know what investment bankers do lol

[@chicharito1548]

@@sarowie As far as I know, investment bankers just get laid off when they screw up.

[@stephenbeyer4315]

Thanks for that straight forward, no frills explanation. As soon as I saw you had posted this video I thought "uh huh! now this will explain what's happening with none of the crap." Please keep up your high quality videos. 5 stars!

[@gregz1235]

Finally, a common sense, "world isn't ending" explanation on the situation. Thank you!

[@jeffreylevin9728]

PB - some corrections. SVB was not shut down by the FDIC. The bank was shut down by the California Bank regulatory which named the FDIC as receiver. Plus for you a deeper dive. Basically for all of 2022, no chief risk officer. Think about that for a bank with over a 100 billion in assets. Next, the "run" as you indicated was entirely corporate. When the bank announced that it had sold $5 bb in treasuries and lost $1.8 bb, corporate customers went back and looked at their 10K and noticed that the held to maturity portfolio of R/C MBS and treasuries had an unrealized loss in excess of 17 bb. THeir NBV was only $16 bb. They than ran for the exits, all at ounce. However, they had plenty of risk officers around the world it would seem really concerned about things like equity in meetings and global warming, but not soo concerned about doing any hedging of their 100 billion plus portfolio. Tha's right, they were completely unhedged. Again, no chief risk officer in 2022. They had more important things to do.

[@umiluv]

They had to meet those DEI quotas. 🙄

[@nuprophett]

If I wasn’t already subscribed, I would have done it again after this video. You’re a national (and international) treasure.

[@jewels3846]

You made me check and so I subbed! Thanks for the reminder comment

[@pablouribe1522]

Thanks for explaining what is going on. There is no better place to get clear and trustworthy information than The Plain Bagel.

[@Reklaw-]

The people trying to calm things down by saying more bank fails are unlikely are the same ones that said SVB was OK not too long ago. Clown Crammer from CNBC just weeks ago emphatically stated SVB was not a risk.....he also said the same of Bears Stearns just days before it folded....when will Crammer get sued to the poor house and prevented from ruining people's lives?

[@kickassandchewbubblegum639]

it wasnt people doing bank runs tho...thats not why this is happening...bank runs are a symptom of the problem... the problem is greed and hubris....all the ceos took their money out weeks before this so its not the bank runs doing this...thats the narrative of the far left....reality shows otherwise we had this problem in 1929 and it surprises me nobody talks about 1929 right now...they only bring up 08 which wasnt that far back...this is more akin to 29 than 08 were going to see bread lines and soup lines... if you look at the bank sell off its all 60 70 80 in the red..monday wil be a dark dark blood bath of sell offs...its going to be nasty af.........

[@piuthemagicman]

Also Patrick Boyle - top quality nonsensational financial knowledge spiced with Patrick's driest of dry top quality humor!

[@Fractal_32]

@@piuthemagicman both are great! :)

[@zteaxon7787]

I think not. He's juwish. They're not exactly famous for trustworthyness. He also blamed the failiure of a bank on people collecting their money back. And not on embezzlement and gambling away deposits as if the bank is a ponzi.

[@nicolatorbayuk6778]

Excellent video .. clear and descriptive .. thanks Plain Bagel ..

[@ChrisMillerLite]

Thanks for explaining without sensationalism, doom and gloom, and clickbait thumbnails which is 99% of finance related channels on KZbin.

[@pretzelandmustard]

I want thank you for your calm, straightforward, and thoughtful analysis. I passed by many videos in my search [including big media networks and other clickbait] looking for you because I wanted an honest, analytical take on the situation. Thank you!

[@rairaur2234]

The amount of people comparing it to 2008 makes me question whether the public has already forgotten what even happened in 2008 and what were the reasons for it. Such an amount of worry just for the sake of being worried.

[@cursethesemetalhans]

There is a huge misallocation of capital in the system just like '08 in housing, I just don't think we know where it's going to blow yet.

[@davidpolk6373]

@@cursethesemetalhansthis is definitely a different situation the op is right worrying because it’s fun to do is the current trend

[@choccolocco]

@@cursethesemetalhans And in 2008, everyone seems to forget that banks giving mortgages to ppl that couldn’t pay, KNOWING they were going to default, then bundled the bad loans and sold them to unknowing institutions. It was a scam from criminal lenders from the beginning.

