how much of the gig economy's labor payments moved through SVB? Door dash, Uber, etc. those companies suck ass, but their precarious workers could very well get caught out. even one day's pay could be catastrophic.

and what about our lovely private "money apps* in the US? any exposure there?

  • silent_water [she/her]
    ·
    2 years ago

    the free money dried up and there's tons of unprofitable startups with no plan to be profitable. they started spending more than they were depositing and the geniuses as the bank had put their deposits into bonds with 10 year terms that only pay 1-2% interest. rates went up, resale value of the bonds dropped at the same time that the net withdrawals began. eventually the bank had to go ask for a loan to cover the short-fall, they failed to secure funding, and word got back to the startups who panicked and tried to pull their money out of the bank, collapsing it. those bonds included MBS, but in this case the issue isn't that the bonds might not be paid back in 10 years - it's that the bank put all their eggs into the bond market basket and the fed smashed that bucket. congress also removed all reserve requirements for banks back in 2020 so at the time of its collapse, SVB had only $1 in equity for every $90 owed to customers, once the investment losses were factored in.

    so colossal stupidity at all levels but I don't think debt-derivatives are the issue this time. just deregulation, greed, incompetence, and a deep desire to crush the working class.