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

341–350 of 1001 posts

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

#341

Post by blibble »

criddell wrote: post #219
sneak wrote: post #183

Earlier quoted context omitted.

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.

Then maybe banks should be required to have private insurance for accounts with balances above $250k? More conservative banks would pay very little for insurance while banks that take on more risk would pay more for insurance.

they'd all set maximum balances instead

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

#343

Post by fwlr »

obventio56 wrote: post #194
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…

I don't think it's fair to blame the SVB depositors for the bank run. Perhaps you can blame public figures (VCs etc) who catalyzed it. Once a run starts, though, it's in your interest to run too. If you had >250k in SVB and you managed to get it out before it was shut down, you'd be pretty happy with yourself right now. If you run a business and have an obligation to share-holders, it would be negligent not to try th…

Yeah, I can’t blame them at all for joining an ongoing bank run.

I can kinda blame them for starting one because they did it so aggressively, but only a bit, because that’s just how internet banking works these days.

I can definitely blame them for demanding the taxpayers make them whole by 9am next business day.

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

#344

Post by Denvercoder9 »

ouid wrote: post #305
rayiner wrote: post #231

Earlier quoted context omitted.

Why shouldn’t depositors learn a lesson that they should get additional insurance beyond the $250,000?

Being at the top of the line in bankruptcy proceedings is the law . So they shouldn't be generally subject to lessons from the government that go beyond that...

Nobody is saying that depositors shouldn't be at the top of the line. They're saying that if there's not enough money to pay back even them, the goverment shouldn't jump in to make up the shortfall (beyond the $250K it has insured).

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

#345

Post by HervalFreire »

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…

These are start ups and people with connections to VCs who get free money to do all kinds of moonshot businesses. Start ups are basically pet projects of rich billionaires.

The majority of people in the world don't have those connections or opportunities, so there's definitely hate.

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

#346

Post by thesimon »

helsinkiandrew wrote: post #320
fullshark wrote: post #164

Earlier quoted context omitted.

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.

Because if a normal business goes bust leaving customers out of pocket, it’s usually only a small percent of the customers “wealth” (and often insurance will cover it). If someone’s bank goes bust they can loose a much larger proportion of their wealth. Often causing them to go bust, causing more bankruptcies and job losses. Governments act as insurer of last resort for most bank defaults, because the confidence of t…

> If someone’s bank goes bust they can loose a much larger proportion of their wealth

But only if they decide to hold their wealth in uninsured deposits to save money or effort.

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

#347

Post by deepsquirrelnet »

roland35 wrote: post #222

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.

Even as an individual with not a lot of money, I think this is prudent. When you give your money to a bank, they effectively give you back an IOU.

And while most of the time they can make good on it, sometimes the investments they make with your money are risky, short sighted, or just unlucky.

In any case, don’t put yourself into jeopardy by not having other options.

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

#348

Post by ffggffggj »

rib3ye wrote: post #293
lotsofpulp wrote: post #191

Earlier quoted context omitted.

The same thing people tell 22 year olds trying to find their footing who invested in the wrong degree.

Depositing money in a bank is not supposed to be an investment with associated risk. Yes there may be an interest yield and services rendered, but these customers were not greedily looking for a sizable return.

There are literally stickers on the doors of every bank explaining that depositing money beyond $250,000 incurs risk.

These naive smol bean founders don’t struggle to figure out the most tax advantageous way to get paid, let’s not pretend they’re too stupid to read a huge sticker.

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

#349

Post by pcl »

watwut wrote: post #317
gerad wrote: post #199

Earlier quoted context omitted.

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…

Depositors are protected exactly as any other depositors and there are solutions to the protection ceiling. Like insured cash sweep. That VCs forced the small companies to operate in less safe way and gave them bad advice is 100% fault of these. I do not know why it was so, but this really seems like the case of "we want benefits of minimal regulation and getting better protection then everyone else gets from the gov…

The $250k is the protection floor, not the ceiling. The FDIC guarantees that $250k, but SVB has assets well beyond $250k per account.

The FDIC is in the business of protecting depositors. So it will pay out the floor immediately as a matter of course, and then will continue to use the tools it has available and the remaining assets of SVB to pay out more — perhaps 100%, perhaps some amount less — to depositors.

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

#350

Post by corette »

I have a really dumb question. If my spouse and I have a checking account and a savings account at the same US Bank, does the 250K limit apply to the total of both accounts or each account separately?

Say we have 200K in checking and 200K in savings. Would we get 400K from FIDC or just 250K total?

Thanks

Post reply on HN