dmayhem93 avatar
dmayhem93
closes Apr 14
Will Silicon Valley Bank cause another bank to fail by April 14th
39%
chance

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BraulioValdivielsoMartine avatar
Braulio Valdivielso Martínezis predicting NO at 40%

https://www.bloomberg.com/news/articles/2023-03-14/signature-was-seized-after-leaders-caused-crisis-of-confidence

It's pretty ambiguous. The case for no:

  • Regulators closed the bank because they didn't trust managers. "The bank failed to provide reliable and consistent data, creating a significant crisis of confidence in the bank’s leadership"

  • “By Sunday morning, the executives of the bank believed they had satisfied the need for the data and had secured the capital from the discount window and elsewhere,”

  • The regulators “wanted to send a message to get people away from crypto,” Frank said in a Bloomberg radio interview Monday (I personally don't give much credence to this take)

The case for yes:

  • I believe that what prompted the regulators to start looking into the numbers of Signature was a run on the bank that was partially (but not exclusively) motivated by the run on SVB. The article mentions one example of this

octothorpe avatar
octothorpe

What does "cause" mean?

dmayhem93 avatar
dmayhem93is predicting YES at 40%

@octothorpe is SVB failing a direct impact to the other bank that otherwise would allow it to survive

xyz avatar
Yoavis predicting NO at 89%

All signs point to Signature failing at some point this month regardless of SVB collapsing. By the criteria, that can’t count as a yes.

xyz avatar
Yoavis predicting NO at 76%

Apparently, it was closed by regulators to send an anti-crypto message to banks. https://www.cnbc.com/2023/03/13/signature-bank-third-biggest-bank-failure-in-us-history.html

xyz avatar
Yoavis predicting NO at 76%

Crazy stuff!

dmayhem93 avatar
dmayhem93is predicting YES at 85%

Looking likely yes to me, but since there has been some contention in the comments I'm leaving it open until Friday at the earliest to see if we get more details

Gigacasting avatar
Gigacastingbought Ṁ100 of YES

Circle raised Signature bank due to their SVB exposure causing withdrawals.

It is so.

Gigacasting avatar
Gigacastingis predicting YES at 73%

*raided

xyz avatar
Yoav

@Gigacasting From a cursory internet search, I can't find any source which says that.

BTE avatar
Brian T. Edwardsbought Ṁ100 of YES

Signature bank just seized

BraulioValdivielsoMartine avatar
Braulio Valdivielso Martínezis predicting NO at 73%

@BTE has it been reported that it failed because of svb?

BTE avatar
Brian T. Edwardsis predicting YES at 87%

@BraulioValdivielsoMartine I don't know how old you were in 2008 but banks don't really fail in isolation very often. They fail like dominos fall because of similar risk profiles exacerbated by ongoing run on deposits.

xyz avatar
Yoav

It looks like Signature Bank's woes began long before the SVB crisis. Because of it's relationship with the crypto sector, it seems more likely to me to be related to Silvergate's collapse than SVB's. https://www.proquest.com/docview/2707266859?parentSessionId=v02fbJDloYmoh%2FMnSEssH4ywzXFPJtAzTCqP8deQ%2BfU%3D

BraulioValdivielsoMartine avatar
Braulio Valdivielso Martínezis predicting NO at 79%

@BTE that bank failures are correlated I know. I'm just a bit sceptical that SVB's caused Signature's. It's entirely possible, I just don't know

BTE avatar
Brian T. Edwardsis predicting YES at 79%

@BraulioValdivielsoMartine Would signature have failed if svb had not? Unlikely.

BraulioValdivielsoMartine avatar
Braulio Valdivielso Martínezis predicting NO at 89%

@BTE maybe, but @Yoav 's take that it was related to silvergate and not svb seems reasonable as well?

jack avatar
Jackbought Ṁ100 of YES

https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm indicates a likely link between SVB and Signature. "We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority."

xyz avatar
Yoavis predicting NO at 89%

@jack This article argues that unlike SVB, Signature’s collapse was due to its links to the crypto industry, which was turning away from it. https://www.barrons.com/amp/articles/signature-bank-failure-a0adf63f#

Signatures stock price tracks somewhat closely with Bitcoin, down 80% since Feb ‘22. It was also down 30% in the month prior to March 10, when SVB collapsed, diverging sharply from Bitcoin—so it had unrelated, longer term issues, like Silvergate. Signature also didn’t have a Hold to Maturity liquidity issue. Just goes to show how much likelier this was a Signature-crypto problem rather than one like SVB’s.

xyz avatar
Yoavis predicting NO at 89%

@jack I don’t think announcing a systemic risk exception for both means they are actually linked. They just both happen to be very large banks (top 40), and the fed would rather not let their depositors lose money for many reasons.

BraulioValdivielsoMartine avatar
Braulio Valdivielso Martínezbought Ṁ30 of NO

@jack they could be linked in that both failures were caused (transitively) by higher interest rates, but need not have caused one another?

xyz avatar
Yoav

Does this resolve yes if any bank fails, or only those which clearly would not have failed had SVB not failed?

dmayhem93 avatar
dmayhem93is predicting YES at 14%

@Yoav only those that wouldn't have failed if SVB had not failed, but unless that's clear cut I'd lean to resolving yes in ambiguity on the failure, or get some kind of vote/third party resolution if there's good arguments on both sides.