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

201–210 of 1001 posts

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

#201

Post by macintux »

nodemaker wrote: post #179
macintux wrote: post #144

Earlier quoted context omitted.

Because businesses need to be able to pay their employees, because the banking system as a whole relies on trust to function. And because we're not really bailing out depositors. The FDIC is just doing its best to make sure depositors take precedence over bank shareholders, which is as it should be. Sure, you could let Roku lose a half billion dollars, but it's not their fault SVB couldn't meet its obligations. They…

Businesses need to pay their employees from the money they have not from taxpayer money. If a business loses that money because their banking partner lost the money, taxpayers have no obligation to help (beyond the 250k)

Taxpayers benefit enormously from a banking system that isn't a crapshoot. Workers benefit from businesses being able to make payroll.

The government isn't offering to bail out depositors. And taxpayers aren't even paying the $250k, that's from an insurance fund paid into by banks.

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

#202

Post by jmull »

manuelabeledo wrote: post #132

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 asse…

Hang on...

The issue here is not about whether the government should seize SVB assets rather than return them to depositors. Hopefully no one is arguing for that.

(The issue is about what the government should do -- if anything -- about (1) shortfalls depositors may face; (2) delays depositors may face in accessing the funds that do remain.)

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

#203

Post by stanleydrew »

koolba wrote: post #59
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…

> 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…

> If anybody gets an extra penny more than $250K from the Feds than that is by definition a bailout.

I think this is naive. The FDIC or some government entity is in a pretty reasonable position to take on the longer duration assets that appear to have brought down SVB. If they hold those assets to maturity then everything is fine, and they can return deposits today if necessary because they don't need to sell assets to generate cash.

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

#204

Post by nonethewiser »

a13n wrote: post #176
koolba wrote: post #153

Earlier quoted context omitted.

> Then what do we do with the billions in remaining assets? Appropriate them, and leave small and mid businesses hanged to dry? Easy, pay out $250K per account, then distribute the rest pro rata based upon closing balance from when the fed's took over. If they have to wait because assets need to be liquidated then sucks to be them. I'm sure they can get their money faster if they agree to a haircut. > “This is a bail…

This is short sighted. If the government doesn’t make depositors whole then people and companies all over the world lose trust in US banks and eventually US dollars. This is a federal problem. It makes sense to make depositors whole, they’re innocent here. It doesn’t make sense to make SVB whole for managing their risk poorly.

Well it’s not even about innocence. They have the strongest legal claim.

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

#205

Post by initplus »

paganel wrote: post #104
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…

> For the Feds to put up that money as part of a deal to sell SVBs portfolio intact to another bank, makes good sense to me Honest question: why? I.e. why can't the capitalists invested in this business absorb the reasonable haircut? (I assume it's "reasonable" based on the information we have been provided with until now). Depositors (especially those holding more than 250k) were also investors, they were getting ba…

SVB catered primarily to businesses - the last thing we need right now is every business worrying about where their bank deposits are. If they do worry, it may trigger more runs as they all try to move their funds to “safer” banks.

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

#206

Post by luckylion »

macintux wrote: post #144
hanoz wrote: post #124

Earlier quoted context omitted.

Bailing out the owners is obviously completely out of the question, but why bail out the depositors beyond the guarantees they knew they were getting at the time? Funny how language is being used to frame all this. For depositors it's made whole , not bailed out , when of course it's no less a bail out.

Because businesses need to be able to pay their employees, because the banking system as a whole relies on trust to function. And because we're not really bailing out depositors. The FDIC is just doing its best to make sure depositors take precedence over bank shareholders, which is as it should be. Sure, you could let Roku lose a half billion dollars, but it's not their fault SVB couldn't meet its obligations. They…

Why are you pretending that Roku would get $250k and not a cent more? They won't. The bank has plenty of assets, they'll take a 5% loss for their strategy of taking on counter party risk, not a 99% loss.

Everyone is going to be able to pay their employees, unless they're looking for a reason not to.

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

#207

Post by belter »

stephen_g wrote: post #189
belter wrote: post #100

Earlier quoted context omitted.

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)..."

Amazing the IMF has a misconception of how banks work in their “basics” explanation! From the Bank of England: “[…] Where the stock of bank deposits comes from is often misunderstood. One common misconception is that banks act simply as intermediaries, lending out the deposits that savers place with them.” 1. https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...

No. The Bank of England has it wrong...

"...Transactions on deposit accounts are recorded in a bank's books, and the resulting balance is recorded as a liability of the bank and represents an amount owed by the bank to the customer..."

"Deposit account" - https://en.wikipedia.org/wiki/Deposit_account

"Does The Money In Your Bank Account Really Belong To You?" - https://www.sgrlaw.com/does-the-money-in-your-bank-account-r....

"...At the moment of deposit, the funds become the property of the depository bank...Thus, as a depositor, you are in essence a creditor of the bank. Once the bank accepts your deposit, it agrees to refund the same amount, or any part thereof, on demand..."

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

#208

Post by senttoschool »

koolba wrote: post #153
manuelabeledo wrote: post #132

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 asse…

> Then what do we do with the billions in remaining assets? Appropriate them, and leave small and mid businesses hanged to dry? Easy, pay out $250K per account, then distribute the rest pro rata based upon closing balance from when the fed's took over. If they have to wait because assets need to be liquidated then sucks to be them. I'm sure they can get their money faster if they agree to a haircut. > “This is a bail…

I think the depositors should get a bit of a haircut if selling the assets don’t cover all deposits. For example, 5%. If it’s more than 5%, then the government steps in and pay for the rest.

5% seems like the right balance between the two extremes.

Companies and people should pay a small penalty.

At the same time, we shouldn’t rock the financial system further. We need to have confidence in the system.

After this, the government should make new regulations to prevent this scenario from happening again.

For those wishing to just follow existing rules exactly as is, bear in mind that a contagion will likely reach your personal finances.

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

#209

Post by thehappypm »

bradleyjg wrote: post #136
chewbacha wrote: post #129

Earlier quoted context omitted.

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.

Depends where the money is coming from. SVB has lots of assets — clearly not enough cash on hand for a bank run but they have lots of assets. Once those are liquidized depositors should get as much of their fair share as possible.

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

#210

Post by booleandilemma »

morelisp wrote: post #40
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.

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…

I love the AI meat grinder analogy, wow.
Post reply on HN