[@anaruizguti]

@@cursethesemetalhans replacement of fiat ...

[@mkl5448]

I feel the average person has no real clue on what is going on, or what went on. They just see news clips and take it as the gospel, instead of actually reading about why. Things are more knee jerk than ever, and that's really not helpful.

[@JGeMcL]

Thanks for the update PB. I'm a retail banker and I know I'm going to be getting a ton of people asking about their accounts.

[@LydiaKrow]

Thank you so much for this information. Very easy to understand, and appreciate the straightforward approach. It really means a lot to a layperson like myself to get this type of quality analysis in a manner I can understand. :)

[@advancetotabletop5328]

Invest in a “bank” known for startup and VC’s during a recession when IPO’s are at a 30-year low. What could possibly go wrong?

[@advancetotabletop5328]

SVB was “not large enough to fail”. Back during the previous financial crisis, the USA bailed out numbers us banks which would have failed. So, historically, SVB is one of the “largest” banks that failed, but it could have been bailed out like other banks. SVB has been taken over by FDIC, and *deposits* are still insured.

[@azeria1]

@@advancetotabletop5328 well yes and no up to 250.000 is but since it’s mostly for businesses they will have a lot more then 250.000

[@TheNaldiin]

I think they looked at the industries of their clients and thought that was diversified. That they were almost all tied to the start-up VC ecosystem never crossed their minds.

[@hahaha9076]

Great explanation. It's a bloody relief to have someone speak authoritivly about economics without the bs emotive driving drama. I'm subbed bro. 👍

[@romanroyer7057]

No shock, no fire, no exaggeration. Thanks for the restraint, Plain Bagel

[@chevonne24]

I feel like I get the gist of what happened after watching your video, which is a stark contrast to another I tried to view that confused and worried me more than anything. Thanks!

[@craigdelaune6768]

Thanks for putting this into perspective. I'm in school for finance and people are always looking to say the next collapse is coming. Love your videos!!!

[@Aaron-wq3jz]

@@markc1682 it’s not that hard

[@katrinabryce]

The London branch has also collapsed, and that affects some of the companies we manage. They are certainly not the second largest bank to collapse in the UK, that I think was Halifax Bank of Scotland, Royal Bank of Scotland was definitely the largest in the UK, and indeed company of any kind in the world to collapse.

[@drpeterc12]

Yes but all our banks (except perhaps Barclays) are still technically bankrupt, but are all fortunately backed by HM Government and our money tree, so none will be allowed to ask for receivership.

[@intruder313]

@@drpeterc12 the Magic Money Tree thank you!

[@akkawowa]

The BBC is reporting that the UK Gov is working out a plan to bail out the UK companies affected... it doesn't mention bailing out the bank though.

[@usa9116]

US bank run start now!! Withdraw yr money and invest in house and property is the safest invest.

[@Vee-jc1qh]

@@drpeterc12 The Financial Services and Markets Bill started in the HoC and now at the Committee Stage in the HoL is worth a look. HM Government has never been tested, to date, in compensating individual personal deposits to the current amount of £85,000. Let's hope you are right that sufficient funds are directed to such individuals who do not hold private banking accounts whom, I'm sure would be first in the queue to be protected.

[@goingwalkaboutnow]

Great job, excellent way of explaining a very complex situation.

[@hazeldavis3176]

Once again, very grateful for your viewpoint. Your level-headedness is greatly appreciated.

[@piecake9173]

Excellent summary Richard, one minor point, silicone is the soft rubber material used in sealants and kitchen utensils while silicon is used for semiconductors

[@unixtreme]

I deal my pipes with chips.

[@Belboz99]

I caught that one as well... quite the pet peeve of mine. Also, silicon is an element. I think the only one that irks me more is "duel-core", though at least now that multi-core CPU's are the mainstream that's become less frequent.

[@OrangeFluffyCat]

It was bothering me too

[@ByteReaper]

Thanks for this! So much of what is out there is just panic and the sky is falling. It was great to hear someone just give the facts and some perspective.

