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Dr. Jorge Caballero

Retirement accounts are going to be impacted by the #SVB meltdown because a large share of the money flowing into venture capital in recent years came from pension funds, mutual funds, and other retirement investment vehicles— more so than in prior market cycles because of the macroeconomic conditions leading into the pandemic

10 Mar 2023 at 20:58 | Open on fedified.com
33 comments
Dr. Jorge Caballero
Dr. Jorge Caballero

#SVB is the new Lehman Brothers. Hold onto your 401Ks, folks. It's about to get real.

10 Mar 2023 at 21:06 | Open on fedified.com
Dr. Jorge Caballero

Just took this photo outside Silicon Valley Bank on Sand Hill Road. The media is starting to gather. And there are a few customers sprinkled in there.

Surreal.

#SVB
10 Mar 2023 at 21:49 | Open on fedified.com
Dr. Jorge Caballero

Before trading was halted, shares of Silicon Valley Bank (#SVB) Financial Group had fallen 93% from their 52-week high.
10 Mar 2023 at 22:26 | Open on fedified.com
Dr. Jorge Caballero

‘Shares of [#SVB Financial Group], the parent of embattled Silicon Valley Bank, will remain halted “until SVB Financial Group has fully satisfied Nasdaq’s request for additional information,” Nasdaq said late Friday.’

marketwatch.com/story/silicon-

10 Mar 2023 at 22:33 | Open on fedified.com
Dr. Jorge Caballero

tfw paper billionaires watch their wealth go up in flames

#SVB
10 Mar 2023 at 22:47 | Open on fedified.com
Dr. Jorge Caballero

Silver lining: the debt ceiling will magically get fixed now that billionaires that were angling for cuts to social security and medicare will have to give up their tax cut in exchange for another government bailout of the banking sector. Also, unlikely that the Fed raises rates as aggressively was they signaled they would as recently as last week

#SVB

10 Mar 2023 at 22:53 | Open on fedified.com
Dr. Jorge Caballero
Dr. Jorge Caballero
Dr. Jorge Caballero replied to Dr. Jorge Caballero

#SVB had $175 billion in deposits according to regulatory filings (linked above), so this article tells us that 25% of the bank's deposits were pulled within 48 hours. And all of this happened because ::checks notes:: FOMO. This is so fucking on-brand for VCs that it's honestly not a bit surprising. JFC.

“All told, customers withdrew a staggering $42 billion of deposits by the end of Thursday, according to a California regulatory filing.”

cnbc.com/amp/2023/03/10/silico

#SVB had $175 billion in deposits according to regulatory filings (linked above), so this article tells us that 25% of the bank's deposits were pulled within 48 hours. And all of this happened because ::checks notes:: FOMO. This is so fucking on-brand for VCs that it's honestly not a bit surprising. JFC.

11 Mar 2023 at 1:46 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

This part is important b/c the situation at #SVB isn't as dire as VCs made it seem when they blasted emails to their portfolio companies to get the bank-run going: ”[24 hours ago] SVB had a negative cash balance of $958 million, according to the filing” -- that's after $42 billion in withdrawals. But the damage is done, and the dominoes have begun to fall. And this is where things get *really* interesting for many VCs because many of them just screwed themselves…

cnbc.com/2023/03/10/silicon-va

This part is important b/c the situation at #SVB isn't as dire as VCs made it seem when they blasted emails to their portfolio companies to get the bank-run going: ”[24 hours ago] SVB had a negative cash balance of $958 million, according to the filing” -- that's after $42 billion in withdrawals. But the damage is done, and the dominoes have begun to fall. And this is where things get *really* interesting for many VCs because many of them just screwed themselves…

11 Mar 2023 at 1:56 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

The angle that the media isn't covering (yet) is: many VCs took out personal loans from SVB to cover their contribution to the funds that they manage. Many of them used their homes as collateral to secure those loans, or had mortgages directly with #SVB. Depending on the way things shake out, and what role individual VCs played in the bank-run, this may end up coming back to bite them in the ass when LPs (investors in the funds) ask about their money.

11 Mar 2023 at 2:00 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

To the point about dominoes falling: if I were a journalist, I'd start asking gig workers (DoorDash, Uber, Lyft) whether they've been told to expect delays in payment for their services.

Lots of people that have absolutely nothing to do with tech will start sharing that they're not getting paid b/c their payroll department used financial services software that moved money through #SVB. The impact will be much broader than people expect.

