ChatGPT is not current!
I hope this post finds you well.
Today, President Biden’s very short speech, assured, we would not bail out this investment bank like we did the real estate banks in the 2008 banking crisis. So, he suspended my belief that America was doomed. It is not our fault that the bank failed. It’s just part of the capitalist system we live in. The FDIC which is a self-funded government insurance regulatory and services agency will take over the banking side and make sure us citizens will get continued service. So, I decided to ask ChatGPT and google search engine what was going on and answer some questions. Below are the results.
What is a bank?
A bank is a financial institution that accepts deposits from customers and provides various financial services, such as loans, investment management, and payment processing. Banks are regulated by government authorities and provide a secure way for people to store their money and conduct financial transactions. Banks also make money by charging fees for their services and by earning interest on the loans they provide to customers. There are various types of banks, including retail banks that serve individuals and small businesses, commercial banks that serve larger businesses, and investment banks that provide financial services to corporations and governments.
What is Silicon Valley bank?
Silicon Valley Bank (SVB) is a bank that specializes in providing financial services to technology and innovation-focused companies, as well as their investors and partners. SVB was founded in 1983 in Santa Clara, California and is headquartered in Santa Clara, with additional offices in the United States and internationally.
SVB offers a range of financial products and services to its clients, including deposit accounts, loans, cash management, foreign exchange, and investment services. SVB is known for its expertise in working with early-stage and high-growth companies in the technology, life science, healthcare, and energy sectors. SVB also works with venture capital and private equity firms, as well as their limited partners.
In addition to its banking services, SVB provides a variety of resources to support the growth and success of its clients, such as networking events, educational programs, and research reports on industry trends. SVB is considered one of the leading banks for startups and innovative companies, and has played a significant role in the growth of the technology industry in Silicon Valley and beyond.
Why did SVB fail?
As far as I am aware, Silicon Valley Bank has not failed. In fact, SVB is considered one of the most successful and innovative banks in the world, with a strong focus on serving the needs of technology and innovation-focused companies. SVB has grown significantly since its founding in 1983 and currently has more than 30 offices in the United States and internationally, serving thousands of clients around the world.
It is possible that you may be confusing Silicon Valley Bank with another bank or financial institution that has experienced financial difficulties or failure in the past. However, to my knowledge, Silicon Valley Bank has not failed and continues to be a leading provider of financial services to the technology and innovation industry.
So, there you have it ChatGPT is not current. So now let’s find out what FDIC is.
What is the FDIC?
The Federal Deposit Insurance Corporation (FDIC) is a United States government agency that provides insurance coverage for depositors in the event that their bank fails. The FDIC was created in 1933 during the Great Depression as part of the Banking Act, in response to the widespread bank failures that occurred during that time. The FDIC provides deposit insurance to customers of member banks, which includes most commercial banks and savings institutions in the United States.
The FDIC works to maintain stability and public confidence in the banking system by providing insurance coverage to depositors and promoting sound banking practices. The FDIC is an independent agency of the federal government and is funded through premiums paid by member banks, rather than through taxpayer dollars. The FDIC insures deposits up to a certain amount per depositor per bank, currently $250,000 per depositor per bank.
In addition to its role as a deposit insurer, the FDIC also regulates and supervises certain banks to ensure their safety and soundness. The FDIC also has the authority to take over and resolve failed banks in order to protect depositors and maintain stability in the banking system.
A couple observations here. ChatGPT says FDIC regulates and supervises certain banks to ensure their safety and soundness.
What banks do the FDIC not regulate and supervise?
The FDIC is responsible for regulating and supervising most commercial banks and savings institutions in the United States. However, there are some types of financial institutions that the FDIC does not regulate or supervise, including:
- Credit unions: Credit unions are financial cooperatives that are owned by their members and typically offer banking services to a specific community or group of people. Credit unions are regulated by the National Credit Union Administration (NCUA), not the FDIC.
- Investment banks: Investment banks are financial institutions that specialize in providing advice and underwriting services for corporate clients, as well as trading and investing in securities. Investment banks are regulated by the Securities and Exchange Commission (SEC), not the FDIC.
- Insurance companies: Insurance companies provide various types of insurance policies, such as life, health, and property insurance. Insurance companies are regulated by state insurance departments, not the FDIC.
