SVB Bank Collapse in the US

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Mad Mike said:
I don't worry about my bank stock, it's there to puke out dividends and appreciate over the long haul. It's been about 4% dividend and 8% annual appreciation since 2015. Even with a 10k loss, you'd be up 60% in in the last 5 years.
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I'm not an expert in this subject and have no opinion but have been fallowing the conversation here.

I'm curious, is your bank stock in the higher regulated Canadian banks or in the less regulated US banks?
 
woot said:
I'm not an expert in this subject and have no opinion but have been fallowing the conversation here.

I'm curious, is your bank stock in the higher regulated Canadian banks or in the less regulated US banks?
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I have some of both (although much more in canada and it is a big US bank). I don't have investments in small banks on either side of the border. I have owned the US bank for probably 15 years and appreciation has been zero. Just the dividend kick.
 
PrivatePilot said:
Banks often don't have much interest in businesses that are not in a situation for long term (or even short term in many cases) sustainability, producing (potentially, if they're successful) a product that is subject to high price volatility.

I think that's just called common sense business decisions, and nothing else.

The fact, as you mention, that some smaller banks in the USA with less regulatory overhead are willing to serve these potentially high risk businesses, and the fact that said small banks frequently fail, should speak volumes.

In a somewhat related note, I follow a lot of other forums and such for the RV industry and a lot of Americans are now starting to yell loudly that they're having trouble getting banks to finance that shiny new RV that they want to rush out and buy - why? Because the industry is teetering on the edge of disaster after an artificial bubble that was created during Covid where manufacturers couldn't make units fast enough, dealers jacked prices by anywhere from 20 to 50% taking advantage of the hysteria, and now that house of cards is all falling down - people that paid $50K for a trailer during covid that was worth $30K in normal pre-pandemic times and is now only worth $20K (a double whammy of post covid price correction plus the customary horrible first 2-3 year depreciation which is common in the RV industry) are struggling to make payments and coming to the realization that they're massively upside down on an asset that they still owe the same amount for another 10...15....20 years. And many are thinking about walking away from them and letting the bank repo them instead.

So, is a small "less regulatory burdened" bank still willing to lend to people in a market that is on the verge of seeing an impending collapse of epic proportions where the value of the financed product is going to crater being "easy to deal with", or are they being incredibly stupid simply because they can get away with it in the interest of maximizing profits and "shareholder value" (*cough*, greed) even if it means that a year or two from now they risk collapse, screwing a lot of their customers along the way?
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I sincerely enjoying this conversation, and I believe that regulations are absolutely necessary. However, in this answer, you implied a behaviour from the consumer (getting a loan for a RV) driving a possible financial collapse (in short, correct me please if I am wrong). Question is, should we blame the consumer? I don't know if I am going off topic, I don't either if it is a good question but most of drive for bankruptcy in recent years comes from very gullible people thinking they can or make a profit or acquire something without the proper means, like going for a variable rate mortgage in 2021/22... Or subprime car loans in 2008...
 
cvcb said:
I sincerely enjoying this conversation, and I believe that regulations are absolutely necessary. However, in this answer, you implied a behaviour from the consumer (getting a loan for a RV) driving a possible financial collapse (in short, correct me please if I am wrong). Question is, should we blame the consumer? I don't know if I am going off topic, I don't either if it is a good question but most of drive for bankruptcy in recent years comes from very gullible people thinking they can or make a profit or acquire something without the proper means, like going for a variable rate mortgage in 2021/22... Or subprime car loans in 2008...
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I don't think he was blaming the consumer for bank issues (although he was calling the consumers dumb). Imo, he is calling the banks out for writing too many risky loans (while probably carrying them in the books as safe and secured by an asset). Now their books are in jeopardy if you have to start writing down your safe assets that had low interest rates. Big bonus last year, big problem this year. I have no idea if any bank as enough exposure to recreational toys to suffer serious issues or if it is just a beesting.
 
GreyGhost said:
I don't think he was blaming the consumer for bank issues (although he was calling the consumers dumb). Imo, he is calling the banks out for writing too many risky loans (while probably carrying them in the books as safe and secured by an asset). Now their books are in jeopardy if you have to start writing down your safe assets that had low interest rates. Big bonus last year, big problem this year. I have no idea if any bank as enough exposure to recreational toys to suffer serious issues or if it is just a beesting.
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I understand. But I sometimes think that we underestimate the participation of the general public in causing great financial catastrophies. And the fact that the general public is getting dumber and more gullible over the years...
 
cvcb said:
I understand. But I sometimes think that we underestimate the participation of the general public in causing great financial catastrophies. And the fact that the general public is getting dumber and more gullible over the years...
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We are doomed as a species, that much appears to be true.
 
GreyGhost said:
I don't think he was blaming the consumer for bank issues (although he was calling the consumers dumb). Imo, he is calling the banks out for writing too many risky loans (while probably carrying them in the books as safe and secured by an asset). Now their books are in jeopardy if you have to start writing down your safe assets that had low interest rates. Big bonus last year, big problem this year. I have no idea if any bank as enough exposure to recreational toys to suffer serious issues or if it is just a beesting.
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I 100% blame the consumer for bringing on their own financial calamity.

We have grown so accustomed to cheap credit that the good times are never going to end. No one forced Billy Bob to spend an extra 20-30k on an RV. Nobody twisted Methany's hand to go out and buy a 30k car when she was making peanuts because of cheap credit.

Just because you can, doesn't mean you should.

