Silver Bank and SVIB
What the eff just happened?!?!?
We are coming to you early this week as a lot happened last week in the banking world. We saw 2 big bank blow-ups with Silvergate Capital and Silicon Valley Bank (SVB $SIVB) going into FDIC receivership. There are a ton of bad takes out there and even more scare-mongering clickbait.
Luckily, we had good timing with our posts as we just covered the basics of bonds. If you read and understood that post, then you are in good shape for understanding the underlying issues with these 2 meltdowns.
So what happened at these banks? And more importantly should you be concerned and does this impact you? Also, what does this mean for USDC and USDT the crypto stable coins who may or may not have had huge deposits here and also run a similar model as the banks?
[Note - we know 2 people in real life who have gone and tried to remove all their money out of all their bank accounts and move it to physical cash. They both banked at places not at all tied to Silvergate or SVB. But all they did was hear “bank run” and panicked. We aren’t there yet, you don’t need to go move to cash and put it under your mattress.]
[Note 2 - on a bank balance sheet, deposit accounts are liabilities]
Let’s cut through the noise and the atrocious twitter takes to walk through what really happened.