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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

#51

Post by oivey »

olalonde wrote: post #18
whitemary wrote: post #13

Earlier quoted context omitted.

The capitalist class will always leverage its capital for its own interests. It's an inherent fact of capitalism. The American socialist movement was mostly wiped out during the Red Scare.

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

So you think the government should step in to add regulation to ban fractional reserve banking, and that that would be more capitalist? Your Mises link doesn’t even mention the term.

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

#52

Post by ajross »

skwirl wrote: post #50

If SVB collapsed because of corruption in the federal government, then that just makes a stronger case for federal institutions doing whatever they need to do to make the depositors whole. The solution to failing to protect depositors is not to snuff them out, it's to make things right.

Where on earth do you get "corruption in the federal government" from that article? It's explicitly saying that they were lobbying to weaken regulation. That's transparently circular. You're saying government oversight is bad because the government can be convinced not to oversee, in which case we get bad results from the lack of oversight!

In this particular case, it's unclear exactly what oversight could have prevented the mistakes. We just won't know for a while. But... yeah, it seems very much not unreasonable that the 2018 Dodd-Frank rollback may be part of the problem.

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

#53

Post by hindsightbias »

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.

Freedom-oriented low-service states would seem to be too good a deal to pass up:

https://www.nbcdfw.com/news/local/spanish-company-signs-50-y...

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

#54

Post by Regnore »

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…

I wouldn’t consider over-investing in assets that are extremely volatile from a short-term liquidity perspective “conservatively managed”. The timeline liquidity of your assets is one of many forms of risk that needs to be managed by a bank.

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

#57

Post by skwirl »

ajross wrote: post #52
skwirl wrote: post #50

If SVB collapsed because of corruption in the federal government, then that just makes a stronger case for federal institutions doing whatever they need to do to make the depositors whole. The solution to failing to protect depositors is not to snuff them out, it's to make things right.

Where on earth do you get "corruption in the federal government" from that article? It's explicitly saying that they were lobbying to weaken regulation. That's transparently circular. You're saying government oversight is bad because the government can be convinced not to oversee, in which case we get bad results from the lack of oversight! In this particular case, it's unclear exactly what oversight could have preve…

I don't see where you get "government oversight is bad" from anything I said. I strongly believe that we should have strict government oversight of deposit accounts and that people should be able to have faith in the banking system. I don't think it's depositors fault that banks lobby to weaken this regulation and that the government goes along with it.

I agree that we don't know if the weakened regulations caused this - it's possible the regulators already had the tools in their belt they needed to prevent this and were asleep at the wheel. We will find out eventually.

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

#59

Post by SmoothBrain12 »

notch898a wrote: post #32
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…

[flagged]

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

#60

Post by cratermoon »

It appears the emerging consensus among the apologists is that SVB failed because the federal government, or the Fed specifically, over-regulated them by making them take certain positions, then pulled the rug out from under the by raising interest rates. In short, it wasn't the fault of the people running the bank.

In other news: https://www.nbcnews.com/business/business-news/etsy-delays-p...

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