Bail them out at the value of remaining assets in the bank basically buying back the bonds. Any left over losses distribute over the depositors .
Yellen says government will help SVB depositors but rules out bailout
251–260 of 1001 posts
Re: Yellen says government will help SVB depositors but rules out bailout
#252I 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…
The reason is because there are countless scenarios in the US economic system, where people/businesses fail cause of no fault of their own, but they are told tough luck that's the free market at work cause these people are simply unconnected or their failure is deemed unimportant. It's why the finanical bailouts left a bitter taste for anyone paying attention, and why gov't action here is immediately scoffed at.
I don’t understand this debate. The article says nothing about whether or not depositors will be bailed out.
Re: Yellen says government will help SVB depositors but rules out bailout
#253I 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…
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…
You make valid points. I’m not sure why you’re downvoted.
I think the question now is whether a bailout would provide better ROI to the US economy than no bailout.
Yellen seems to think the ROI is worth it.
Re: Yellen says government will help SVB depositors but rules out bailout
#254I 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 don't get this comment at all. The post you're replying to literally says the bank has more assets than 250k per client. I read somewhere the insured amount is around $8B whereas the bank's assets are at least 20x that. Where should that money go if every client gets capped at 250k?
Re: Yellen says government will help SVB depositors but rules out bailout
#255> “Depositors shouldn’t get anything beyond the insured $250,000”.
This is just uneducated people sharing a knee-jerk reaction.
Re: Yellen says government will help SVB depositors but rules out bailout
#256Earlier quoted context omitted.
can’t people buy private insurance for their deposits above the $250k threshold? if you buy an expensive house or car you generally pay a lot more to insure that asset. not sure why people don’t think of buying insurance on their bank deposits in the same way if you find yourself in a situation where you need to hold much more than $250k in one account for whatever reason. But even if you’re an individual holding mil…
I am fairly sure that the FDIC does not want people to need private insurance for bank deposits. This is a big sign your banking system sucks and is expected to fail badly at least some of the time, the avoidance of which is why the FDIC exists. And, yes, opening ten checking accounts is difficult and inconvenient.
Do you think the $250,000 limit was an accident? Someone tripped on a keyboard and that’s how the provision capping the insured amount came to be in the law?
Re: Yellen says government will help SVB depositors but rules out bailout
#257Earlier quoted context omitted.
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.
Maybe we should have a public banking option if the government's going to give everyone their money anyway
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Re: Yellen says government will help SVB depositors but rules out bailout
#258These SVB threads really highlight how uninformed the SVB readership is lately. If you don't understand tech and finance why are you here?
SVB readership? Are you still drunk or something?
Re: Yellen says government will help SVB depositors but rules out bailout
#259Earlier quoted context omitted.
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.
Seems likely it’s all there.
https://www.fdic.gov/news/press-releases/2023/pr23016.html
> As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined. The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.
Re: Yellen says government will help SVB depositors but rules out bailout
#260I 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…
If you're volunteering to give or invest a few billion into the SVB receivership deal, then go right ahead.
Please leave me and my tax dollars out of it. I'm not just hard-hearted, BTW. Unlimited depositor insurance is an awful idea.