[@medinadan]

How elegantly put despite the fact that so many people are about to fall into financial despair and probably will never recover from it... Plain & Simple

[@kkgt6591]

It's wonderful that no youtubers, no fundamental anyalyts were able to predict the bank run. Says something that how much all these people are aware of it. It's so so easy to start making videos and do explanations after the fact.

[@ickster23]

What happens now? Well, for the people that led these institutions to collapse, I forecast large bonuses and probably another seven to eight figure position on another board.

[@kumarj4693]

True words

[@kevinmosteller7279]

Solid info per the usual and you are the absolute man to provide this info to the general public for free. Thanks as always!

[@TonyGonzales]

No frills sure, but also straightforward and powerfully honest. Subbed.

[@bulldawzer5074]

First video I've seen from you, loved it my lad subbed :)

[@michaelarriaga6154]

I was waiting for someone to explain ! Nobody better then the plain bagel! Been researching these failures all day!

[@costanzojr]

Always timely, insightful, and factual. Thank you, Richard, for your work.

[@hellize4212]

I have the feeling, that he is holding some awful information back

[@Bekayvd]

I really love your nuanced takes in a sea of drama and clickbait. Thanks for your amazing work!

[@ayalneh1245]

Indeed "Plain & Simple". Very clear explanation. Thanks.

[@jasonkim1069]

Thanks for the info Richard. Although one thing that could have been mentioned that could make this video more useful is about exposures that financial institutions hold on U.S gov bond. It's an asset that most financial institutions hold certain amount for 'risk free' return. There may be more financial institutions with unrealized loss on gov bond that can be later revealed, which may lead to another bankruns.

[@YourUncle8501]

REMINDER: On March 26th, 2020 the Federal Reserve FOMC's change of bringing the bank reserve requirements from 10% to 0% became effective. This means that banks could and may loan 100% of deposits and keep $0 in the vault leaving them highly exposed to a bank run. This is how a significant amount of money is entered into supply, through fractional reserve banking... the entire banking system is VERY fragile. Over $250k? You're an uninsured lender not a depositor

[@snowblind.]

So then it can't be called fractional reserve if there is now no reserve...

[@runescapefan0001]

@@snowblind. 0/1 is a fraction

[@onothankyou]

This conflates two concepts (reserves vs insurance) and misses an important piece of context. The Reserve also went to an "abundant reserve" model while also requiring the banks to "show their work" on the loans. There is fragility, as there will be in a highly developed financial system, but you are choosing fear rather than understanding.

[@YourUncle8501]

@@onothankyou We understand that a bank will have a natural tendency to loan out a larger ratio of deposits, if allowed, in order to make more money, as they are a for profit business. It would be naïve to trust lenders to act in good faith always if you look at history, especially GFC (The "show your work" and "Oh please act in good faith" is worthless unless regular audits are expected and penalties are severe). FDIC insurance exists but doesn't not protect >$250k in deposits meaning they are exposed. We are seeing massive transfers (Large account holders) to the big banks as we speak, "just in case", which is a bank run of some magnitude. Will it get bad enough to implode? Probably not as the Fed and Gov will always step in to save their own

[@BenjaminLemons]

@@runescapefan0001 Simplified to 0.

[@MattLunser]

Best explanation I’ve heard so far. Thanks

[@BA-ji1zh]

Your channel is pure gold and you deserve more. Idk even know what you got, bruh. I just know you deserve more than whatever it is.

[@IncognitoFinance]

I always appreciate the calm tone and level-headedness of Richard's video. Not trying to spook investors, but just provide clarity on the news.

[@relevantinformation6655]

Thank you for covering this situation straightforwardly as it unfolds. The network media would have you think that there should be a run on every bank - this to drum up viewership. The selective data being used to cover this situation by the mainstream news channels is as ‘sensational’ as the political coverage by both sides. 🤨. Subscribed

[@genkiferal7178]

thank you for showing and telling about the bank run. this is a key point that others have missed - though I must wonder if those people in the video clip didn't show up after the fact.

[@blackwhitegrey001]

Thank you for your unbiased and straight forward report of this. Soo much junk and noise when you read it on news headlines.

