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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

#261

Post by Kephael »

stanleydrew wrote: post #247
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.

It's a matter of differing expectations. When you purchase stock in a bank, there is a reasonable expectation that your investment could lose value. When you deposit money with a bank (in the United States in 2023), you basically never consider the possibility that you might not get it all back. You can certainly argue that the expectation isn't fair, but I'm pretty confident it's nearly universal.

Sure you do, banks fail and you shouldn't expect more than $250,000 of coverage.

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

#262

Post by hindsightbias »

ajross wrote: post #162
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…

> Generic screeching against the tech world There's some of this, for sure. But there's an equivalent screeching from the tech finance world[1] demanding a full government guarantee. That ain't happening, and I think it's appropriate for the fed to make that clear. FWIW: the dirty secret here is likely that there's a bunch of internal dealing going on as regards SVB. They were The Startup Bank for some reason, it's n…

We need to know who and how much the big fish are exposed.

Bailing out the Peter Thiel’s of the world is not something that should be swept under the rug.

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

#263

Post by senttoschool »

admissionsguy wrote: post #223
senttoschool wrote: post #208

Earlier 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.

That’s fine if you don’t.

I don’t have any money in SVB nor anyone I know.

However, I have a vested interest to lower the risk of a contagion.

I think the ROI to the US economy should make sense for a bailout.

It sucks. And I’m once again paying with my tax dollars. But a deposit bailout, while shaving a few percentage off seems to make sense.

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

#264

Post by belter »

auntienomen wrote: post #241
imustbeevil wrote: post #174

Earlier quoted context omitted.

> Money to depositors for amounts greater than $250K is a bail out. They have no right to that money from the Feds. No. The feds aren't giving anyone fed money, they're selling SVB's assets and giving the people they owe their own money back. There isn't enough money to give everyone 100% back, so they won't be getting 100% back. There's no extra government money making anyone "whole". They're just winding down the a…

Extra money is precisely what Yellen is proposing. The government will backstop the depositors to prevent a run on every other non-SIFI. This is the right move.

Under what regulatory framework?

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

#265

Post by imustbeevil »

auntienomen wrote: post #241
imustbeevil wrote: post #174

Earlier quoted context omitted.

> Money to depositors for amounts greater than $250K is a bail out. They have no right to that money from the Feds. No. The feds aren't giving anyone fed money, they're selling SVB's assets and giving the people they owe their own money back. There isn't enough money to give everyone 100% back, so they won't be getting 100% back. There's no extra government money making anyone "whole". They're just winding down the a…

Extra money is precisely what Yellen is proposing. The government will backstop the depositors to prevent a run on every other non-SIFI. This is the right move.

> Extra money is precisely what Yellen is proposing.

That's certainly not what any of the articles quoting her are saying.

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

#266

Post by baq »

softwaredoug wrote: post #243

There’s a theme of NEVER AGAIN comments in these SVB posts. Harkening back to 2008 financial crisis. Doing your best to make depositors whole (maybe not 100%, but as much as possible) is not a bailout ala 2008. It’s generally not very controversial financial policy that prevents a financial contagion like 1929. No 10 person company is going to split their 2.5 mil 10 ways to get insurance. And they’re not going to hav…

> No 10 person company is going to split their 2.5 mil 10 ways to get insurance.

This is a service banks provide transparently. Not sure how much paperwork is required, probably could be optimized to a couple of clicks.

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

#268

Post by a13n »

rafael09ed wrote: post #186
a13n wrote: post #176

Earlier 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

Yeah I think the capitalist version of that is more regulation to the point where large banks aren’t able to take on so much risk to depositors.

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

#269

Post by JumpinJack_Cash »

gerad wrote: post #199
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…

I just don’t understand why folks on the internet are so passionate about the depositors being hit by this. In terms of avoiding moral hazard they are about as far down the list as possible, and bankruptcy law supports that. First stock holders get wiped out (common then preferred), then debt holders (folks who have lent money to SVB won’t get their money back), only then would it hit depositors - and in the case of…

> > I just don’t understand why folks on the internet are so passionate about the depositors being hit by this

Well if you want to go down to the nitty gritty of it, depositors are competitors for stuff, especially in San Jose and San Francisco where every square inch of stuff (any stuff) is super-expensive.

The ones complaining and taking time to argue against any involvement of govt. in SVB are people and institutions who didn't hold any funds in SVB but think or have reason to think that their competitors do

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

#270

Post by alpineidyll3 »

baq wrote: post #224
avianlyric wrote: post #188

Earlier quoted context omitted.

> 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.

In many cases the loans are to depositors (and the debt is questionable). The just thing would be make depositors without debt with svb whole first, ofc there is no system of fairness in finance.
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