Eric Mathewson

Founder & CEO WideOrbit

[Roshan Patel @roshanpateI]

My lead investor just texted me this about SVB.

[Bill Ackman @BillAckman]

The gov’t has about 48 hours to fix a-soon-to-be-irreversible mistake. By allowing @SVB_Financial to fail without protecting all depositors, the world has woken up to what an uninsured deposit is — an unsecured illiquid claim on a failed bank. Absent @jpmorgan @citi or @BankofAmerica acquiring SVB before the open on Monday, a prospect I believe to be unlikely, or the gov’t guaranteeing all of SVB’s deposits, the giant sucking sound you will hear will be the withdrawal of substantially all uninsured deposits from all but the ‘systemically important banks’ (SIBs). These funds will be transferred to the SIBs, US Treasury (UST) money market funds and short-term UST. There is already pressure to transfer cash to short-term UST and UST money market accounts due to the substantially higher yields available on risk-free UST vs. bank deposits. These withdrawals will drain liquidity from community, regional and other banks and begin the destruction of these important institutions. The increased demand for short-term UST will drive short rates lower complicating the @federalreserve’s efforts to raise rates to slow the economy. Already thousands of the fastest growing, most innovative venture-backed companies in the U.S. will begin to fail to make payroll next week. Had the gov’t stepped in on Friday to guarantee SVB’s deposits (in exchange for penny warrants which would have wiped out the substantial majority of its equity value) this could have been avoided and SVB’s 40-year franchise value could have been preserved and transferred to a new owner in exchange for an equity injection. We would have been open to participating. This approach would have minimized the risk of any gov’t losses, and created the potential for substantial profits from the rescue. Instead, I think it is now unlikely any buyer will emerge to acquire the failed bank. The gov’t’s approach has guaranteed that more risk will be concentrated in the SIBs at the expense of other banks, which itself creates more systemic risk. For those who make the case that depositors be damned as it would create moral hazard to save them, consider the feasibility of a world where each depositor must do their own credit assessment of the bank they choose to bank with. I am a pretty sophisticated financial analyst and I find most banks to be a black box despite the 1,000s of pages of @SECGov filings available on each bank. SVB’s senior management made a basic mistake. They invested short-term deposits in longer-term, fixed-rate assets. Thereafter short-term rates went up and a bank run ensued. Senior management screwed up and they should lose their jobs. The @FDICgov and OCC also screwed up. It is their job to monitor our banking system for risk and SVB should have been high on their watch list with more than $200B of assets and $170B of deposits from business borrowers in effectively the same industry. The FDIC’s and OCC’s failure to do their jobs should not be allowed to cause the destruction of 1,000s of our nation’s highest potential and highest growth businesses (and the resulting losses of 10s of 1,000s of jobs for some of our most talented younger generation) while also permanently impairing our community and regional banks’ access to low-cost deposits. This administration is particularly opposed to concentrations of power. Ironically, its approach to SVB’s failure guarantees duopolistic banking risk concentration in a handful of SIBs. My back-of-the envelope review of SVB’s balance sheet suggests that even in a liquidation, depositors should eventually get back about 98% of their deposits, but eventually is too long when you have payroll to meet next week. So even without assigning any franchise value to SVB, the cost of a gov’t guarantee of SVB deposits would be minimal. On the other hand, the unintended consequences of the gov’t’s failure to guarantee SVB deposits are vast and profound and need to be considered and addressed before Monday. Otherwise, watch out below.

[Eric Mathewson @emathewson]

@marcelomagics @RoKhanna Marcelo: You are not paying attention to what really happened. SVB bought Treasuries and Fed mortgage backed securities that went down in value when the Fed tightened rates. SVB was clearly not being reckless and there has been no taint of Fraud. This was classic Run on Bank.

[Eric Mathewson @emathewson]

@Sigalow Hi.. thinking Yahoo's 1BB into Alibaba for 30% and investment into Yahoo Japan was prob close.

[Ukraine Territorial Defense Forces @TDF_UA]

During the Kharkiv counteroffensive, TDF aerial recon team located 2 Russian self-propelled howitzers, and artillery of 92nd Mechanized brigade swiftly took them out.

[Eric Mathewson @emathewson]

If Biden had shown the leadership to send in the US Air Force on Day 2 or Day 4 or Day 10, it would have cost US taxpayers a whole lot less than 33 Billion dollars, while saving thousands of Ukrainian lives AND reduced nuclear risk. You can’t stop a Military Bully with sanctions

[Eric Mathewson @emathewson]

@RepDavidValadao The way to hold Russia accountable is to send in the US Air Force! Our nuke risk goes down if we stop Putin sooner..

[Eric Mathewson @emathewson]

Stopping Putin now is safer than not standing up to Putin the Bully.

[Eric Mathewson @emathewson]

When is the US going to do the right thing and send in the US Air Force? All Russian military assets in Ukraine should be declared fair game for interdiction. How many more innocent civilians have to die for the US to wake up and solve the problem?

[Olga Tokariuk @olgatokariuk]

Russian military purposely searched for people who served our country in Bucha to kill them. They shot and killed women and children. Civilians were crushed by tanks while sitting in their cars. Women were raped and killed in front of their children - Zelensky at the UN

[Eric Mathewson @emathewson]

@JoeNBC When is the right time to step up to Putin the Bully? Where would your draw the line? Why do you think fighting him later after thousands of civilians are dead is better than before more are killed? Your logic is broken

[Lou B @LuigiCPA]

Chesa's 11th hour pardons

Stephanie Ching was involved in the murder and chopping up her father

Tomorrow in Dept 18, Chesa trying to reduce Ching's crimes to:
a) misdemeanor, b) terminate probation, & c) expunge her record.

The prosecutorial vandalism continues

#gbtbmedia

[Eric Mathewson @emathewson]

When is the US going to man up and send in the United States Airforce to protect Ukraine? We can either choose to defend Ukraine or fight Putin elsewhere…

[Anastasiia Lapatina @lapatina_]

A 6-year-old boy stands near the grave of his mother, who was buried in their yard in Kyiv oblast. (Ph: Rodrigo Abd/AP)

[Eric Mathewson @emathewson]

@rsg She needs to retire gracefully

[Eric Mathewson @emathewson]

@brooke Just cancel your credit cards once a year… the remnant subscription problem goes away..

[Eric Mathewson @emathewson]

@RoKhanna Ro: You know I am a fan, but I thought you were able to borrow against your house. And when you do it reduces your taxes when you deduct the interest cost. And Prop 13 keeps property taxes relatively low vs CA Home appreciation.

[Eric Mathewson @emathewson]

Kudo's to Lithuania for pulling the plug on 38% of their gas that comes from Russia. "Don't be an accomplice"
https://t.co/4pyt0s46vO^tfw|twcamp^tweetembed|twterm^1510583973902229509|twgr^|twcon^s1_c10

[Gabrielius Landsbergis🇱🇹 @GLandsbergis]

Russian army of mass murderers retreat from Bucha reveals full scale of atrocities. We can only imagine what is going on in other occupied territories. No other way arround - buying 🇷🇺 oil&gas is financing war crimes. Dear EU friends, pull the plug. Don't be an accomplice.

[Eric Mathewson @emathewson]

@calmatters @GavinNewsom The Governor of CA wants to give every CA car owner $400? Did this money magically appear? or is the Gov simply taking too many tax dollars and rather than giving it back the excess tax he is giving free money to those who did NOT earn it.

[Eric Mathewson @emathewson]

@RepDavidValadao Send in the US Air Force...