Although there's too much content being produced on the SVB and broader banking situation, I selfishly have to post for my future self to refer back to.
I like pausing during extreme times to asses how I feel and how I'm behaving. And to use them as a reminder to check in on my preparedness.
I don't know about you, but I felt a strong sense of deja vu throughout the weekend. I was reminded of some feelings from the early days of COVID (which I captured in this series).
Uncertainty is a problematic state for most people. I'd be full of shit if I said I'm totally comfortable when uncertain about big things in life – health, career, finances, etc. With that said, I'm much better at dealing with it after having gone through several long years of extreme uncertainty with several family members on the personal health front. Adversity can do wonders for helping you work through difficult times.
Fortunately, markets are resilient. And people are resilient. Remember that.
Always try to remain cool, calm, and collected.
I was extremely impressed by how the Costanoa Ventures partnership conducted themselves while springing into action to support portfolio companies. Nobody was shouting on Twitter or running around like a chicken with their head cut off. They were calm, thoughtful, decisive, and selfless. This is how you need to be to operate optimally during duress.
Here's an excerpt from the first post of my COVID series:
On the topic of small businesses and the stimulus, Silicon Valley Bank announced initiatives to provide relief programs to startups. They also announced support for ‘Hello Alice’ which is a free platform for providing guidance to business owners. Their COVID-19 Business Resource Center looks like a great resource.
I'm not going to preach why venture and startups (and by extension, SVB) are vital to society. I'll just say that regional banks are critical to the segment of customers they serve, and those customers often play an important role in our lives and economy.
Regionals are the lifeblood of American businesses. Their role is especially impactful when they're needed the most like during economic collapses and pandemics.
Any action other than what was taken swiftly this weekend could have been catastrophic. I'm thankful for all of the people and agencies who worked day and night to impact the final decisions and action taken to backstop depositors.
Clients depositing funds in US regional banks can feel safe doing so. It should have always been that way. It was questionable this weekend but we now have the definitive answer. And we should all be thankful for the comfort this affords us in the future.
Going forward, there are some obvious questions regarding banking. How will banking change? Will the Systematically Important Financial Institution designation remain relevant as implemented today? Deposit insurance reform – $250k relevance? Ultimate impacts on cost of funds, margins, and to clients? Consolidation acceleration? Future methods to compete? Impacts to sponsor banking, BaaS and fintech? Lots to read and think about ahead.
Here's some reading material that you may enjoy: