DISCLAIMER: My partner works in the banking industry. I’m not speaking on his behalf nor on behalf of the bank he works for.
A recent blog article by an executive at Silicon Valley Bank gives the wine industry many reasons to smile. As many of you know, SVB is one of the first names we consider when financing purchases of wineries or acreage, whether established or starting out.
Side note: They also sponsor great cyclists! Shout out to Portland’s own Clara Honsinger; Alison Jackson, the most recent winner in the Paris-Roubaix Femme cobble-stone crush of a race; and Welsh darling teen star Zoe Backstedt!
Anyway, back to banking.
To recap: Silicon Valley Bank had a rapid crash in the week of March 6, 2023. The rumblings started when the Federal Reserve began raising interest rates. Although the bank had been steadily increasing cash deposits, it had been storing them in long-term securities – we call that “house-poor.” You’ve got a gorgeous house but you can’t afford to go to Burgerville. Once those Fed-controlled rates exceeded the securities benefits, the bank found itself stuck. Nuanced investors began to pull their deposits leaving the bank cash-depleted. On Wednesday the 8th, the bank made a public statement that it had sold a significant amount of securities and received a major loan. It wasn’t enough. A jittery stock market coupled by those early withdrawals led to a bank run on Thursday the 9th. And by the morning of the 10th, the FDIC placed the bank into receivership. The next
And now here’s my cynical take. The week after the crash, right-wing Twitter blamed not the economic effects of the pandemic, not the increased fuel prices driven by Putin’s insane invasion of a sovereign country, but rather the diversity and inclusion measures taken by the bank.
You can read this thread about the theories that noted weirdo and angry-man-with-money Peter Thiel prompted the bank run.
THE POINT of this blog is that Silicon Valley Bank is still providing all sorts of great service to the wine industry. The bank that has taken over the majority of the wine practice hasn’t laid anyone off in the SVB practice, to my knowledge. Good stuff.
Love these links between all of us in this community, hate the instability that terrifies people, Peter remains a weirdo, and ‘lil Clara is our champion.