Epic Real Estate Investing - Silicon Valley Bank Crisis - The Secret Reason Why They Were Bailed Out! | 1260

Episode Date: March 21, 2023

Are you curious about what happened to Silicon Valley Bank and how it impacts the economy? Listen to this episode to learn the scoop on SVB's recent bankruptcy and the government's role in helping them out. Discover important financial terms like FDIC and certificate of receivership and why they matter to you. Find out how to keep your money safe and make informed financial decisions. Don't miss out on this valuable lesson! Are you ready? Let’s go! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Silicon Valley Bank Crisis. That's what my son asked me about yesterday when he got home from school. So I had to explain this complicated disaster to a fifth grader. Basically, I had to explain it like he was five. And so I was telling my good friend, he's an adult, by the way, about this experience that I had. And he was like, wow, can you explain it to me too like I'm five? Okay, can give it a shot.

Welcome to the epic real estate investing show. where we talk about the housing market, creative financing strategies, and everything else you need to retire early. And if you're ready to get to the next level in your real estate game and get there fast, go to R-E-I-Aase.com, where most training programs end, ours, begins,

at R-E-I-Ase.com. Enjoy the show. Hey, kiddos. Let me tell you about what happened to Silicon Valley Bank. You've probably seen it on TV recently, right? And everyone seems to be talking about it, don't they? You see, Silicon Valley Bank, or SVB for short, is a bank that's been around for 40 years, but it recently went bankrupt because the people who run the bank didn't do a good job.

And the people who make the rules for banks, called the Federal Reserve, didn't pay enough attention to the people that weren't doing a good job. Now, you might be wondering how this affects all the other banks in our country. Or maybe you're not, but you probably should be. You see, with interest rates going up, And with so many of the banks doing business with each other, that could cause problems for the other banks, too. And that has a lot of people very nervous.

You can try that again. And that has a lot of people very nervous. Did that really just happen? Yes. Now, let me explain a couple of new words that we learned this week. FDIC is the first one. The FDIC is like a big boss that makes sure that banks don't go out of business. And if a bank does go bankrupt, they will give the bank's customers,

back their money only up to $250,000. That's a lot of money. But if you have more than that in the bank, you might not get all of it back. The other word that we learned is a certificate of receivership. It's like an IOU that the bank gives you when they can't give you all of your money back. Now, it's not as good as having your money right away,

but it's better than nothing. At least that's what they tell us. And maybe you know what I'm talking to what? What happens to Silicon Valley Bank now? That's a good question. Well, obviously, they could use a helping hand, even though nobody really likes giving banks a helping hand. But the government did finally extend their hand to help. Sometimes, you've got to do things you don't like.

So why did the government have to help this bank? Well, it's kind of like when you're playing with dominoes and one falls and knocks down all the others. If the government didn't help all the other dominoes, I mean, banks might start falling too. That's called a contagion. That was another word that we learned this week. and that spells bad news for everyone. You see, a long time ago, in 1991, well before you were born, there was a guy named Jerome Powell,

who was just starting to work at a big, important place called the Treasury Department. The Treasury Department is like a big piggy bank for the United States government. It's a group of people who work together to make sure the government has enough money to pay for important things like schools, hospitals, and roads. And they do this by collecting taxes from people, in businesses, printing and making new money, and then borrowing money if needed, like just in case the money printing machine breaks down. They also help make sure that our money is safe and that people follow the rules

when it comes to spending and saving. Well, in 1991, Jerome Powell and the Treasury Department were dealing with a bank that was in trouble, and they had to decide whether to help the bank or let it fail. Well, they decided to help it because they didn't want all the other banks to have problems, too. They wanted to avoid the contagion. So Jerome, he's still around, and he works at a bigger and more important place now. So he helped out Silicon Valley Bank, just like he did the other bank way back then.

That was nice of him, wasn't it? Well, he may be a kind man, but this wasn't necessarily out of the kindness of his heart. You see, banks are kind of like your piggy bank, where you put your money to keep it safe. But sometimes people get scared and think their money isn't safe anymore. so they try to take it all out at once. That's called a bank run, and that could be very bad for the bank. So, when the government steps in and helps,

they're trying to make people feel safe again, so they don't all rush to take their money out. In this story, some people, with lots of money, were trying to scare the government into helping Silicon Valley Bank. They said that if the government didn't help, there would be consequences. So the government decided to help. even though they didn't really want to do it.

It kind of makes you wonder who's really in charge, doesn't it? Yes. Yes, it does. Sometimes we've got to do things we don't like, to keep everything running smoothly. It's kind of like eating your veggie. Even if you don't like them, you still got to, because they're good for you. It keeps your body running smoothly. Well, the same goes for helping banks. Sometimes it's just the best option we've got.

But it would be nice if we could find a way to make sure banks don't need help in the first place. so we don't have to keep eating those nasty vegetables. I mean, bailing out banks. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind,

please share it with them and ask them to click the subscribe button when they get here and I'll take great care of them. God loves you, and so do I. Health, peace, blessings, and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow. You didn't know.

Okay, only 10 more presents to wrap. You're almost at the finish line. But first? There, the last one. Enjoy a Coca-Cola for a pause that refreshes. This podcast is a part of the C-Suite Radio Network. For more top business podcasts, visit c-sweetradio.com.