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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

#221

Post by benjaminsky2 »

bradleyjg wrote: post #121
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…

Sure we taxpayers can toss in a few billion. In exchange, VCs can give up the carried interest loophole and founders can give up 83b elections. Deal?

Founders aren’t the only ones who can make an 83b election. Regular employees can do so too if they’re allowed early exercise.

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

#222

Post by roland35 »

Whether or not depositors get their money back, or even have access to it in a timely manner, I think one lesson for me is how important it is to have a contingency plan for banking.

It doesn't cost much to have a few month's (or even just a few weeks) worth of money at a second backup bank, but it could be a lifeline in the case of your primary bank going belly up.

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

#223

Post by admissionsguy »

senttoschool wrote: post #208
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…

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, th…

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

No it's not. If they get a single cent above the bank's remaining assets (after administrative costs of the FDIC action), I don't think I will be the only one losing any remaining trust in the system.

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

#224

Post by baq »

avianlyric wrote: post #188
Edmond wrote: post #152

Earlier quoted context omitted.

>The government will use the bank assets to make customers, not owners, whole. The reason SVB is in receivership is because they don't actually have the ability to make all their depositors whole. Any scenario where uninsured depositors end up with all their money back is likely to be a bailout.

> The reason SVB is in receivership is because they don't actually have the ability to make all their depositors whole. No, SVB is in receivership because they can make their depositors whole right now . They have most of the assets, it’s just that liquidating them immediately would result in losses far greater than SVB can afford, but that’s what a bank run demands. The feds can take over, make depositors whole now…

By now all the liquid assets are already sold. The question is what about the loan book. The most interesting development would be FDIC making offers to the top 5 banks which they can’t refuse, which is what I’m personally hoping for.

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

#225

Post by LatteLazy »

fwlr wrote: post #148

Eh, the depositors aren’t totally blameless here. On Thursday they conspired to perform a huge bank run on SVB, on Friday they succeeded, and on Saturday they were demanding the government and taxpayers make them whole by Monday. They deserve to get their money back and they eventually will once SVB’s assets are liquidated. But that’s not good enough, they want it now , and they won’t hesitate to make you pay for the…

Of course, the ones who ran the bank got their money. The ones who didn't are now going to be punished for NOT panicking...

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

#226

Post by rolandog »

a13n wrote: post #197
martythemaniak wrote: post #166

Earlier quoted context omitted.

This whole saga has exposed the shocking financial illiteracy in this industry. There are laws and procedures about how to handle the situation. Banks fail all the time and the FDIC disposes of them all the time. Depositors will get their insured money on monday. The FDIC will then dispose of all the banks assets and return the proceeds to its creditors, that is depositors. Calling for the government to guarantee all…

Second biggest bank failure in the history of the US requires exceptions to be made due to the sheer volume of companies and assets involved here. We don’t want to erode global trust in US banks and dollars do we?

Maybe the banks shouldn't be able to lobby for relaxing the regulations without which situations like these arise.

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

#227

Post by nonethewiser »

version_five wrote: post #200

As others have said, if depositors are bailed out, it's a bailout. Pretending that changing the definition makes a difference is childish. Whatever the government decides to do, this makes the VC and startup industry look really weak and entitled, and knocks them down from risk takers building the future to the same status as a bunch of bankers looking for a handout. There was an opportunity here for VCs with lots of…

> As others have said, if depositors are bailed out, it's a bailout.

No one is nor can argue that. But you’re presupposing it’s a bailout.

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

#228

Post by adharmad »

avianlyric wrote: post #188
Edmond wrote: post #152

Earlier quoted context omitted.

>The government will use the bank assets to make customers, not owners, whole. The reason SVB is in receivership is because they don't actually have the ability to make all their depositors whole. Any scenario where uninsured depositors end up with all their money back is likely to be a bailout.

> The reason SVB is in receivership is because they don't actually have the ability to make all their depositors whole. No, SVB is in receivership because they can make their depositors whole right now . They have most of the assets, it’s just that liquidating them immediately would result in losses far greater than SVB can afford, but that’s what a bank run demands. The feds can take over, make depositors whole now…

Or they can find a buyer for SVB's assets - preferably a bank - which do all this and in addition provide business banking services as well.

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

#229

Post by criddell »

wheelerof4te wrote: post #63
nabla9 wrote: post #35

Earlier quoted context omitted.

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.

Then, at least be fair and nationalize the big banks. There's no point pretending that the large banks are "private" if they are subjected to some special rules. People put their money there willingly, no one forced them to. Let them all feel the joys of "free market capitalism".

No need to nationalize them. AFAIK, Canada has had two bank failures over the past 100 years. Regulation can work.
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