Silicon Valley Bank / Rippling

[somecyguy]

Just an FYI, if the company you work for uses Rippling for payroll, you might want to check your savings account because you may not get paid today. SVB is a major player in the start-up/ tech world and Rippling's primary bank. Regulators closed the bank this morning. Tech people I talk to are going nuts this morning. Very chaotic.

New info: Rippling has pivoted to JPMC for processing payroll, but anyone who has already submitted for processing is kind of on hold and may need to re-submit.

 

[somecyguy]

This is some crazy stuff.

 

[Althetuna]

Yea banking industry!

 

[CycloneDaddy]

Where the **** were the Regulators?

 

[Gunnerclone]

Where the **** were the Regulators?

Raising the interest rates that led to SVB getting ******?

Banks are businesses. They make choices. They leveraged MBS’s to cover their deposits. They made the wrong choice. Now they sow.

 

[JM4CY]

This is some crazy stuff.

Huh? Explain this to me like I am 12.

 

[Rabbuk]

Where the **** were the Regulators?

Someone had to turn off the lights after it was over

 

[SCNCY]

Huh? Explain this to me like I am 12.

Same. What is Rippling?

I assume Silicon Valley Bank is fundamentally just a normal bank. But what is Rippling and how does SVB use it and what for?

 

[somecyguy]

Huh? Explain this to me like I am 12.

Rippling is a payroll services company. Fairly new tech start up and they got popular quickly. Millions of people get their paycheck from them and probably don't know it. Thankfully Rippling did not leave all their money sitting with SVB. Otherwise, those company's who use Rippling's services would not be able to make payroll.

Many companies that have debt with SVB signed agreements that they could not open accounts elsewhere. So ALL of the company funds were in one place and today is currently $0. Big ouch. Monday may see a wave of layoffs if those companies can't make payroll.

The other is the co-mingling of services all at one bank. So your company has a loan with SVB and also has your personal mortgage too. Unraveling all that is going to be messy and time consuming.

Where the **** were the Regulators?

There is a big question whether it's a liquidity or solvency issue. Many claim it was a liquidity issue and after some tech venture capitalists made some comments regarding the bank, they caused a bank run. Doesn't matter much now as the FDIC will have to clean up the mess.

 

[Cyclonepride]

Raising the interest rates that led to SVB getting ******?

Banks are businesses. They make choices. They leveraged MBS’s to cover their deposits. They made the wrong choice. Now they sow.

Are you familiar with the way this works? They reap, we end up sowing.

 

[somecyguy]

Fully expect the current House to start a “eliminate the FDIC” campaign now.

I'm more curious to see how the FDIC handles receivership. The $250K people will be made whole quickly, but if liquidation doesn't cover everything, what is their next move. Given how intrenched this bank is to a number of companies, do they drop a bunch of bonds on the market to pay for the rest? That would solve some problems, but would really throw the bond market in chaos if ~$100 billion in bonds got dumped.

 

[SCNCY]

Here's an article that I read from Yahoo. TLDR version, classic bank run forcing shutdown. This resulted in, as OP said, the bank unable to process payroll for it's corporate customers.

Why Silicon Valley Bank's crisis is rattling America's biggest banks

The struggles of SVB Financial are spooking investors across the banking world, highlighting the new risks posed by rising interest rates.

www.yahoo.com

 

[Big Daddy Kang]

Huh? Explain this to me like I am 12.

Maybe you could tell me what is going on. And please, speak as you might to a young child. Or a golden retriever. - John Tudd in the movie Margin Call

 

[Fitzy]

 

[CycloneDaddy]

Employees should start hearing about their employment status in the next couple of hours. Have to feel bad for people who are going to get **** on because of the C Suite.

 

[cowgirl836]

Huh? Explain this to me like I am 12.

ELI5 please

 

[LeaningCy]

My quick attempt at understanding the situation:

Interest rates keep climbing, so the people of Bedford Falls (VCs) got spooked resulting in a bank run. Despite the best efforts of George Bailey (Silicon Valley Bank CEO), the townspeople demanded their money now, forcing Bailey Brothers Building and Loan to sell bonds at a big loss and go under. I assume old man Potter (Chase, Citi, Bank of America) is licking his chops and will likely snatch up a bargain.

 

[somecyguy]

Employees should start hearing about their employment status in the next couple of hours. Have to feel bad for people who are going to get **** on because of the C Suite.

No one will act until Monday. The Fed has already hinted they may provide some relief for those uninsured, and those insured will likely be whole by EOD Monday.

We'll find out which companies have high burn rates, because they will be the first to drop without funding.

 

[ClonerJams]

They'll get bailed out. Its the American way

 

[Lexclone]

No one will act until Monday. The Fed has already hinted they may provide some relief for those uninsured, and those insured will likely be whole by EOD Monday.

We'll find out which companies have high burn rates, because they will be the first to drop without funding.

The insured will get $250,000. Most businesses keep millions. It’s something, but not much.

A lot will depend on the extent of leverage…