[@willdehne1]

This reminds me of 2008. We were invested with Merrill Lynch, Bank of America and AIG. Long story short. The financial advisers we talked to at these companies had no idea what was coming down on us. I had to explain to them what a "SWAP" is. ML got caught by abuses of speculators in their London office. It went down fast. This feels similar.

[@slofty]

"Comming" lol.

[@0utc4st1985]

Yeah, people forget that 2008 started with Bear Stearns and other niche institutions. While it could stay contained, because of credit tightening overall I'd be surprised if it did. We'll see in the Fall.

[@willdehne1]

@@slofty Yeah. Did not use spell check.

[@yuglesstube]

In my experience, financial advisors are undereducated fools who are programmed to sell products. The tragedy is that their superiors in the C Suite aren't much better.

[@willdehne1]

@@yuglesstube This is true to a point. I am a specialist in robotics and automation. It takes all I got to keep up. Knowing various financial instruments is beyond my skills and I need to get advise where I can. But, you are correct except I know less.

[@EatCoffee]

Banks that gamble on crypto or NFTs SHOULD NOT be bailed out with taxpayer dollars

[@newagain9964]

The only banks that should be insured be the govt are public banks…but we don’t have any in USA. Save one.

[@sznikers]

Excepy they didn't, they died because they invested heavily in government bonds which are treated as 100% safe assets.

[@thebaker8637]

None of these banks invested money into crypto, they took deposits from companies whose cashflow correlated with low interest rate (ie startups or crypto companies) and invested a lot of it into assets (say 5yr govt bonds) whose market value drops when interest rates rise. The government guarantees you’ll get the money back after 5yrs, but if someone gave you $6bn in deposits and you put $5bn of it into these bonds, you can’t wait 5 years and have to sell them at a loss if people start withdrawing more than $1bn. This is the same as if you took most of your savings and put it into a 3-year savings account and suddenly lost your job two years in. Yeah you’ll get the money back in a year but that does not help you if you run out of money from your checking account - you’re still insolvent because you won’t be able to pay me if you owe me money.

[@thebaker8637]

@@newagain9964 I think what you mean is 15% of the liabilities were insured. That would mean that of the money the depositors kept in the bank, the government’s insurance scheme for depositors would still leave 85% of the money unavailable. This is the same as with any other bank, if you hold money in a bank account, and that bank becomes insolvent, the FDIC will make sure you’ll be able to withdraw up to $250k no matter what, even if the bank blew all your money on hookers the government will still pay out of pocket up to $250k of your balance that you can withdraw. This is a good thing because the presence of this insurance makes it incredibly unlikely a bank run can happen. In most cases most people have less than that amount with a bank, meaning rumors of insolvency will not cause a stampede to withdraw money or lose it all, which is what ultimately causes the run to begin with. In this case most of the clients had far more than $250k in the bank, meaning this help will only recover ~15% of the money people put into the bank. Mind you this is not a bank bailout, if you had money invested in shares of SVB or held its bonds, you are going to lose your money in all likelihood. This is about depositors, ie companies banking with SVB who held money there.

[@IamGrimalkin]

No-one cares about Silvergate. The thing everyone's eyes are on right now is SVB.

[@markogrba1]

Awesome explanation. Subscribed instantly. Thanks.

[@navygrubbs]

The information you share is beyond valuable. You are making a positive contribution to the world.

[@petiertje]

This reminds me a bit of the DSB in the Netherlands. That one had a bank run too which ultimately put the bank out of business. It was/is a fishy story from the start with the Dutch Central Bank doing nothing to contain rampant rumors in media and even contributed to them in a way.

[@GplusOKnameHERE]

I was surprised to learn that SVB has been around since the early ‘80s. They survived multiple crisis events that, on face value, pressured them. When the dust settles, what combination of changed business practices and/or the economic climate, led to their collapse?

[@TheMinimumPC]

Also, you said that these banks serve Silicon Valley startups. Those startups can be quite susceptible to failure even without external factors like this… We may see a lot of startup failures out of this

[@abaddoniez]

Thank you for your feedback mate! Great analysis and research as always!

