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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

#31

Post by chewz »

dgacmu wrote: post #4

Alternative non-paywalled source: https://apnews.com/article/silicon-valley-bank-bailout-yelle... "WILMINGTON, Del. (AP) — Treasury Secretary Janet Yellen said Sunday that the federal government would not bail out Silicon Valley Bank, but is working to help depositors who are concerned about their money. ... "

> but is working to help depositors who are concerned about their money.

by providing emotional support, therapy, free adderall and opportunity to buy some long term government bonds at a discount...

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

#33

Post by [deleted] »

sithlord wrote: post #19
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.

My guess ( I havn't looked at is the last ones ) is that the majority of deposits were well under 250k, and that hundreds of thousands of jobs weren't on the line. Also, you are talking about a major banking collapse if people start thinking that their deposits aren't safe. (a lot of people will start pulling money, even if under 250k). There are so many irrational people out there... edit: I guess somewhere in what…

[deleted]

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

#34

Post by roseway4 »

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, in the case of large retail banks, the government did help. In 2008, the federal government purchased stock in several banks in order to recapitalize them. One could argue this was a starker example of moral hazard than letting the bank fail, but making depositors whole.

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

#35

Post by nabla9 »

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.

Because there was a systemic risks.

You let one bank collapse, OK. If the collapse causes other banks to collapse then it's bad. When WalMart, Costco can't transfer money to fill shelves, people go hungry. When people can't get their wages, they go hungry.

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

#36

Post by relativ575 »

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.

> they don’t have enough assets to make depositors whole.

They do, if their assets get acquired by other banks who also invest in long term bonds, says at a discount?

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

#37

Post by lkschubert8 »

sithlord wrote: post #19
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.

My guess ( I havn't looked at is the last ones ) is that the majority of deposits were well under 250k, and that hundreds of thousands of jobs weren't on the line. Also, you are talking about a major banking collapse if people start thinking that their deposits aren't safe. (a lot of people will start pulling money, even if under 250k). There are so many irrational people out there... edit: I guess somewhere in what…

I can't seem to find it now, but either here or on reddit someone had numbers from a filling indicating ~8% of accounts were below 250k.

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

#38

Post by jszymborski »

rvz wrote: post #17

Some people just want to see the (tech) world and the VC pyramid scheme collapse. This time, Silicon Valley has to help itself with this mess it created. Some startups like Circle with large backers will survive, but others on the other hand need more than a miracle or a hero. I would not want to see the chaos underneath in bookface right now and certainly the collapse with in less than 24 hours.

While I have no love for what has become "big tech", this really has nothing to do with their indiscretion or bad behaviour.

SVB was a financial institution outside of that sector which catered to that class of customer and regrettably took on risks that made them exceptionally vulnerable to interest rate increases. Add that with their clients mostly having uninsured deposits and belonging to one industry, and we're in this mess.

Im not sure how this is evidence of a tech or vc pyramid scheme, it's just a regrettable series of choices by a financial institution.

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

#39

Post by Ekaros »

matwood wrote: post #23
kreeben wrote: post #12

Earlier quoted context omitted.

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.

If depositors gained single penny of interest on their deposits. They should have been certain there is some risk. Including losing money above 250k. And they have less than zero right to cry when risk realises.

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

#40

Post by morelisp »

bastian wrote: post #9
Lionga wrote: post #5

[flagged]

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.

Founders drained the whole Bay Area of anything culturally interesting, tech companies all just did massive layoffs, years of shouting "learn to code" at every other profession, the world's art output fed into an AI meat grinder with "whoops sorry but also it's legally okay" to enrich a few VCs, but you can't imagine why someone might be bitter about demands to compensate their business mistakes from the public purse?
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