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SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

theintercept.com

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Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#31

Post by daveguy »

InTheArena wrote: post #21

This seems pretty knee-jerk, especially given, that the current glances that the business was probably too conservatively managed. The problem here was not holding safe assets - but the value of the government bonds depreciating dramatically because of the rising interest rates and a flush supply of higher interest rates due to massive government deficit spending. It’s also a reflection of the extremely aggressive ma…

The business got in trouble with long term mortgage backed securities, not government bonds. "The government did it" is a bad take on this one. It was the business that chose excessive long term illiquid mortgage backed securities vs short to mid term government bonds which would have been a better choice.

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#32

Post by notch898a »

andrewstuart wrote: post #3

Weaken regulations, trains and banks crash, but hey small government, slash the red tape.

0) Make narrow banking illegal

1) Hold interest rates near zero, inflating the fuck out of the economy

2) Use government to destroy market value of distant maturing bonds by holding real interest rates deeply negative and then rapidly inverting it. Force people to seek ever more risky investments and long term low interest MBS securities just to barely not even break even.

3) Suck all the liquidity out of the market by using fed to raise interest rates sharply

4) Banks fail

5) "There wasn't enough government intervention, we need more!"

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#33

Post by mjhay »

andrewstuart wrote: post #11
hedora wrote: post #8

Earlier quoted context omitted.

In fairness, the train crash had bipartisan support.

[flagged]

Biden could reinstate them by EO, just like how Trump cut them. He hasn't though. There is a bipartisan consensus that the safety of the rail system is less important than rail company profits.

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#34

Post by InTheArena »

daveguy wrote: post #31
InTheArena wrote: post #21

This seems pretty knee-jerk, especially given, that the current glances that the business was probably too conservatively managed. The problem here was not holding safe assets - but the value of the government bonds depreciating dramatically because of the rising interest rates and a flush supply of higher interest rates due to massive government deficit spending. It’s also a reflection of the extremely aggressive ma…

The business got in trouble with long term mortgage backed securities, not government bonds. "The government did it" is a bad take on this one. It was the business that chose excessive long term illiquid mortgage backed securities vs short to mid term government bonds which would have been a better choice .

This does not appear to be the case with the numbers coming out this morning. It’s really the government bonds that have the dramatic drop in value, relatively. The write down of the government bond assets are significantly higher than the write down of the MBS assets.

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#36

Post by leeroyjenkins11 »

andrewstuart wrote: post #11
hedora wrote: post #8

Earlier quoted context omitted.

In fairness, the train crash had bipartisan support.

[flagged]

Was there actual evidence that Trump's changes had any affect on the derailments? From what I heard they had no effect. And last I checked , Biden has been president for 2 years. If they were vitally important, wouldn't the transportation dept worked to add them back?

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#37

Post by mjhay »

tikkun wrote: post #4

Which groups are working to reduce the impact of $ on laws? One I've seen is https://represent.us , who else?

None of that will do anything, beyond, at best, chipping at some of the most egregious examples. We are a capitalist system. Economics and politics are inseparable, and the capitalist class has the power.

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#38

Post by InTheArena »

ZachPruckowski wrote: post #26
InTheArena wrote: post #19

Earlier quoted context omitted.

The problem is is that the amount of debt is percentage of GDP, and therefore the interest rates that we need to pay are significantly higher now. This kind of analysis is hopelessly naïve without taking into account overall macro situation.

I mean, yeah, that's ultimately a potential problem for the federal budget. But that's not what tripped up SVB - long-term Treasury prices declined because higher interest rates made short-term Treasuries more attractive than long-term ones.

Which in turn would not be a problem if the amount of data issued didn’t swamp at destroy the market for debt already on the books…

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#39

Post by olalonde »

whitemary wrote: post #25
olalonde wrote: post #18

Earlier quoted context omitted.

What is capitalist about modern banking? It's probably the most regulated industry in existence. Where a practice that would normally be regarded as fraudulent anywhere else (fractional reserve banking) is not only legal but encouraged by government. There's nothing capitalist about it[0]. [0] https://mises.org/power-market/central-banking-socialism

A sovereign state in a capitalist society is a capitalist state. A capitalist state always serves, in aggregate, the interests of the capitalist class. Karl Marx showed us how this works 150 years ago and nobody has challenged this part of his analysis to my knowledge. I am familiar with the delusional American libertarian fantasies, but that's just ideological denial. They haven't done any actual analysis of how a g…

I was referring to capitalism as in "free enterprise" (not as in "anything that happens in a mostly capitalist society"). Many of Marx' central theories were shown to be incorrect (e.g. labor theory of value) and personally, I don't buy the theory of class struggle (it is probably not even a falsifiable theory).

Re: SVB Used Former McCarthy Staffers to Weaken Regulations, Lobby FDIC

#40

Post by henrydark »

jacquesm wrote: post #27
fspeech wrote: post #24

Other than the focus on governmental regulation we should also look at the glaring principal-agent risk. Large shareholders (such as the Swedish pension fund) should have asked questions about the concentration risks and AOCI losses. Management could be loathe to realize the losses earlier due to profit targets. Their risk/reward calculation on addressing a mistake could be misaligned from the shareholders'.

Pension funds - and municipalities - have no business to take the funds that they have been entrusted with outside of the country where they reside. The same kind of nonsense led to the Icesave debacle.

Is this possible for all countries?

Surely the lowest gdp (maybe per capita) country in the world that has pension funds should be eligible to invest these funds outside of the country.

A priori, without knowing anything about world economies, we shouldn't expect every country with pensions to even have local possibilities of investment. There's possibly a country where every single tax payer works remotely, or in local administration.

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