Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Yellen says government will help SVB depositors but rules out bailout

ft.com

Post reply on HN
Print view View original

131–140 of 1001 posts

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

#131

Post by skwirl »

ericmay wrote: post #128
skwirl wrote: post #79

Earlier quoted context omitted.

> FDIC insurance is not infinite. Not understanding that is no fault of the rest of society. I hope you realize FDIC insurance isn’t even guaranteed to be $250k. The FDIC is funded by member fees and can only cover a very small amount of “insured” losses. If it goes beyond that, depositors would need a bailout.

It’s practically infinite precisely because if a bank goes under and you lose your checking account the entire banking system immediately collapses and there is a real bank run 1920s style. I look at the FDIC and its ability to either pay or be bailed out to pay as an existential function of the State (US specific) and the inability to do so threatens its existence.

You are making the same kind of argument that people asking for SVB depositors to be made whole are making.

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

#132

Post by manuelabeledo »

I see a lot of unexpected saltiness and clear misconceptions in any thread about SVB.

“Depositors shouldn’t get anything beyond the insured $250,000”. Then what do we do with the billions in remaining assets? Appropriate them, and leave small and mid businesses hanged to dry?

“This is a bailout”. It would be if shareholders were to get their money back, which doesn’t seem likely. The government will use the bank assets to make customers, not owners, whole.

Generic screeching against the tech world. I get the schaudenfreude, but this will not hurt big tech and VCs as much as tens of thousands of small businesses, and the people employed at them. Some billionaires will be upset at some relatively insignificant losses, while hundreds of thousands may lose their jobs.

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

#133

Post by rib3ye »

fma wrote: post #117
marvin wrote: post #20

This is exactly the statement that's required, given the confusion and irresponsible politicization of deposit insurance. Shareholders lose 100%, depositors get 100% of their deposits back. It's a simple situation, and the former point (as opposed to the solution during the GFC) counteracts moral hazard.

If depositors get 100% back (I assume the government pays the difference between selling SBV assets & the deposits)...then what's the purpose of saying "FDIC Insured up to $250k"? It's a moot then isn't it? I don't need to go through the hassle of distributing my money anymore? Edit: I read the article. Yellen says "“But we are concerned about depositors, and we’re focused on trying to meet their needs.” She says NOT…

I think you’re beginning to get it.

Consider time it takes to get your deposit back: FDIC says depositors will get $250k back on Monday morning (pretty incredible turnaround actually). For the rest, they will have to wait for assets to be sold.

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

#134

Post by ellisv »

amelius wrote: post #6
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. Which is ... everybody?

They should have used an em-dash.

"working to help depositors--who are concerned about their money."

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

#135

Post by sambull »

jszymborski wrote: post #38
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…

They also lobbied to become more vulnerable. Greg Becker the CEO worked to get regulations removed that helped them get in this position by removing public liquidity stress test reports and reduce the frequency of liquidity stress tests.

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

#136

Post by bradleyjg »

chewbacha wrote: post #129
bradleyjg wrote: post #61

Bailing out the depositors is still a bailout.

It’s an insurance payout, not a bailout. If someone totals my car the insurance doesn’t say “well, that’s the risk of owning a car” and pay nothing. Insurance exists for these scenarios.

The insurance had an explicit policy limit. That’s what the premiums were based on.

Up to $250k per depositor isn’t a bailout. A penny above that is.

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

#137

Post by [deleted] »

Mistletoe wrote: post #47
sithlord wrote: post #19

Earlier quoted context omitted.

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.

[deleted]

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

#138

Post by sebzim4500 »

belter wrote: post #100
belter wrote: post #60

The first step would be to stop calling them Depositors. They are not and were never Depositors. That is what you have deposit boxes for...You do not have money at the Bank. You loaned money to the Bank. That is why they pay you interest on it...

For the downvoters... "International Monetary Fund - What Is a Bank?" - https://www.imf.org/external/pubs/ft/fandd/2012/03/basics.ht... ".... Banks are intermediaries between depositors (who lend money to the bank) and borrowers (to whom the bank lends money)..."

Your citation for why they aren't depositors refers to them as depositors. I'm confused.

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

#139

Post by 300bps »

walnutclosefarm wrote: post #98

I think Yellen is signalling the right approach, frankly. First, the balance between the bank's assets (its loans and the investments it made with depositors money, plus the bank's capital) and its liabilities, is such that SVB has enough holdings to cover nearly all of its deposits. The banks capital (that is its equity, and subordinated debt) should all go toward making depositors whole. That's what bank capital is…

First, the balance between the bank's assets (its loans…)

Keep in mind those loans are largely being paid by SVB customers that are very likely scrambling to make sure they can pay their employees right now.

It’s pretty assured that more SVB loans will be defaulting in the coming weeks than if their depositors didn’t lose access to about half of their money.

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

#140

Post by [deleted] »

skwirl wrote: post #79
koolba wrote: post #59

Earlier quoted context omitted.

> 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 enough assets to cover the liabilities (deposits), but its tied up in such long term investments that it could take a long time to get it out. If anybody gets an extra penny more than $250K from the Feds than that is by definition a bailout. > But moreso, when…

> FDIC insurance is not infinite. Not understanding that is no fault of the rest of society. I hope you realize FDIC insurance isn’t even guaranteed to be $250k. The FDIC is funded by member fees and can only cover a very small amount of “insured” losses. If it goes beyond that, depositors would need a bailout.

[deleted]
Post reply on HN