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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

#41

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

#42

Post by mgfist »

mrcwinn wrote: post #26

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 anyt…

> 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.

You seem confused. The "cash" you're talking about here is the deposited cash, which Yellen is saying will get funded. I think you're confusing that with bank equity.

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

#44

Post by MomoXenosaga »

roseway4 wrote: post #34
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, 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.

Which is why you should always bank at a "too big to fail" institution.

Why America has 4000 banks is beyond me. In my country they all consolidated in the 60s and 70s into a half a dozen giants.

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

#45

Post by Ekaros »

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.

So just fire sale everything and distribute equally to depositors. Time value of money solved. And everyone gets fully what belongs to them.

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

#46

Post by _8j50 »

chewz wrote: post #16
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.

Op is not bitter but realistic... Deposits are insured up to 250 thousand. Above they do incur risk..

Both you, op and others are being ignorant on this. Insurance payment or bailout is external money, this is making depositors whole using the bank's assets, not FDIC or government money. Tax payers are not making anyone whole as I understand yellen's proposal.

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

#47

Post by Mistletoe »

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…

With this place the majority were over 250k. Something like 97% or something. It was a big bank for businesses. Why they were bizarrely keeping such large sums in one bank account I don’t understand. Roku had almost $500 million there.

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

#48

Post by citizenkeen »

jmye wrote: post #30
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.

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?

The cost is that we keep publicizing risk and privatizing gains. SVB took advantage of Trump-era deregulation to make more profit and now that they've screwed up they want help. The people who deposited money at SVB profited from those choices and now they also want a bailout.

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

#49

Post by mgfist »

relativ575 wrote: post #36
oceanplexian wrote: post #15

Earlier quoted context omitted.

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?

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

"Hi it's me, rival bank. I'll buy those bonds of yours, buuut my best offer is 70 cents on the dollar".

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

#50

Post by IG_Semmelweiss »

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…

Thats not true. It was said elsewhere in HN thread and also in several articles online.

The majority of avg deposits were NOT Only 3-7% of SVB accounts under FDIC limits.

Edit: corrected to have specific languange

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