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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

#381

Post by Denvercoder9 »

jliptzin wrote: post #285
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…

It is completely insane to allow innocent depositors to lose their money especially when the government clearly would have no problem coming up with the funds to backstop depositors since this is an isolated incident. This bank being located in a tech hotspot is incidental and I am sure some non-techies are swept up in this as well. Imagine a 70 year old woman who just lost her husband and sold her house to downsize…

> FDIC limit should be way higher anyway (when was the last time it was raised?)

In 2008 it was raised from $100K to $250K. The increase in the FDIC limit has actually outpaced inflation since its establishment in 1934, when it was $2500, which is $56K inflation-adjusted today.

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

#382

Post by belter »

idopmstuff wrote: post #339
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'm pretty baffled to see so much of this on HN. Like a whole lot of people here, I've worked at startups for my whole career. People here are effectively suggesting that I shouldn't get my paycheck and that the company I work for should lose most of its money because our CEO used a well-reputed bank? Absolutely wipe out the equityholders of SVB. They deserve nothing, because that's what you should end up with if you…

It's coming from the same system that probably led you to work at Startups your whole career. High risk for high reward on a lightly regulated capitalist system. If your CEO or CFO put all the money in one risky bank, it was bad financial management.

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

#383

Post by mattkrause »

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…

Are people seriously arguing for $250k and not a penny more, regardless?

I thought the argument some were making is that depositors should be guaranteed up to $250k and then get a proportionate share of whatever’s left (which is not zero!)

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

#384

Post by TechBro8615 »

remote_phone wrote: post #126
belter wrote: post #82

Earlier quoted context omitted.

Paid out to the limit set up by FDIC rules you mean?

Depositors will get a “special dividend” next week which is about 50% of their deposits. The other 50% will be coming as they sort out and sell the assets which would take a couple of months.

I'm hearing this 50% number everywhere but what is the source for it?

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

#386

Post by DoneWithAllThat »

belter wrote: post #382
idopmstuff wrote: post #339

Earlier quoted context omitted.

I'm pretty baffled to see so much of this on HN. Like a whole lot of people here, I've worked at startups for my whole career. People here are effectively suggesting that I shouldn't get my paycheck and that the company I work for should lose most of its money because our CEO used a well-reputed bank? Absolutely wipe out the equityholders of SVB. They deserve nothing, because that's what you should end up with if you…

It's coming from the same system that probably led you to work at Startups your whole career. High risk for high reward on a lightly regulated capitalist system. If your CEO or CFO put all the money in one risky bank, it was bad financial management.

It wasn’t a “risky bank”.

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

#387

Post by tialaramex »

Ordinarily in the UK, although the legal rule says £85 000 is protected per person per bank, in practice the government has typically paid all depositors in full up front even though it takes some time to recover the value of the bank's assets. Politically this is a good idea if it's affordable because even if many depositors are unsympathetic, it only takes a few good causes to make you look like heartless bastards.

Of course, the UK banks are obeying Basel III, whereas SVB had fought hard not to be obliged to obey similar US rules because they're less risky (and thus, less profitable when things go well...). Obviously the liquidity protections in Basel III wouldn't be enough to prevent a run this huge from overwhelming the bank, but the capital requirements may well have meant depositors were less likely to begin such a run, and would also surely make it easier to successfully liquidate the bank if that became necessary.

https://www.bis.org/bcbs/basel3.htm

One reason to pay depositors (not shareholders, fuck 'em) is to shore up confidence in other banks. If I know I will get my money anyway, when I hear Local Bank might be fucked, there's less rush to withdraw my money, thus less risk of a run on Local Bank, thus they are less likely to actually fail. This is why FDIC exists, and why functionally similar (though very different mechanically) schemes exist in many developed countries.

If the US feels obliged to give SVB depositors their money anyway, the lesson is that you can't afford to have banks which will be so vulnerable, they all need to obey Basel III or equivalent (perhaps even more stringent) rules locally.

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

#388

Post by lotsofpulp »

nightpool wrote: post #288
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…

Yes, but "worth" is a complicated concept here. What's probably going to happen is that a big bank like JPMorgan is going to buy the remaining assets at 100% book value, and the depositors are going to be made whole out of that. That's not their current market value if sold at fire-sale prices, but banks have the time horizons to hold those assets to maturity and not worry so much about their market value. The stabil…

> The stability of the US banking infrastructure is worth more to JPMorgan then haggling over a few billion dollars of lower rates bonds

I wonder why the leaders at JPM did have not announced this yet, to say they are paying 100% book value.

Seems like it would let everyone go back to enjoying their weekend, including Yellen and numerous other prominent people.

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

#389

Post by manuelabeledo »

CPLX wrote: post #171
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…

Perhaps I can address your point about “generic screeching” against the tech world, by noting that the criticism here is often specific and direct. Not generic. The usual suspects have been trying to frame it in terms of the regular old startup workers that will be affected. But what about these entrepreneurs, the taxi drivers who were completely fucked by the onslaught of Uber and Lyft using financial engineering to…

I find it ironic that you mentioned taxi drivers, since many were initially collateral damage, and then moved onto drive for Uber or Lyft.

I would say that medallion holders, those with enough capital to pay the almost million dollars a license was running for around 2010, were the ones getting screwed. And if you ask me, I would compare them to whomever invested in SVB. Those will not get their money back.

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

#390

Post by Waterluvian »

booleandilemma wrote: post #149
Waterluvian wrote: post #21

Earlier quoted context omitted.

The law is clear on the priority of claims. You can get a quick overview at the bottom of this page: https://www.fdic.gov/resources/resolutions/bank-failures/fai... It makes sense that they’ll make depositors whole before even thinking about the rest. From the top of that page: “ All depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured de…

More than 85% of Silicon Valley's Bank's Deposits Were Not Insured. https://time.com/6262009/silicon-valley-bank-deposit-insuran...

Insured means they’re guaranteed to get it back. But the uninsured deposits are at the very front of the line for all further fundraising efforts.
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