Financial collapse hot takes, rabbit holes, and side quests.
Three Good Explanations of What Happened to Silicon Valley Bank, in Order From Shortest to Longest:
One of the following three posts will adequately explain what happened to Silicon Valley Bank in the right presentation style and at the right level of detail for you. You will know immediately which one it is, and you should practice the radical self-acceptance of choosing to read or watch that one and then going about the rest of your life in peace.
1. Morning Brew
...home of the only good media Tiktok, explained it in skit form:
2. Liz Lopatto
…A’d all the Q’s in her characteristic breezy yet accurate style for The Verge, and even managed to drop an inexplicable Beastie Boys reference.
This bank run happened fast, in less than two days. Tech nerds can take credit for that one. It used to be that you had to physically go to a bank to withdraw your money — or at least take the psychic damage of picking up a telephone. That slower process gave banks time to maneuver. In this case, digitalization meant that the money went out so fast that Silicon Valley Bank was essentially helpless, points out Samir Kaji, CEO of investing platform Allocate. Customers tried to withdraw $42 billion in deposits on March 9th alone — a quarter of the bank’s total deposits on a single day.
3. Matt Levine
…managed to cover it in barely more than four thousand words, along the way explaining several minor ancillary concepts like “banking,” “interest,” “accounting,” and “money.” It sounds like a lot, but I promise these four thousand words are by far the quickest and most engaging way to grasp what would otherwise take a graduate-level economics degree and several years of working in finance to understand.
[Silicon Valley Bank] borrowed very short to lend very long. Specifically, it is funded mostly by deposits, largely from tech companies and venture capitalists who got a lot of money over the last couple of years, and who put that money into SVB deposits that were much bigger than the US deposit insurance cap of $250,000. It plowed that money disproportionately into bonds, quite safe bonds — US Treasuries and agency mortgage-backed securities — but bonds with long duration. It did not do much to hedge its interest-rate risk. Basically it was as reckless as it is possible to be with a business model of “take deposits and invest them in US Treasury bonds.” Which, until recently, might not have seemed that reckless!
Now that you know what happened, to the precise degree your heart demands, we can get to the fun part which is:
Bank Collapse Hot Takes, Rabbit Holes, and Side Quests
It seems like the whole thing started with this tweet / newsletter from Byrne Hobart:
Silicon Valley Bank’s Chief Administrative Officer was a guy named Joseph Gentile. Finance tweeter @unusual_whales pointed out that “prior to joining the firm in 2007, he served as the CFO for Lehman Brothers’ Global Investment Bank” (now Bank of Evil). Neat!
The Inverse Cramer markets are booming on the news that CNBC’s mushmouthed stocks blabberer Jim Cramer said that SVB was a good buy at $320 last month, claiming: “Essybeeolpsilicongalleyban! Recenbaoneurbavirtie resherchfrrms…” and a lot more alleged human speech that I could not sieve any meaning from.
WSJ Opinion’s Andy Kessler suspects that what we might have here is another victim of corporate wokery:
Then there’s this: In its proxy statement, SVB notes that besides 91% of their board being independent and 45% women, they also have “1 Black,” “1 LGBTQ+” and “2 Veterans.” I’m not saying 12 white men would have avoided this mess, but the company may have been distracted by diversity demands.
Future media scholars will wonder why every respectable journalism outfit in our time felt compelled to share space with a clown show dedicated to embarrassing its reporters which it called “Opinion.”
But, in a radical departure from orthodox opinion page dumbassery, LA Times columnist Brian Merchant correctly attributed the failure of SVB to the failures of the Silicon Valley venture funding model in general, specifically the “handful of dudes” responsible for both:
Imagine a world where a handful of dudes were not able to decide among themselves whether an idea was suddenly worth the gross domestic product of a small nation state, or kill off an entire industry without a sustainable replacement — or panic one another into toppling a major financial institution. Utopian, I know!
That handful of dudes spent the weekend unselfconsciously chronicling minute by minute how they wrecked their own bank (Alexander Torrenegra), descending into spittle flecked caps-locked Mad Max fantasies (perpetual cringe merchant Jason Calacanis, now deleted but we remember it Jason), and whining (David Sacks, which to be fair is what he does every day).
Frank’s Bank Tanks:
Meanwhile in crypto, Circle’s USDC stablecoin lost its dollar peg for the whole weekend due to its exposure to the toxic traditional banking system, a real delight for irony fans.
Today in Extremely Other News
Vice’s David Gilbert writes that Ivermectin influencer Danny Lemoi died suddenly of a known side-effect of the horse dewormer he has been taking since 2012:
In the [Ivermectin promoting] Telegram channel, administrators broke the news of his death to his followers. “Though it was obvious that Danny had the biggest heart, it was unbeknownst to him that his heart was quite literally overworking and overgrowing beyond its capacity, nearly doubled in size from what it should have been”…
Look, it’s sad that he died from abusing a veterinary medication but this is an objectively hilarious thing to write in memoriam. Bury that man in Disney’s Boot Hill, I guess. Chris Stokel-Walker checked in on how things are going inside Twitter and found: it bad. Now that Rod Dreher’s hopelessly weird blog on The American Conservative is over, Vanity Fair’s Caleb Ecarma reports that “Dreher’s six-figure salary at TAC, which is published by American Ideas Institute” was funded entirely by one rich guy: Howard Ahmanson Jr., who eventually got tired of paying for Dreher’s increasingly outré musings on rectal bleeding and African-American penises. If it seemed like no one was editing Dreher either, that’s because that was part of his deal. Welcome to Substack, Rod! Speaking of Substack, there was a Sarah Miller x Ask Molly crossover episode this weekend. At the Academy Awards, Brendan Fraser and Ke Huy Quan weazed all the Oscar juice, leaving Pauly Shore snubbed yet again.
Today in Crabs: It was a big weekend for Margate’s Crab Museum.
Don’t miss the t-shirt. And in Baltimore, Jimmy's Famous Seafood and PETA continue their 6 year long crab based feud, now with dueling billboards.
Today’s Song: CORPSE, “life waster” (via Garbage Day)
Here’s one of the worst things I’ve ever seen, via the Tabs discord’s #bad-posts channel, subscribe and join the chat to have this kind of thing on tap in your eyeballs 24/7.
Ok see you tomorrow!