Patrick Boyle’s video on Silvergate:
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)….(read more)
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In recent news, two banks in the United States have failed. The first, The Enloe State Bank in Texas, was closed by the Texas Department of Banking on May 31. The second, Louisa Community Bank in Kentucky, was closed by the Kentucky Department of Financial Institutions on June 6. So what happened, and what happens now?
The Enloe State Bank had been under scrutiny by regulators for several years. In 2018, the bank’s board of directors was ordered to stop risky lending practices and pay a $1 million fine for violating a law that prohibits banks from lending to insiders without proper documentation. In May 2019, regulators found that the bank had lost almost half of its capital and was in danger of failing. The bank was closed by regulators because it was unable to replenish its capital reserves.
The Louisa Community Bank had been struggling for years as well. In 2018, the bank was ordered to raise additional capital by the end of the year, but was unable to do so. The bank was cited for deficiencies in its internal controls and risk management practices, and was closed by regulators because it was deemed to be insolvent.
So what happens now that these banks have failed? The Federal Deposit Insurance Corporation (FDIC) steps in to protect depositors. Deposits are insured up to $250,000 per depositor, per insured bank. The FDIC will transfer insured deposits to another bank, and customers will have access to their funds as soon as possible.
For some customers, the failure of a bank may cause inconvenience, such as having to switch to a new bank or waiting for access to funds. However, the FDIC’s role is to ensure that customers are protected and that the banking system remains stable.
These two bank failures are a reminder that even with regulations and oversight, banks can still fail. However, the FDIC’s insurance program provides a safety net for depositors, and the banking system is able to continue functioning smoothly.
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
It's good to see the West fall
Peter Thiel caused this collapse by telling everyone in the tech VC community to pull their money out
Stocks goes to puta?
I’ve never heard of either of these banks so ima go ahead and say it’s nothin to be concerned about. Shit happens all the time
This is what happens when you do something irresponsible, like engage in maturity transformation (borrowing short and lending long OR borrowing high rate and lending low rate). The maturity obligations don’t match and obligations can’t be met.
Another crisis that millenials have to deal with. All the while we get blamed for businesses closing and not being able to buy a house because we buy Starbucks coffee.
So basically this is just more of the crypto fallout contagion plus tech companies not doing so well right now.
It's really funny how many people are just learning their deposits are insured up to an amount most people won't ever have lying around. Lots of fear-mongering and people wondering if they should pull out there money out of their neighborhood bank only to be assured they're covered.
Man, if regular people, companies and the government are struggling, then who the heck is profiting?! Money just doesn't disappear!
I would like to know who tried to draw out all their cash to start this all off, was the investment that was set to gain a 10% pay back in Chinese negotiable bonds and did the Chinese account owner do this because they knew Joe Biden would cover their loses and China would still has the money from the investment plus the account pay out from American banks and the tax payers. I have heard that the Chinese buy US bonds and this is in loans to the US Government. You have to watch the communist Country that wants to be the world money controllers in the World Banks system. This is all in line with driving the US Deficit so high the interest would be beyond the people ability to pay and would have to default so china could take over control of the world Banks
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.
Love the video and simplistic explanation but hearing SiliconE instead of Silicon is like screeching chalk on a board.
Make it 3 banks – FRB the latest
Part of the issue is, and this will get political, Bidens insane spending. With hos persistent "fuck the future" budgets he keeps printing money and the fed needs to hike rates to the moon wighin the span of an hour. Which means this banks bonds became worthless in 3 seconds and they lost half their value when they needed to sell them in the open market to sure up their deposits
12:34 "limited" and "idiosyncratic" as central banks around the world brace for impact. What a joke!
can we get an update on this? i see a lot of people panicking still…
The banks fail. We loose and they walk away with pockets full of cash !!!!!
give..me…a..break. Saying that SVB was merely a "run on the bank". LOOK at the FAILED investments they were making AND covering their losses with HIDING it. Unbelievable.
Do you think Universal Basic Income would be bad for the economy?
As expected this video made no effort to touch the Peter Thiel angle or the deregulation trend. Always one step behind and intentionally dumbed down.
Great review from a Canadian.
You're funny. I bet you lose so much money your here
I am new to this channel and that was an excellent summary of the situation.
Time for an update with more bank failures happening?
At last something I can follow and understand…how can I support yr site? Thank you!
Bitcoin literally fixes this
9:31 interesting. Foreign deposits not covered under FDIC? I didn’t know that.
At least the bankers were able to pay themselves their bonuses before everything went down!
You look like the banking version of Mike Ross bro 😉
What I really would like to know and understand, is how do bank failures spread? How do two banks far away from each other, with no money tied up in one another collapse?
And those on top walk away with not a hair out of place
Get out the trowel so everything can be smoothed over
It's sad. They take take and take. Then are still in debt after all the taking. Then use citizens hard earned money to loan to other people and bail themselves out. Where to is the law when u need them. If a black kid steal a piece of candy they'll try to mess up his future. But they steal from us everyday. Even merchants. They take the money as soon as u order something. Then u may not even get ur online order. Or they lie about it. Stealing. And u can do nothing. But they can f ur life up tho. LOL. I see the demonism. And God's coming soon. Don't believe me. Lol.
Hopefully the AmeriKKKan economy and by extension the empire will ultimately collapse and implode respectively….fingers crossed from Australia
I guess the USA government will save the banks, with the money of the people.