11 Mar 2023 at 2:09 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

For those trying to catch up on the #SVB story, here you go:
11 Mar 2023 at 2:31 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

The next shoe to drop is going to be another bank (but I won't speculate about which one because I'm not a VC, and therefore know better) and/or a massive capital call that shifts lots of money into liquidities

11 Mar 2023 at 3:31 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

Turns out #SVB's CEO was one of the guys whispering in the Fed's ear to manufacture a recession— and cost tech workers their jobs. Now, he's out as one of the executives at the San Francisco Fed Board. #Karma

h/t @heidilifeldman

reuters.com/markets/us/ceo-fai

11 Mar 2023 at 4:12 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

The irony is that this fucker was almost certainly trying to jack up the Fed's rates in this tight VC funding environment with the expectation that startups would have to borrow money to extend their runway— at higher rates. He did this to himself, and to everyone else he screwed over. He needs to go to prison.

reuters.com/markets/us/ceo-fai

11 Mar 2023 at 4:20 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

"the first time in more than a year that Becker had sold shares in parent company #SVB Financial Group"

"The sales were made through a revocable trust controlled by Becker, filings show."

This is technically legal, but he *chose* to go forward with the sale. He chose to pocket $3.6 million into a trust that legally shields it from his victims.

He knew damn well what he was doing.

h/t @drahardja @heidilifeldman

mercurynews.com/2023/03/10/svb

"the first time in more than a year that Becker had sold shares in parent company #SVB Financial Group"

"The sales were made through a revocable trust controlled by Becker, filings show."

This is technically legal, but he *chose* to go forward with the sale. He chose to pocket $3.6 million into a trust that legally shields it from his victims.

11 Mar 2023 at 4:35 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

What did Elon's BFF Peter Thiel know, and when did he know it? #SVB

"Founders Fund withdrew millions from SVB, said the person, who asked not to be identified discussing private information."

"Peter Thiel’s Founders Fund had no money with Silicon Valley Bank as of Thursday morning as the bank descended into chaos, according to a person familiar with the matter."

news.yahoo.com/thiel-founders-

11 Mar 2023 at 4:43 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

Just going to repost this *riiiiiiiiight* here

#SVB
11 Mar 2023 at 4:52 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

Just going to post this *riiiiight here*

"The venture world took note late last week as news broke that San Francisco-based Founders Fund will cut the size of its $1.9 billion venture fund raised last year by about half."

#SVB

news.crunchbase.com/venture/fo

11 Mar 2023 at 4:58 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

I'll close by noting that the Washington Post had a journalist on the ground outside of Silicon Valley Bank in Menlo Park, but the New York Times did not (at least not when I was there). Worth noting as you read coverage of the #SVB fallout over the coming weeks and months. Why? Because when press outlets don't have journalists on the ground, they rely on the bullshit spin that comes out of crisis comms and PR shops. I fully expect a lot of faux-empathetic framing that pushes for a bailout. /X

11 Mar 2023 at 5:45 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

Lots of "thought leaders" on the hellsite and elsewhere are already bullshitting about the #SVB failure and blaming it entirely on the banks balance sheet. That's a reductive and shallow take. Their balance sheet and naked risk was a factor but, at the end of the day, SVB was very well capitalized and their spread was 2.00% as of last quarter. They went under because their CEO fucked around, there was a $43 billion bank run but SVB could only come up with $42 billion, and investors panicked.

11 Mar 2023 at 6:11 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

That last part is key: investors panicked. One of the articles I linked earlier in this thread mentioned that Goldman Sachs had secured the capital the bank would need to survive hours before the bank run. Then, investors panicked. By end of the day Thursday, the bank was $938 million in the red, but that was after a 25% drawdown. Remember those stress tests after the 2008 meltdown? #SVB would have passed them with flying colors up to the "Severe Stress Scenario"

imf.org/external/pubs/ft/wp/20

That last part is key: investors panicked. One of the articles I linked earlier in this thread mentioned that Goldman Sachs had secured the capital the bank would need to survive hours before the bank run. Then, investors panicked. By end of the day Thursday, the bank was $938 million in the red, but that was after a 25% drawdown. Remember those stress tests after the 2008 meltdown? #SVB would have passed them with flying colors up to the "Severe Stress Scenario"

11 Mar 2023 at 6:30 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

Why mention this ^^ because the spin cycle is at work— I've lived through this bullshit 3 times already. The playbook is *always* the same: blame everything *other than* the lack of regulation and lackluster enforcement. Find shameless, clout-seeking useful idiots to amplify, give them fancy sounding titles, and run their hot takes on a loop until the public accepts the "need" to bail out the billionaires that manufactured the mess. Let's not get fooled again.

