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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

#371

Post by chewbacha »

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…

Bank runs aren’t a conspiracy they are emergent behavior. They are the reason FDIC insurance exists in the first place.

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

#372

Post by lotsofpulp »

nerdponx wrote: post #289
lotsofpulp wrote: post #146

Earlier quoted context omitted.

> “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? I think the common sentiment is depositors should not get any more than whatever the remaining assets are worth. And I think the prominent people asking the government to bailout depositors are worried about only getting 75% of…

But why? What purpose does that serve? It's hardly even inflationary, the value was basically destroyed, so the Fed conjuring replacement money doesn't seem like such a bad thing. Shareholders will still be taking a major loss, and they are the ones who ought to be held responsible, so it makes sense. You can't fault depositors for not doing thorough diligence on a 40-year-old bank with a good reputation and it doesn…

Suppose an immigrant is starting a restaurant, and has to pay up front to some suppliers that have been in business for 40 years for kitchen equipment. And the supplier goes out of business, and the money is gone. And the immigrant has no more time or money to hire a lawyer to submit a claim to recover it.

Is there a federal bailout waiting for the immigrant? Or the immigrant’s employees who might also be family members?

> What purpose does that serve?

The purpose is to show we are playing by the same rules. And that somehow, it is not always the poorer, the more uneducated, the ones born to the wrong parents who do not get bailed out.

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

#374

Post by harles »

ianai wrote: post #327
harles wrote: post #252

Earlier quoted context omitted.

I don’t understand this debate. The article says nothing about whether or not depositors will be bailed out.

It says exactly that: “ Janet Yellen said on Sunday that the US government was working closely with banking regulators to help depositors at Silicon Valley Bank but dismissed the idea of a bailout. […] “Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out . . . and the reforms that have been put in place means we are not going to do that again,…

The quote says the opposite of that. Depositors are not investors or owners. How can so many people misread this?

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

#375

Post by [deleted] »

mrcwinn wrote: post #26

Good. Investors like Ackman and Cuban seem so concerned about payroll for tech workers. The truth is that the vast majority of this cash was dry powder for acquisitions, staying liquid for new new investments, fresh VC money for advertising. Isn’t it these same folks who remind us all the time that most startups fail? Why bail out an entire bank when 99% of its startup depositors wouldn’t have made it anyway? If anyt…

[deleted]

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

#376

Post by bentlegen »

fallingknife wrote: post #323
bentlegen wrote: post #278

Earlier quoted context omitted.

The C-suite paid themselves millions of dollars via bonuses and stock sales right before insolvency. Executives got paid. What’s to stop future bankers from running the same playbook? (We can debate that this the stock sale was premeditated/signaled months in advance, but the stock had already declined 80% from its 2021 peak and they surely knew about the tough liquidity position months ago — external observers drew…

Fake news. The largest bonuses paid were $140,000 to managing directors, which is just bankerese for VP. Bonuses were already scheduled to be paid and earned for work done in 2022.

According to Bloomberg, the CEO sold 3.6 million dollars worth of shares days before insolvency. The sale was scheduled back on January 26th.

Around the same time, analysts were commenting negatively about SVB’s earnings and liquidity position.

Please correct me if I’ve misinterpreted.

https://www.bloomberg.com/news/articles/2023-03-10/svb-chief...

https://seekingalpha.com/article/4573087-svb-financial-30-pe...

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

#377

Post by m3kw9 »

daniel-thompson wrote: post #355
fma wrote: post #117

Earlier quoted context omitted.

If depositors get 100% back (I assume the government pays the difference between selling SBV assets & the deposits)...then what's the purpose of saying "FDIC Insured up to $250k"? It's a moot then isn't it? I don't need to go through the hassle of distributing my money anymore? Edit: I read the article. Yellen says "“But we are concerned about depositors, and we’re focused on trying to meet their needs.” She says NOT…

> what's the purpose of saying "FDIC Insured up to $250k" The FDIC guarantees up to $250k, but if additional assets are available beyond that, then those will be paid out to depositors as well. It's a floor, not a ceiling

Upto sounds like a ceiling to me

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

#378

Post by yeahsure22 »

fallingknife wrote: post #323
bentlegen wrote: post #278

Earlier quoted context omitted.

The C-suite paid themselves millions of dollars via bonuses and stock sales right before insolvency. Executives got paid. What’s to stop future bankers from running the same playbook? (We can debate that this the stock sale was premeditated/signaled months in advance, but the stock had already declined 80% from its 2021 peak and they surely knew about the tough liquidity position months ago — external observers drew…

Fake news. The largest bonuses paid were $140,000 to managing directors, which is just bankerese for VP. Bonuses were already scheduled to be paid and earned for work done in 2022.

I don’t know if the work they did in 2022 really warranted a bonus though. Doesn’t seemed to have worked out for the shareholders.

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

#379

Post by TechBro8615 »

JumpinJack_Cash wrote: post #364

In the aftermath of SilverGate and SVB demise people are rightfully (from their perspective) rooting for a shake-up at the top of the social pyramid. I don't know if people realize but living in San Francisco and being at the helm of your own company with millions in equity funding is an extreme privilege. Millions of things have to go right in order for that person to be in such position. That is the dream of many i…

For every one privileged founder there are dozens of employees who won't get paid.

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

#380

Post by aodin »

skwirl wrote: post #94
mrcwinn wrote: post #26

Good. Investors like Ackman and Cuban seem so concerned about payroll for tech workers. The truth is that the vast majority of this cash was dry powder for acquisitions, staying liquid for new new investments, fresh VC money for advertising. Isn’t it these same folks who remind us all the time that most startups fail? Why bail out an entire bank when 99% of its startup depositors wouldn’t have made it anyway? If anyt…

> Investors like Ackman and Cuban seem so concerned about payroll for tech workers. They weren’t calling for a bailout of SVB. They were calling for protection of depositors, which is what Yellen is trying to make happen.

Both Ackman and Cuban have called for measures beyond "protection of depositors".

Ackman: "What should the FDIC do? @FDICgov to guarantee all bank deposits by Sunday night before Asia open and call a time out. Run a process to recapitalize @SVB_Financial while managing liquidation of UST and MBS portfolios ... Equity holders pre-recap are wiped out, bond holders are protected." [1]

Cuban: "The Fed should IMMEDIATELY buy all the securities/debt the bank owns at near par, which should be enough to cover most deposits. Any losses paid for in equity and new debt from the new bank or whoever buys it. The Fed knew this was a risk. They should own it" [2]

In a following tweet, Cuban claimed "this isn't a bailout" [3]. Their tweets, like many of the comments here, seem to be arguing the semantics of a "bailout". However, both Ackman and Cuban are calling for financial assistance from the Fed, which is absolutely a bailout, if only "partial".

[1] https://twitter.com/BillAckman/status/1634694924707807236

[2] https://twitter.com/mcuban/status/1634416692301373442

[3] https://twitter.com/mcuban/status/1634418925331968007

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