Biran Sullivan CNBC Anchor comments on the SVB Bank "bailout". Warns Emotions will be high.
I have found Brian Sullivan’s reporting and common sense a rare trait in the reporting world. The following is from his post on LinkedIn. We will be looking at the impact the bank failure has on the global energy markets. It has a wide path of damage we are seeing unfold. Not sure if it is like a tornado or a tsunami, but we will be looking at all resources. - Stu
Over next 24-48 hours you’re going to hear/read about the term “bailout” regarding $SIVB. It will rightly generate high emotion.
I don’t know what’s best either way but as someone who was at forefront of subprime meltdown I’ll just note this.
Whatever happens if the government gets involved this will not be a “bailout” like 2008. The talk is backstopping the depositors not the shareholders or stock (company execs/shareholders)
If anything happens, it would be backstopping the people and companies who had their money in SVB. Not rescuing the stock or execs who paid themselves millions.
Many small and startup businesses had their cash in the bank .. just like you might at a local bank.
That bank - through what looks like questionable risk management given the sharp move in interest rates - imploded.
The ‘why’ it bombed will be the subject of many opinions and news for a long time. It seems clear to me but I’ll reserve judgement until I know more.
But right now a huge, unknown number of companies face a cash obliteration - not being able to make payroll - through no fault of their own. Like if your local bank f***ed up and you’re holding the bag. And the folks who rely on you - your employees - may get hosed.
I don’t know what’s right or what may happen. But just know the politically charged term “bailout” is very different here than 2008. It’s depositors is what the term may be referring to, not shareholders. Small cos perhaps almost forced to bank with SVB.
The stock is done.
SIVB execs need to answer questions for why they held such long term bonds as rates soared (and no Chief Risk Officer for months) but depositors are a different story.
Next day is key.
Much more to come. Nasty business.