Both SVB (Silicon Valley Bank) and Signature Bank have crashed and burned dramatically over the past week. What once was a few large customers making withdrawals quickly turned into a bank run of epic proportions. Within just a few days, SVB went from one of the largest banks in the United States to one of the biggest bank failures in the nation’s history. But what led to such a fast-paced collapse, and are more banks on the chopping block?
You don’t need to be an expert economist to understand what happened at SVB and Signature Bank this week. But you will want to hear Dave Meyer’s take on what could come next. With bailouts back on the table, many Americans fear we’re on the edge of a total financial collapse, mirroring what unfolded in 2008. With more and more Americans going on cash grabs, trying to keep their wealth safe from the “domino effect” of bank failures, what should everyday investors prepare for?
More specifically, for our beloved real estate investors, how could SVB’s failure affect the housing market? Will the Federal Reserve finally be forced to end its aggressive rate hikes? Could money flood into real estate as hard assets become more attractive? Stick around as Dave explains this week’s wild events and what it could mean for the future of the US economy.
~~~~
Join BiggerPockets for FREE 👇
~~~~
Listen to The “On The Market” Podcast Wherever You Listen to Podcasts:
BiggerPockets:
Apple Podcasts:
Spotify:
~~~~
Join the Future of Real Estate Investing with Fundrise:
~~~~
Find an Investor-Friendly Agent in Your Area:
~~~~
Join the Discussion on the “On the Market” Forums:
~~~~
How Did A $200B+ Bank Collapse In 48 Hours? Is Real Estate Going To Be Impacted?
~~~~
Connect with Dave and Our Panel of Guests:
Dave Meyer:
Henry Washington:
James Dainard:
Jamil Damji:
Kathy Fettke:
~~~~
Follow Dave and Our Guests on Instagram:
Dave: @thedatadeli or
Henry: @thehenrywashington or
James: @jdainflips or
Jamil: @jdamji or
Kathy: @kathyfettke or
BiggerPockets: @biggerpockets or
Episode #87
Show notes at:
00:00 Intro
01:44 Behind the Banking System
07:50 SVB’s Collapse Explained
21:21 Another Bank “Bailout”
27:13 What Happens Now?…(read more)
LEARN MORE ABOUT: Bank Failures
REVEALED: Best Investment During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
HOW TO INVEST IN SILVER: Silver IRA Investing
The recent crash of SVB Financial Group and Signature Bank has once again brought the concept of bailouts back into the spotlight. The bailout is a term that was popularized during the financial crisis of 2008, when the government stepped in to rescue failing banks with taxpayer money. It was a controversial move, with many arguing that it rewarded bad behavior and set a dangerous precedent for government intervention in the economy.
Now, more than a decade later, the banking industry appears to be facing another crisis. SVB Financial Group, a Silicon Valley-based financial services company, saw its stock price drop by more than 20% in May, while Signature Bank’s stock fell by around 30%. Both banks were hit hard by the economic fallout from the COVID-19 pandemic, with loan losses and declining interest rates putting pressure on their balance sheets.
The question now is whether these banks will need a bailout to survive, and if so, what form that bailout might take. The government has already taken steps to support the banking industry during the pandemic, through measures such as the Paycheck Protection Program and economic stimulus packages. However, these programs have been criticized for their lack of transparency and potential for abuse.
If a bailout does become necessary, it could take several different forms. One option is for the government to provide direct financial assistance to the banks, either through loans or grants. Another possibility is for the government to offer guarantees on the banks’ debts, giving investors more confidence in their ability to repay.
Whatever form the bailout takes, it is likely to be met with resistance from some quarters. Critics will argue that it rewards bad behavior and sets a dangerous precedent for future government interventions in the economy. However, supporters will point out that the banking industry is a vital part of the economy, and that a collapse could have far-reaching consequences.
In the end, the key question will be whether a bailout can be structured in a way that protects taxpayers while also preventing a systemic collapse of the banking sector. This will require careful planning, transparency, and a willingness to learn from the mistakes of the past. Whether we like it or not, bailouts are once again making an unwelcome comeback, and we must be prepared to deal with the consequences.
Dave, love your quest to provide info, but for goodness sake, get to the point in fewer words. Intro in one sentence would be stellar. Besides that, I do appreciate your work.
Dave- great content as always. Thanks!
So explain to me this, why did SVB start discount selling their low interest treasuries instead of just caching in and loosing couple months of earned interest ???
A little redundant with all the info out there but I appreciate anytime you try to explain what you expect to happen in the future, and what we can do about it to prepare. Thanks and keep up the great work!
Fascinating. I was confused if this was a fed problem but it appears it’s the actual bank’s problem for having 86 percent uninsured investments.
Are there any other banks that bought long dated bonds and also have a higher percentage of startups as depositors?
We should absolutely let these people fail and get destroyed. Everyone MUST PAY consequences.
We’ll explain
It’s a bailout. Here’s why. The ppl/groups that deposited funds that are FDIC insured likely pay a premium for that backing, but when 86% are not FDIC insured, but the FDIC is saying it will fund those 86% to the 250k per and then some, that’s coming from somewhere. And the somewhere is presumably from those paying a “premium” or taking a lower yield to protect their deposits. I think it’s poor policy to essentially reward those who decided on largely unbacked monies. Of course, the people who often have less making the more prudent deposit are now subsidizing the rest. As always, it’s who you know. Look at all the big politicians who took money from SVB, and you see exactly why the bailout is occurring.
Solid info and break down as always. Thank you for this Dave!