Second pin drops: Signature Bank

Okay, I wasn’t prepared for this quick development. Yesterday (Sunday), a second bank failed but I have no idea what precipitated the failure although I can imagine it was a bank run, probably driven by panic.

There’s a lot of talk on LinkedIn in the finance groups about this turn of events. Of course, as usual, there is a debate on government stepping in to bail out versus letting the market rip. I don’t know which options weighed more but there were some who were acknowledged the need to let those who made bad decisions take their lump but also realized that a lot of innocent workers were going to be adversely impacted if they didn’t get paid for their work.

It’s late at night right now, so I don’t have time to go into all of the details that I have learned but I do want to write it down sometime this week to solidify in my head how these kinds of events can transpire. There is a bit of psychology going on.

One thing I do want to note which I forgot to do Saturday night is an article I read where hedge fund manager Bill Ackerman (he also supports Vivek Ramaswamy’s financial company trying to end the ESG/DEI initiatives) warned everybody on Twitter that Treasury/Feds need to reassure to ALL depositors, not just those insured up to $250K, that they will have access to their money on Monday and to make that announcement immediately. Otherwise, we are likely to see further runs on other banks as depositors get the jitters.

At the time I thought, “What the hell is he doing? Start a panic?” To me, it seemed very inflammatory.

What I didn’t know at the time was that during the entire weekend, a lot of venture capitalists were tweeting out constantly to the Treasury/Federal Reserve the same kind of sentiments. One person wrote in all caps, over and over. Save the depositors or make announcements to save the depositors; otherwise, depositors will withdraw their money from the smaller banks, precipitating unmanageable bank runs.

Since I do not live on Twitter, I didn’t know about this series of events.

Today, I read that some of the SVB depositors were venture capitalists in addition to startups.

Hmmm, sounds like they were trying to save themselves. A little bit of selfishness there, trying to build up fear.

Tomorrow, I’m attending a panel that will discuss the topic of SVB and finance.

Hopefully, tomorrow will be a quiet day.