[@notabeautyguru6412]

Thank you for being calm and logical about this video. There’s so many exploiting this news and making fear based posts , even if their information was true I just can’t take their presentation of it seriously. Many do however so the market is affected by these people

[@ctg4818]

Bad businesses are SUPPOSED TO FAIL

[@Palo-jm7xc]

I think this is one of the major problems with this world along with no accountability. If people are given golden parachutes then they won't learn from their mistakes. I believe a lot more is to come due to the great can kick of 2008.

[@QGfk1]

​@@Palo-jm7xc honestly it's not as if things were much different before the intense financialization of the world economy. financial crises were more frequent and brutal pre-20th century. there's no such thing as a capitalist economy that doesn't go through cyclical crises

[@realnapster1522]

At 200 billion in assets it’s a very big bank and if they can’t pay the depositors it will be a huge hit to US financial system because people will lose trust in the system. It will cause more bank runs and then we will have a real financial crisis like 1929.

[@the1exnay]

Are they not being allowed to fail? I hope they are, and i hope the people at the top don’t find a way to profit off failure.

[@JoseGomez-vr6lh]

This was caused by high interest rates by the fed not by bad banking.

[@DROIDFARM]

Liked and subscribed! Thank you for the context.

[@ahorrell]

I love this channel. Dude is so level headed. I never feel like he's trying to sell me his merch or courses or speaking events. He just wants to give me good information

[@rikilshah]

One of the ways from here for SVB is to have some large bank to step in, acquire SVB at peanuts and provide customers the full confidence. Big Bank could halt customer withdrawals by imposing daily limits for certain time periods and meanwhile slowly offloading bonds. Loss made in bonds would be the cost of acquisition for the parent bank.

[@rutherfordbhayes423]

Don’t give them any ideas !

[@trevorsabourin6564]

I expect that's exactly what we'll see. The same way Bear Stearns and Merrill Lynch were taken over by the much stronger JP Morgan and BofA

[@Sacto1654]

I wouldn’t be surprised that BlackRock, PIMCO, State Street or Vanguard figure out a way to get a safe takeover of SVB.

[@MrSupernova111]

Yeah, until its your money at stake then you'll want government bailouts. GTFH

[@darksoul1381]

@@rutherfordbhayes423 This happened many times since the dawn of American financial history. This isn't exactly a new idea.

[@BodybuildingNews]

Brother, I just sent a huge invoice payment to a company that uses them. I’m sitting at home watching this video right now and fortunately because of you I was able to get in contact with my bank and cancel it before it got cleared on Monday. Thank you.

[@_Dumb_Answers]

Thanks for covering this. My mum called me in a panic and asked me about this because she's worried about her finances with Chase. She's a health worker, worked hard all her life, and just minds her own business. Whoever told her about this and insinuated that this will lead to a wide collapse really needed their basic econ knowledge checked.

[@allentoria]

Thank you! I know nothing about money but worry for humanity in general. I found your video calming amidst the crazy going on in banking system. Seriously thank you for your demeanor,

[@Sjapilot]

I knew there was a reason I liked your videos. Well done sir!

[@MrStarfishPrime]

Good explanation. But as someone who worked in financial regulation I think there should be questions to the regulators on the stress testing and LCR submissions for SVB.

[@fool9111z]

Or why fed reserve didn’t step in and buy the government bonds for cash ? There should be standard procedures for dealing with ban runs, esp when there are high quality assets.

[@katarh]

My spouse mentioned that SBV fell just below the threshold for stricter stress testing, due to the weakening of Frank-Dodd in 2018. Yet another thing to blame on the 2016 elections.

[@AgentDoubleOSeven77]

Page 87 of their most recent 10-K. "As a banking organization, our liquidity is subject to supervision by our banking regulators. Because we are a Category IV organization with less than $250 billion in average total consolidated assets, less than $50 billion in average weighted short-term wholesale funding and less than $75 billion in cross-jurisdictional activity, we currently are not subject to the Federal Reserve’s LCR or NSFR requirements, either on a full or reduced basis."

[@markhathaway9456]

@@katarh The reduction was Republican policy that a couple of Republican senators (probably Manchin and Sinema, though I'm not sure) also supported. I wouldn't be surprised if some rich people bought those votes because I don't have much belief that R senators are smart enough or would have any incentive to go for those changes to the law on their own.

