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SVB does not deserve a bailout. They DID NOT hedge interest rate risk at all

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Re: SVB does not deserve a bailout. They DID NOT hedge interest rate risk at all

#11

Post by antibasilisk »

SkyPuncher wrote: post #4
Ekaros wrote: post #3

Earlier quoted context omitted.

The situation is that the depositors will eventually get some money. And that should be good enough. If they were so stupid they put all of their money in single bank account they deserve to fail.

> The situation is that the depositors will eventually get some money. And that should be good enough. No, it's not "good enough". Far too many companies can no longer make payroll as a result of this.

i guess they should have thought of that before they deposited their money into a business that plays games with money to scam wealth out of the economy

Re: SVB does not deserve a bailout. They DID NOT hedge interest rate risk at all

#12

Post by zabzonk »

helianer wrote: post #5

Why would they hedge? They would lose pretty much all of the return that they were getting by going long duration. The problem is that their portfolio was too long duration, not a lack of hedging.

i don't know what the hedge would be, but if they made some return rather than a loss?

Re: SVB does not deserve a bailout. They DID NOT hedge interest rate risk at all

#13

Post by lovich »

SkyPuncher wrote: post #4
Ekaros wrote: post #3

Earlier quoted context omitted.

The situation is that the depositors will eventually get some money. And that should be good enough. If they were so stupid they put all of their money in single bank account they deserve to fail.

> The situation is that the depositors will eventually get some money. And that should be good enough. No, it's not "good enough". Far too many companies can no longer make payroll as a result of this.

We already insure 250k in deposits through the FDIC. If you have more than 250k in cash, I don't think its unreasonable to expect that you need to start investing time/money in managing your reserves and not have the rest of society fund the risks you're taking.

If companies want to lobby for some sort of tax like unemployment tax on wage labor, to fund a business version of unemployment, it might be a different story.

Re: SVB does not deserve a bailout. They DID NOT hedge interest rate risk at all

#14

Post by machina_ex_deus »

What's the point in having banks anyway. Why let the people in the bank earn anything if they are risking money that isn't theirs and that the government will pay back anyway if they fail.

If banks are rescued from this, the only logical conclusion is that all banks should just cease to exist. Why should they get to play with what is effectively taxpayer's money, since that is where the risk will be paid from if they lose?

Let it all fail. If you don't let it fail, might as well go full on CDBC and revoke banks privilege and role in managing money. What's even the point of having banks when the banks don't really hold the risk themselves? Why have them as gatekeepers? They don't deserve a single dollar earned from risk that they don't hold.

Re: SVB does not deserve a bailout. They DID NOT hedge interest rate risk at all

#15

Post by hiharryhere »

lovich wrote: post #13
SkyPuncher wrote: post #4

Earlier quoted context omitted.

> The situation is that the depositors will eventually get some money. And that should be good enough. No, it's not "good enough". Far too many companies can no longer make payroll as a result of this.

We already insure 250k in deposits through the FDIC. If you have more than 250k in cash, I don't think its unreasonable to expect that you need to start investing time/money in managing your reserves and not have the rest of society fund the risks you're taking. If companies want to lobby for some sort of tax like unemployment tax on wage labor, to fund a business version of unemployment, it might be a different stor…

250k is not a lot. A 15-20 person company could conceivably spend more than that month, especially with dev salaries, rent etc.

How many of those have a treasury function?

Re: SVB does not deserve a bailout. They DID NOT hedge interest rate risk at all

#16

Post by zarzavat »

swatcoder wrote: post #9
SkyPuncher wrote: post #4

Earlier quoted context omitted.

> The situation is that the depositors will eventually get some money. And that should be good enough. No, it's not "good enough". Far too many companies can no longer make payroll as a result of this.

If you had a payroll to make this month and only had that much in cash on hand, you were already a marginal business and a gust of wind could have knocked you out. Your bank failing was that gust of wind. You’ll definitely get up to $250k back soon and probably more, and hopefully you can sort out the disruption and find a way to carry on. If, on the other hand, you had a lot more cash on hand but parked it all as un…

The root cause of all of this is that the US is so corrupt that a large bank was able to exempt itself from international banking standards.

So it really is “the rest of us” who are to blame, by passively accepting corruption and feckless regulators. Taxpayers should pay the bill, it might incentivize them to get off their ass for once.

Re: SVB does not deserve a bailout. They DID NOT hedge interest rate risk at all

#17

Post by salawat »

machina_ex_deus wrote: post #14

What's the point in having banks anyway. Why let the people in the bank earn anything if they are risking money that isn't theirs and that the government will pay back anyway if they fail. If banks are rescued from this, the only logical conclusion is that all banks should just cease to exist. Why should they get to play with what is effectively taxpayer's money, since that is where the risk will be paid from if they…

Because:

In the United States, banks can empower the government in such a way as to crack down on 'problematic' things without a direct Constitutional crisis.

See Bank of America voluntarily handing the FBI their firearm related transaction dataset.

Private industry goves government a plausible deniability proxy in short.

Re: SVB does not deserve a bailout. They DID NOT hedge interest rate risk at all

#18

Post by ericb »

antibasilisk wrote: post #11
SkyPuncher wrote: post #4

Earlier quoted context omitted.

> The situation is that the depositors will eventually get some money. And that should be good enough. No, it's not "good enough". Far too many companies can no longer make payroll as a result of this.

i guess they should have thought of that before they deposited their money into a business that plays games with money to scam wealth out of the economy

I guarantee that you have almost no understanding of whatever the bank you use is really doing. Feel free to point me to the balance sheet, and explain it.

Of course, that won't matter because in the event that you can explain it, there's no guarantee you're not being unknowingly defrauded. Save your schadenfreude, it's gross.

Re: SVB does not deserve a bailout. They DID NOT hedge interest rate risk at all

#19

Post by credit_guy »

helianer wrote: post #5

Why would they hedge? They would lose pretty much all of the return that they were getting by going long duration. The problem is that their portfolio was too long duration, not a lack of hedging.

> Why would they hedge? They would lose pretty much all of the return that they were getting by going long duration.

In general you are right. But last year was special. Everyone and their grandmother knew the Fed will hike rates, numerous times. The Fed did not tire to tell that to whomever bothered to listen. Not putting any interest rates hedge on in such a situation sounds a bit crazy.

Re: SVB does not deserve a bailout. They DID NOT hedge interest rate risk at all

#20

Post by ClumsyPilot »

zarzavat wrote: post #16
swatcoder wrote: post #9

Earlier quoted context omitted.

If you had a payroll to make this month and only had that much in cash on hand, you were already a marginal business and a gust of wind could have knocked you out. Your bank failing was that gust of wind. You’ll definitely get up to $250k back soon and probably more, and hopefully you can sort out the disruption and find a way to carry on. If, on the other hand, you had a lot more cash on hand but parked it all as un…

The root cause of all of this is that the US is so corrupt that a large bank was able to exempt itself from international banking standards. So it really is “the rest of us” who are to blame, by passively accepting corruption and feckless regulators. Taxpayers should pay the bill, it might incentivize them to get off their ass for once.

> Taxpayers should pay the bill, it might incentivize them to get off their ass for once

like they did in 2008?

I would rather pay off student loans

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