Danny Fortson, The Sunday Times West Coast correspondent, with the latest on the SVB collapse. With CNBC’s Sara Eisen and the Fast Money traders, Tim Seymour, Courtney Garcia, Jeff Mills and Steve Grasso For access to live and exclusive video from CNBC subscribe to CNBC PRO:
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LEARN MORE ABOUT: Bank Failures
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The COVID-19 pandemic has had a significant impact on businesses across the globe, and Silicon Valley Bank (SVB) may be one of those companies that require a bailout. As the name suggests, SVB operates in the heart of the tech industry in the United States, and their business model is built on serving startups and venture capitalists. Here are some reasons why Silicon Valley Bank may be the ideal candidate for a bailout.
Firstly, SVB’s customer base is heavily reliant on venture capital investment. With the current economic uncertainty, VC firms are hesitant to invest in new companies, which makes it harder for SVB’s customers to access the funding they need. If SVB’s customers struggle to stay afloat, they will be unable to pay back their loans, which will eventually hit the bank’s bottom line. Therefore, a bailout for SVB could alleviate this problem by providing much-needed capital to their customers.
Secondly, SVB’s exposure to the tech industry has both positives and negatives. The tech industry has been resilient in recent years, with companies like Amazon, Apple, and Facebook continuing to generate high profits. However, the industry is not immune to the impact of COVID-19, as seen by the drop in stock prices across the board. SVB’s exposure to financially stable tech companies could help them weather the storm better than traditional banks, but if the pandemic continues to impact these companies, SVB’s bottom line may suffer.
Thirdly, SVB’s business model is unique compared to traditional banks, making it difficult to compare them apples-to-apples in terms of financial metrics. SVB’s revenue comes mostly from interest income, which is linked to the amount of loans they provide. With the current economic downturn, there is a risk that SVB’s borrowers may default on their loans, impacting the bank’s ability to generate revenue. Therefore, a bailout could provide a much-needed financial buffer for the bank.
Lastly, SVB has a track record of supporting innovation and entrepreneurship, which has contributed to the growth of the tech industry. Supporting SVB with a bailout would not only help to preserve jobs, but it could also help to promote continued innovation and growth in the tech sector.
In conclusion, a bailout for Silicon Valley Bank may be an ideal solution given the bank’s customer base, exposure to the tech industry, unique business model, and history of promoting innovation. As the COVID-19 pandemic continues to impact businesses across the globe, policymakers should consider providing support for SVB, so it can continue to provide vital financial services to the tech industry.
WTH CNBC. Start being the journalist for the people for once! These big bank bailouts are killing the country. The QES / TARP during the last bank collapse and now this. 10s of trillions going into the wealthiest corporation's pockets. And we are shocked at inflation….what could be the cause?
I blame the FEDs for this, because in the end they benefit by either buying off the failed banks cheaper or something. The fed can print credit as long as someone will borrow it into existence, but they cannot print product (or production).
California Gov. Gavin Newsom failed to publicly disclose his SVB ties(his 3 wineries and wife's charity) while lobbying for a bailout.
Wheres the bail out for East
Palestine houses that have plunged in value? The farmland thats poisoned? The restaurants and businesses that people won't visit anymore?
They're all left to die
But if you're woke big tech?
You get every dollar you need in a single weekend.
They're getting bailed out, but they shouldn't. The Fed will just print more money.
This sounds very planned CNBC is very good at discussing noise but not going into detail what happened
Bailout tells bad actors you can make bad decisions, take on risk without any penalties. Why is Biden saying he is not bailing out SVB when he is, 85% of deposits were 'uninsured'. That's the definition of a 'bailout', covering 'uninsured deposits'.
Better just take the rope
FEMALE news caster are DUMB – what is she even talking about none sense
Too bad. 250,000 per account no more.
"Silicon Valley Bank may be the ideal candidate for a bailout" Because they are rich and well connected.
Fact of the matter is: They lobbied to be exempt from regulations for a bank their size and their customers had accounts over the FDIC insurance limit aka they are irresponsible and shouldn't be bailed out.
It's HILARIOUS how the Fed is raising interest rates to crush wages while simultaneously turning on the money printer to bail the rich out
How funny; Imbecile Biden comments that this will not be funded by taxpayers. Only people unaffected by this will be wealthy investors.
They bet on the wrong horse and are demanding taxpayers bail them out.
they should start a go fund me and anyone suggesting tax payers to bail out can contribute. Maybe SVB can get a second job.
I got a novel idea why don't you bail out the rich with taxpayer money… Again. You people keep doing this s*** sooner or later we're going to have a war and I'll be eating liver
All I'm saying is why do they give so much money to large corporations and banks to keep going after they fail monumentally but never give a dime to small business owners and startups coming from the middle class level?
Or better yet, more protections for the worker to diversify markets within existing sectors across America?
What about trade programs and training programs to encourage a strong competition in the market instead of making these "big fish" concessions because they are considered too big to fail?
This isn't capitalism. It's corporate welfare and it's gross.
It is time to let banks fail for gambling
Who bails the Federal Goverment out this summer
Occupy Round 2
SVB doesn’t deserve a bailout beyond what it was insured for.
Easy answer. Because its depositors donate to Democrats.
We should pay 250,000 and not a cent more
Asking for a bailout huh? Lol these same ppl complained about normal people get COVID stimulus checks.
Only in a nation run by Democrats are we expected to bail out depositors with our tax dollars in a failed bank due to the rampant Democrat Administration spending and its miss-managed monetary system causing runaway inflation. Go ahead America, put another group of power-hungry, liberal policy obsessed Democrats in office in 2024. Normal people learn from their mistakes but Democrats are held to different standards because Trump Hate is the only qualification necessary.
Yeah right, the Venture capitalists got out, but the American people should rush in? Hell no!
No Bailout! Period.
Again, why are people so willing to give these institutions bailouts but not students?
This bank was investing in autonomous truck startups like waymo and embark which ultimately would have destroyed the lives of truckers and their families. Trucking is the most common job in 29 states. NO BAILOUT! It's evil to take the taxes that truckers are forced to pay to bail out the very same bank that would enable companies to work tirelessly to destroy their livelihoods!
The negative impact of SVB and SI debacles has been reflected in the regional bank ETF (KRE) which has witnessed a decline of over 20%. This event has triggered contagion effects, dragging the entire market lower. However, historically speaking, a localized and narrow contagion of this nature presents an opportune time to invest in strong, financially stable companies with substantial cash reserves on their balance sheets.
Socialism for me but not for thee.
Soooo, helping millionaires with their money lost but refused to help regular Americans??
That’s what I would call “privilege”.
oops!!!!!!!!!!!!!!
Health care for poor bad, bailouts for rich and the reckless good. Suckers.
No we the people will not bail these criminals out again. Let them fall.
no more bailouts for the rich…