- Brokerage firms: Brokerage firms are financial institutions that provide a range of services related to buying and selling securities, such as stocks, bonds, and mutual funds. Brokerage firms are regulated by the Financial Industry Regulatory Authority (FINRA), not the FDIC.
It’s important to note that while the FDIC does not directly regulate or supervise these types of financial institutions, it still plays a role in ensuring the stability of the overall financial system and protecting consumers in the event of a systemic crisis.
So, here it says the FDIC does not regulate or supervise investment banks. A conundrum here maybe.
Is SVB, an investment bank insured by the FDIC?
SVB Financial Group, the parent company of Silicon Valley Bank, is a publicly traded bank holding company that provides commercial banking and other financial services. Silicon Valley Bank is a subsidiary of SVB Financial Group and is regulated by the FDIC as a commercial bank.
As a commercial bank, Silicon Valley Bank is FDIC-insured, which means that deposits made by customers are insured up to the FDIC-insured limit of $250,000 per depositor per bank. This insurance provides protection to depositors in the event that the bank fails or is unable to return depositors’ funds.
It’s important to note that Silicon Valley Bank is primarily a commercial bank that specializes in providing financial services to technology and innovation-focused companies, rather than an investment bank. While Silicon Valley Bank may offer some investment banking services to its clients, such as underwriting securities offerings or advising on mergers and acquisitions, it is not considered an investment bank in the traditional sense.
So, it turns out SVB financial group is a parent company of Silicon Valley Bank.
Did SVB Financial Group fail?
To my knowledge, SVB Financial Group, the parent company of Silicon Valley Bank, has not failed. In fact, SVB Financial Group is a publicly traded company that is considered one of the most successful and innovative banks in the world, with a strong focus on serving the needs of technology and innovation-focused companies. The bank has grown significantly since its founding in 1983 and currently has more than 30 offices in the United States and internationally, serving thousands of clients around the world.
SVB Financial Group has consistently been profitable over the years, with a strong track record of financial performance. The bank has also received numerous accolades for its innovation, culture, and customer service.
It’s possible that you may be confusing SVB Financial Group with another bank or financial institution that has experienced financial difficulties or failure in the past. However, to my knowledge, SVB Financial Group has not failed and continues to be a leading provider of financial services to the technology and innovation industry.
Hmmm, once again Chatgpt is not current. This article on the internet is the best that describes why SVB failed. https://www.fastcompany.com/90864027/why-svb-failed-silicon-valley-bank-collapse
I copied this from Wikipedia’s site on Gregory Becker.
The CEO of SVB Financial Group since 2011. He is also the final CEO of Silicon Valley Bank and a board member of the Federal Reserve Bank of San Francisco.
Following news of SVB’s dire financial circumstances on March 9, 2023, Becker urged venture capitalist (VC) firms to avoid panic in order to stave off a collapse.[8] Following news of SVB’s failure on March 10, 2023, Becker was reportedly no longer on the board of the Federal Reserve Bank of San Francisco.[9]
On February 27, 2023, Becker sold 12,451 shares of company stock, worth a total of $3.6 million. The sale was made through an executive trading plan filed with the U.S. Securities and Exchange Commission (SEC) on January 26, 2023.[10] Following SVB’s collapse, Becker received criticism from Senator Elizabeth Warren,[11] Representative Ro Khanna of California, and Mayor Matt Mahan of San Jose, who called for money from the stock sale to be clawed back and returned to depositors.
Here is Wikipedia’s info on SVB Financial Group (SIVB). So far, they have lost 60% of its value.
In March 2023, Silicon Valley Bank experienced a bank run and collapsed. The failure of Silicon Valley Bank was the largest of any bank since the 2007–2008 financial crisis by assets, and the second-largest in U.S. history behind that of Washington Mutual.[8] On March 10, 2023, the California Department of Financial Protection and Innovation closed SVB, Santa Clara, and appointed the FDIC as receiver,[25] which transferred all the bank’s assets to a newly-established bridge bank.[26] The holding company was not included in the bank closing or resulting receivership.
Complicated it is, this is my interpretation from the President’s speech this morning at 9:00am. The FDIC will support the Silicon Valley Bank and its customers but not the SVB Financial Group, which is the parent company of the Silicon Valley Bank. President Biden fired the executives and managers of the Silicon Valley Bank and the FDIC will take over and assist SVB customer and businesses. US tax payers will not help the investors or executives out. Like we did in the 2008 real estate financial crisis.