#SVB

11 Mar 2023 at 7:04 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero
Dr. Jorge Caballero replied to Dr. Jorge Caballero

As I warned about in yesterday's posts to this thread:
✅ faux empathetic framing
✅ quotes from clout-chasing useful idiots with fancy sounding titles
✅ Bailouts for billionaires

Every. Fucking. Time.

#SVB

washingtonpost.com/us-policy/2

12 Mar 2023 at 3:52 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

Let's be clear: the #SVB money is there. It's in government bonds and other illiquid assets that will be sold (at a loss) but the money is there. On Monday, the U.S. government will make it possible for each customer to withdraw up to $250K.

Those pushing to "make all depositors whole" are angling for a billionaire bailout. That's who stands to lose as the FDIC sells the bank's assets.

The money is there.

The money is there.

The money is there.

12 Mar 2023 at 4:18 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

FDIC makes it clear that people that need to get paid, will get paid, even startups that had approved lines of credit with #SVB prior to the VC-led bank run:

"When the FDIC is appointed receiver, it immediately begins analyzing loans that require special attention, such as unfunded and partially funded lines of credit, and construction and development loans."

The money is there. The profits for the bigoted billionaires are gone. That's why they're demanding a bailout.

fdic.gov/resources/resolutions

FDIC makes it clear that people that need to get paid, will get paid, even startups that had approved lines of credit with #SVB prior to the VC-led bank run:

"When the FDIC is appointed receiver, it immediately begins analyzing loans that require special attention, such as unfunded and partially funded lines of credit, and construction and development loans."

12 Mar 2023 at 4:33 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

More proof that a government bailout would go straight to the pockets of the 1%: Hedge funds are reportedly offering 60-80 cents on the dollar for certain #SVB assets. This tells us 2 things: there's profit to be made on the assets of SVB *and* the 20%-40% loss would be the amount that taxpayers would be gifting to the a—holes that literally directed this meltdown.

unusualwhales.com/news/hedge-f

More proof that a government bailout would go straight to the pockets of the 1%: Hedge funds are reportedly offering 60-80 cents on the dollar for certain #SVB assets. This tells us 2 things: there's profit to be made on the assets of SVB *and* the 20%-40% loss would be the amount that taxpayers would be gifting to the a—holes that literally directed this meltdown.

12 Mar 2023 at 4:58 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

The key thing to note about reporting that hedge funds are trying to buy #SVB assets is that they're going directly to startups. They're taking advantage of the panic to make a profit. They're quite literally behaving like predatory payday loan sharks. They know damn well that the money is all there, and that they'll be able to cash in at 85-90 cents on the dollar. If there's a bailout, they'll profit the full difference up to $1

reuters.com/business/finance/h

The key thing to note about reporting that hedge funds are trying to buy #SVB assets is that they're going directly to startups. They're taking advantage of the panic to make a profit. They're quite literally behaving like predatory payday loan sharks. They know damn well that the money is all there, and that they'll be able to cash in at 85-90 cents on the dollar. If there's a bailout, they'll profit the full difference up to $1

12 Mar 2023 at 5:06 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

Where do people think all those equities on #SVB's balance sheet came from?

Why do people think that Y Combinator-investors are vocally demanding a bailout?

Hint: some folks will lose all their profits when their convertible notes are sold at a discount.

svb.com/account/y-combinator

12 Mar 2023 at 6:01 | Open on fedified.com
Dr. Jorge Caballero replied to Dr. Jorge Caballero

Let's be crystal clear: this was a bank run directed by one group of venture capitalists, which left another group of venture capitalists holding the bag. The latter is vocally demanding that taxpayers "make them whole" which translates into: rewarding them for assuming unmitigated risk.

The FDIC will ensure that bills are paid, loans are serviced, and payrolls are funded. The VCs that go out of business played the game and lost. That's capitalism. They can't have it both ways.

#SVB

12 Mar 2023 at 6:36 | Open on fedified.com
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