81–90 of 1001 posts
Yet another new precedent by the Fed and FDIC. All depositors are now guaranteed their funds if a bank fails. This is the definition of Moral Hazard [1]. [1] https://en.wikipedia.org/wiki/Moral_hazard
Sure, when the government pays, it's super risky.
However if other banks pay, for sure they'll either self regulate or push for better legislation.
“Depositors will have access to all of their money starting Monday, March 13.” So, they can all go tomorrow morning and withdraw/transfer their money out of SVB?
Yellen and the FDIC is in a tough spot. This is the important line, "Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law." Thus, on one hand, I'm glad they're doing this, as it should help prevent wider bank runs, and it ensures that banks are the ones that are actually paying for it. At the same time, this is yet another exam…
"...recovered by a special assessment on banks, as required by law..." - Would love to know what law/regulatory framework she is referring to. Janet Yellen is ready to become a US based Liz Truss... Now expect a contagion effect next week, if SVB liabilities are shown worst than currently known, and made to bare on other banks capital requirements... "US banks sitting on unrealized losses of $620 billion" - https://e…
Yellen and the FDIC is in a tough spot. This is the important line, "Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law." Thus, on one hand, I'm glad they're doing this, as it should help prevent wider bank runs, and it ensures that banks are the ones that are actually paying for it. At the same time, this is yet another exam…
If it's not a loss to the tax payers, then it seems like good governance to me.
Yellen and the FDIC is in a tough spot. This is the important line, "Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law." Thus, on one hand, I'm glad they're doing this, as it should help prevent wider bank runs, and it ensures that banks are the ones that are actually paying for it. At the same time, this is yet another exam…
In cases where you can't predict the future appropriately, sometimes it's better to make prudent decisions that help everyone instead of attempting to punish the sinful. Keep in mind that bank shareholders and senior management are going to get wiped out and fired.
I'm just curious, who was running the investment / risk team at SVB and why should they get a pass for doing such a terrible job?
Not sure how they're getting a pass.
Yellen and the FDIC is in a tough spot. This is the important line, "Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law." Thus, on one hand, I'm glad they're doing this, as it should help prevent wider bank runs, and it ensures that banks are the ones that are actually paying for it. At the same time, this is yet another exam…
"...recovered by a special assessment on banks, as required by law..." - Would love to know what law/regulatory framework she is referring to. Janet Yellen is ready to become a US based Liz Truss... Now expect a contagion effect next week, if SVB liabilities are shown worst than currently known, and made to bare on other banks capital requirements... "US banks sitting on unrealized losses of $620 billion" - https://e…
It’s not enough for senior management to be removed. Malfeasance like this needs to have real life consequences.
Yellen and the FDIC is in a tough spot. This is the important line, "Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law." Thus, on one hand, I'm glad they're doing this, as it should help prevent wider bank runs, and it ensures that banks are the ones that are actually paying for it. At the same time, this is yet another exam…
Did you foresee this?
It's a bit embarrassing to have to invoke the systemic risk exception when regulations on these banks were relaxed in 2018 on the theory that they wouldn't pose a systemic risk if they got into trouble. This should spark some serious soul searching from everyone involved in that effort, but I'm not holding my breath. Anyway, I'm happy for all the depositors.
The depositors were largely those with means to manage risk but not doing so. Surely you mean you're happy for the workers, clients, contractors, etc., not the depositors? Right? The backstop was sold on the backs of those people, and if they're not the overwhelming beneficiary it means the depositors might not have been totally honest with us about their motives!
Why would anyone be happy for the workers of a bank that won't exist anymore in any form once the liquidation is sorted out?
[Edit: Nevermind, my dumbass didn't understand that those were the workers of the depositors, the clients of the depositors, etc.]