Sure the banks didn't help...but in the end, we are responsible (at least should be) for the financial decisions we bring upon ourselves.

And if Billy Bob and Methany lose their shirts...well I guess they should've thought of that.
 
mimico_polak said:
I 100% blame the consumer for bringing on their own financial calamity.

We have grown so accustomed to cheap credit that the good times are never going to end. No one forced Billy Bob to spend an extra 20-30k on an RV. Nobody twisted Methany's hand to go out and buy a 30k car when she was making peanuts because of cheap credit.

Just because you can, doesn't mean you should.

Sure the banks didn't help...but in the end, we are responsible (at least should be) for the financial decisions we bring upon ourselves.

And if Billy Bob and Methany lose their shirts...well I guess they should've thought of that.
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Granted, sometimes is subtle, but and for instance, this case on top, any common sense Canadian could see from a mile away inflation coming and rates rising, but still some people believe that was ok.
 
PrivatePilot said:
The fact, as you mention, that some smaller banks in the USA with less regulatory overhead are willing to serve these potentially high risk businesses, and the fact that said small banks frequently fail, should speak volumes.
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I don't recall saying that. Them words are all yours. Risk appetite is not tied to a bank's girth. Another thing, there's 4200+ banks in the US, about a dozen are big and have the lions share of the market. Since 2015 dereg, bank failures have dropped substantially.

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PrivatePilot said:
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So, is a small "less regulatory burdened" bank still willing to lend to people in a market that is on the verge of seeing an impending collapse of epic proportions where the value of the financed product is going to crater being "easy to deal with", or are they being incredibly stupid simply because they can get away with it in the interest of maximizing profits and "shareholder value" (*cough*, greed) even if it means that a year or two from now they risk collapse, screwing a lot of their customers along the way?
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Some yes, some no. Like I said before the size of the bank does not generally dictate their risk tolerance.
 
backmarkerducati said:
The entire concept of fractional reserve banking requires at least some regulation. How much can be debated but results show what was there for SVB was not enough, be it regulations themselves or enforcement. Regulation at least in part is there to control/prevent bad actors.

For us commoners, this is a buying opportunity as the industry will be punished for the actions of poorly regulated bad actors. Opportunity to buy into well regulated better actors.
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I agree that more regulation might have averted the SVBs meltdown. But it seems that less regulation has made it easier for small banks to thrive. Since the last degeg, US bank failures dropped to near zero. They are so uncommon that any fails these days is a big deal.
 
cvcb said:
Granted, sometimes is subtle, but and for instance, this case on top, any common sense Canadian could see from a mile away inflation coming and rates rising, but still some people believe that was ok.
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Just reading the article…

- felt pressured to buy
- $500/month toward a renovation
- car looks brand new or fairly new
- didn’t account for property taxes

It all adds up in the end. That’s why when people say ‘wow bank allows me to buy X!’

My first question is always…have you considering the additional XYZ to pay for ON TOP OF YOUR MORTGAGE!?
 
mimico_polak said:
Just reading the article…

- felt pressured to buy
- $500/month toward a renovation
- car looks brand new or fairly new
- didn’t account for property taxes

It all adds up in the end. That’s why when people say ‘wow bank allows me to buy X!’

My first question is always…have you considering the additional XYZ to pay for ON TOP OF YOUR MORTGAGE!?
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2 money pits, I mean dogs
2 car payments??? Why

‘I want it all and I want it now’ attitude.
 
woot said:
I'm not an expert in this subject and have no opinion but have been fallowing the conversation here.

I'm curious, is your bank stock in the higher regulated Canadian banks or in the less regulated US banks?
Click to expand...
TD and RBC, which are big banks operate in both countries. No real preference, my wife and I picked up shares over the years under employee purchase plans. They toss a predictable dividend and have appreciated well over the years.
 
We found ( 10 yrs ago) the TD US and TD Canada we’re almost like two separate institutions. We used TD canada but the ability to transfer money to a US branch and cross services was almost impossible. We ended up with the Arizona National bank .
My biggest problem with many smaller US banks was it was impossible to do any online banking with them , they are a throwback to the 50’s .

I’m pretty amused with consumer considerations of banks , “ my bank sucks , I can’t get approved for XX” and then “ they gave us 800k for our mortgage when we already had 100k in car loans , are they not supposed to council us???”

Banks can be very helpful but never be under the impression they are your friends , a banks role is to make the bank money . There is one bank and 14 million pidgeons.


Sent from my iPhone using GTAMotorcycle.com
 
crankcall said:
We found ( 10 yrs ago) the TD US and TD Canada we’re almost like two separate institutions. We used TD canada but the ability to transfer money to a US branch and cross services was almost impossible. We ended up with the Arizona National bank .
My biggest problem with many smaller US banks was it was impossible to do any online banking with them , they are a throwback to the 50’s .

I’m pretty amused with consumer considerations of banks , “ my bank sucks , I can’t get approved for XX” and then “ they gave us 800k for our mortgage when we already had 100k in car loans , are they not supposed to council us???”

Banks can be very helpful but never be under the impression they are your friends , a banks role is to make the bank money . There is one bank and 14 million pidgeons.


Sent from my iPhone using GTAMotorcycle.com
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Cross border banking suffered due to limitations in the US banking system. Those problems ended around 2014, TDs has a good xborder programs now, (it was much better before 2019 when they removed ACH access from TDCT account holders). RBC is close ok, there are no banks that make it easy.

PAYPAL is also viable, particularly if youre a small biz dealing with xborder clients and/or suppliers.
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