[@meldavies9909]

Thank you. Great clarification on what is going on. 👍

[@affordablewebsiterescue]

So don't panic everybody! Thank you Plain Bagel! I just subscribed!

[@vitordeoliveira6139]

It must be extremely horrible to have money sometimes for a lifetime in a bank and simply lose it. I hope that all people manage to get their money back, and that this doesn't spread to other banks.

[@zegur21]

Allocating (not having all your eggs in one basket) is the lesson learn here

[@TheSuperBoyProject]

@@zegur21 the lesson is clearly to never trust fractional reserve banking. When banks fail, people are free

[@saulserano4292]

This wasn’t a traditional bank. Most are far above the fdic limits.

[@ultimaIXultima]

@@Morcap Complete fearmongering nonsense... "All the banks" aren't involved in crypto, and "all the banks" aren't servicing venture capitalists. The average person hold *FAR* less than $250k in their account, which is what the FDIC *actually* insures. Both of these banks have unwound in more-or-less the honorable way. There does not appear to be any fraud at this point. Businesses fail, and neither of these banks were entwined so deep into the US economy their loss will affect much more than a quarter's balance sheet.

[@Morcap]

@@ultimaIXultima The reason SVB collapsed is a systemic failure and not because some investment in some crypto Ponzi or some bad loaning practice. It was because a critical mass of depositors just purely asked for their deposits back. And that is every single bank Achille's. Nothing can save a bank - anywhere in the world - if a number of people above bank' cash capacity will withdraw at the same time.

[@jwal1992]

My girlfriend’s brother in law was a part of the tech layoffs at Cap One’s West Creek Campus recently. It’s wild seeing the tech world in a downward spiral.

[@Troy_Built]

This is the second go around for a lot of us watching this happen to tech.

[@playtester6635]

Yup, not the first time, it'll bounce bank in time. Just part of life.

[@skullsarecute]

One thing this highlighted for me with Etsy apparently being a SVB customer is how much the average American isn’t all covered by FDIC anymore. So many startups now deal with the transfer of money between payer and seller for goods and services in various ways complete with holding that money for extended periods of time, but they are not a bank.

[@Xairos84]

Thanks for your explanation.

[@JakeBroe]

Silicon and Silicone are two different things. I had fun hearing you say Silicone, lol. Silicone Valley has to be in Las Vegas or Hollywood.

[@ThePlainBagel]

Yeah I got it right the first time, and messed up later on in the video. In my defence, I filmed late last night after a day of working 😅

[@brinistaco1970]

Thank you for being so level headed and explaining so well. I hope more watch this. Confidence and security are truly necessary to avoid more runs. Kudos to the FDIC for stepping in. The comment about "pulling us back from the edge" could have done without the nervous laugh! Actually, thought it was perfect. Great job as usual. I can always count on you.

[@dlevi67]

If you look at the subtitles, there may be a reason for the nervous laugh.

[@victorcates9330]

He didn't answer my lingering concern: should I pee myself from terror now or later?

[@brinistaco1970]

@@victorcates9330 been peeing since 2008

[@leed5768]

Great video and balanced view as always. If only you could write the headlines to keep people calm in these times! Thanks for sharing

[@parkmannate4154]

Glad you covered the bond/interest rate issue. Thats putting pressure on a LOT of regional banks.

[@mynameschelsea8398]

I'm an accountant whose spent most of my career in start-ups. Nearly all of them have had their bank accounts at SVB. I didn't believe the head line when I first read it.

[@manonamission2000]

Things could have been worse: CDOs for sub-prime mortgages on land in the metaverse

[@hinpoppo9185]

The fact that this is almost in the realm of possibility with NFTs is shocking and alarming LOL

[@QGfk1]

if it wasn't for the downturn and interest rate hikes things probably would have gotten to this point after a few years.

[@zbtyn]

Bruh 😭😭😭😭😭😭

[@mikepepper8395]

Omg!!! That made me spit my coffee out. 🤣🤣🤣

[@mendozakoby]

Let's take it one further: credit default swaps on CDOs for sub-prime mortgages on land in the metaverse 🤣

[@mahtabsoin7239]

Great video, nicely explained!

[@multi_misa72]

Thanks for the heads up.