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Yellen says government will help SVB depositors but rules out bailout

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Re: Yellen says government will help SVB depositors but rules out bailout

#21

Post by Waterluvian »

NotACop182 wrote: post #13
sithlord wrote: post #7

This actually makes a ton of sense, lets not forget that a bailout in this term is really pointing towards saving the bank itself, and its shareholders. There is inherent risk in equity investments, and it likely should have to suffer for its poor decisions. But when it comes to depositors, I think it makes a lot of sense to make them whole, especially in the case of SVB where the bank likely has pretty close to enou…

Did they help depositors that lost money in the last 500+ bank collapses? Why do they get special treatment? The government has laws and rules the depositors are insured up to 250k. Either they liquidate and everyone takes a hair cut. Or they wait till the bonds mature and can pay them out. But the government should not relieve anyone past what is legally available.

The law is clear on the priority of claims. You can get a quick overview at the bottom of this page: https://www.fdic.gov/resources/resolutions/bank-failures/fai...

It makes sense that they’ll make depositors whole before even thinking about the rest. From the top of that page:

“ All depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.”

Re: Yellen says government will help SVB depositors but rules out bailout

#22

Post by kasey_junk »

NotACop182 wrote: post #13
sithlord wrote: post #7

This actually makes a ton of sense, lets not forget that a bailout in this term is really pointing towards saving the bank itself, and its shareholders. There is inherent risk in equity investments, and it likely should have to suffer for its poor decisions. But when it comes to depositors, I think it makes a lot of sense to make them whole, especially in the case of SVB where the bank likely has pretty close to enou…

Did they help depositors that lost money in the last 500+ bank collapses? Why do they get special treatment? The government has laws and rules the depositors are insured up to 250k. Either they liquidate and everyone takes a hair cut. Or they wait till the bonds mature and can pay them out. But the government should not relieve anyone past what is legally available.

Yes? Most famously when IndyMac failed they retroactively raised the insurance limits.

It’s almost certainly not going to come to that in this case as the normal fdic playbook will work but the federal government has a history of taking action when extraordinary bank failures happen.

Re: Yellen says government will help SVB depositors but rules out bailout

#23

Post by matwood »

kreeben wrote: post #12
bastian wrote: post #9

Earlier quoted context omitted.

I am not sure why you are so bitter but it’s important do understand that all you do is create more hate with comments like this. The only thing anyone is asking for is to protect the deposits of the people who bank(ed) with SVB. That is it.

Will that not cost anyone anything? If so then sure, let's do it! If it costs more than a dime, though, let's not.

Making depositors whole is important and should happen. Confidence in the banking system is important. A company that needs banking should not be subject to the same risk as a shareholder.

Re: Yellen says government will help SVB depositors but rules out bailout

#24

Post by jmclnx »

Says nothing real. For instance, will the rule for uninsured deposits be followed ? Or will there be a bailout for people with over $250,000 in deposits ?

Seems all it says is "there will be no bailout but there will be a bailout".

If people with over 250,000 in deposits are covered, the once again the the rich is allowed to avoid all risks for bad decisions.

Re: Yellen says government will help SVB depositors but rules out bailout

#25

Post by gonzo41 »

oceanplexian wrote: post #15
gonzo41 wrote: post #10

Earlier quoted context omitted.

SVB probably has enough assets to make most depositors largely whole, but it'll take time. Shareholders are going to wear a total loss. Which sucks for them but this is part of share market game. I suspect cooler heads will not prevail. And there will be much silliness Monday morning.

This keeps getting repeated, but no, they don’t have enough assets to make depositors whole. A bond that matures in 10 years does not make anyone whole. That’s like saying “I know I owe you money today, but don’t sweat it, I’ll get you the money in 10 years”. These arguments completely ignore the time value of money.

I didn't say totally whole, i said largely whole. Everyone will get at least 250K, and then probably something like 75-85% of what ever else they had relatively quickly and then who knows.

Re: Yellen says government will help SVB depositors but rules out bailout

#26

Post by mrcwinn »

Good. Investors like Ackman and Cuban seem so concerned about payroll for tech workers.

The truth is that the vast majority of this cash was dry powder for acquisitions, staying liquid for new new investments, fresh VC money for advertising.

Isn’t it these same folks who remind us all the time that most startups fail? Why bail out an entire bank when 99% of its startup depositors wouldn’t have made it anyway?

If anything, taxpayers should be able to sit at the front of a new cap table with preferred position, like any other entity providing a bridge. But at that idea, I am sure they’d warn of government interference.

Re: Yellen says government will help SVB depositors but rules out bailout

#27

Post by Eisenstein »

kreeben wrote: post #12
bastian wrote: post #9

Earlier quoted context omitted.

I am not sure why you are so bitter but it’s important do understand that all you do is create more hate with comments like this. The only thing anyone is asking for is to protect the deposits of the people who bank(ed) with SVB. That is it.

Will that not cost anyone anything? If so then sure, let's do it! If it costs more than a dime, though, let's not.

Define 'cost'. If losing faith in the banking system gets people to disinvest and hoard under their mattress do you count that as 'no cost'?

Re: Yellen says government will help SVB depositors but rules out bailout

#28

Post by SirensOfTitan »

NotACop182 wrote: post #13
sithlord wrote: post #7

This actually makes a ton of sense, lets not forget that a bailout in this term is really pointing towards saving the bank itself, and its shareholders. There is inherent risk in equity investments, and it likely should have to suffer for its poor decisions. But when it comes to depositors, I think it makes a lot of sense to make them whole, especially in the case of SVB where the bank likely has pretty close to enou…

Did they help depositors that lost money in the last 500+ bank collapses? Why do they get special treatment? The government has laws and rules the depositors are insured up to 250k. Either they liquidate and everyone takes a hair cut. Or they wait till the bonds mature and can pay them out. But the government should not relieve anyone past what is legally available.

I’m inclined to agree, this kind of special treatment is fairly ridiculous, depositors in other bank failures with funds over FDIC limits have to wait for fire sales to recover, which can take years in some cases.

I’m not sure exactly what Yellen is proposing (I only subscribe to print FT so no access), but it seems like special treatment for the well connected on Sandhill Road.

Re: Yellen says government will help SVB depositors but rules out bailout

#29

Post by [deleted] »

kasey_junk wrote: post #22
NotACop182 wrote: post #13

Earlier quoted context omitted.

Did they help depositors that lost money in the last 500+ bank collapses? Why do they get special treatment? The government has laws and rules the depositors are insured up to 250k. Either they liquidate and everyone takes a hair cut. Or they wait till the bonds mature and can pay them out. But the government should not relieve anyone past what is legally available.

Yes? Most famously when IndyMac failed they retroactively raised the insurance limits. It’s almost certainly not going to come to that in this case as the normal fdic playbook will work but the federal government has a history of taking action when extraordinary bank failures happen.

[deleted]

Re: Yellen says government will help SVB depositors but rules out bailout

#30

Post by jmye »

kreeben wrote: post #12
bastian wrote: post #9

Earlier quoted context omitted.

I am not sure why you are so bitter but it’s important do understand that all you do is create more hate with comments like this. The only thing anyone is asking for is to protect the deposits of the people who bank(ed) with SVB. That is it.

Will that not cost anyone anything? If so then sure, let's do it! If it costs more than a dime, though, let's not.

Define costs, specifically. What are the 'costs' of ensuring that depositors have their money, while taking over long-term SVB investments that the government can wait out? What are the 'costs' of tens of thousands of job losses? What are the specific 'costs' of significant centralization of banking, as any new VC would immediately require a start-up to move it's money to JPM or GS?
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