61–70 of 102 posts
Earlier quoted context omitted.
Most other banks found ways to survive the environment in 2021. So clearly there are ways to do it without locking money up for 10 years in MBS.
Most other banks didn't see the incredible growth SVB did, either.
Pre-SVB: SV was full of some really smart people, many of whom didn't realize their skills and experience don't translate to other areas (eg pretty much anything to do with crypto) combined with some salesmen, some of whom are snake oil salesmen. Together they are more and more resembling the rest of Corporate America with performative cultures, privatizing their own luck, often having unearned bravado and increasing…
"Cost the taxpayers nothing" - well not in "taxes", but I'm not sure we can really say nothing. Clearly the banks paying for it won't just eat that cost.
The problem that SVB faced was falling out of compliance with debt ratios. The modern banking system works on fractional reserves. The US requires IIRC 10%. A run of withdrawals still meant they were asset positive but didn't have enough cash on hand. That's what forced the sale of their liquid assets at a discount.
So, no, this probably won't cost the taxpayers anything, directly or indirectly.
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If depositors split $1 million across multiple accounts, then they would be made whole with FDIC insurance for each account. If they have the same $1 million in one account, they’re still being made whole for the same amount. There’s literally no difference in the amount of money being paid back to them in either scenario.
If they had split the $1m over 4 accounts and only 1 failed, there would be no need for a bailout. It's redundancy, something every tech person learns about pretty early on. It's hedging risk, something every finance person learns about pretty early on. It's basic, fundamental stuff in two disciplines. Fine it's an error, take your medicine. My problem is when the average Joe makes an error, they get the full force o…
Is it accurate to say that you are mad the system, and not tech specifically? Afterall, VCs and tech workers aren't the ones locking people up. If anything, it seems like they are softer than average on crime. When I walk the streets in the bay area I see stolen cars and when I go shopping I see people flagrantly robbing stores.
I don't like the account holder bailout either, but in reality, it has much less impact on me. The other banks will pick up the tab and I will probably see another nickel or dime in fees on my checking account.
I may not be fully informed (please comment if that's the case), but it seems like there were really only a couple of instigating factors: 1) SVB invested too heavily in long-term bonds, which reduced their ability to maintain liquidity. In particular, with the inverted yield curve, the recent increase in interest rates seems to me to have made it more likely that these long-term bonds were going to be underwater eit…
My understanding is that assets wont cover the deposits. The FDIC is making the entire banking system pick up the tab with what amounts to a fine on all banks. This will either come out of the profits at other banks or get passed on to account holders of those banks as higher fees/lower interest.
>Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
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What shareholder bailout? If you’re referring to SVB, shareholders will be wiped out. Only depositors are being bailed out (/made whole).
Everyone knew FDIC limited to $250k an account. They put more in anyway and got bailed TF out. It's a bailout of depositors who didn't hedge risk among multiple accounts. Make no mistake, it's a bailout. I'd be more OK with it if regular citizens didn't get shafted at every opportunity but the wealthy always get a pass. Steal a $2 bag of chips, get a year in jail. Take a stupid risk on overfunding your account over F…
> regular citizens didn't get shafted at every opportunity but the wealthy always get a pass.
Not in this case in my view, but generally I would agree with you. Unfortunately, this is how power works... and I don't know that any society, bar perhaps an authoritarian one with a benevolent dictator (but that is destined to fail too over time), has solved it fully or even acceptably. If we think back to the French Revolution, I think as long as the populace is mostly happy, then the powerful are able to get away with things; it is when the population is more down and out that the pitchforks are sharpened and the torches readied with fire - so the powerful have to keep that in mind, always.
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I have no idea what you’re commenting in response to, but the parent comment had a typo that said shareholder bailout, and regardless of your opinion as to whether this was a bailout for depositors or not, it most certainly wasn’t one for shareholders. That’s all I was saying.
I know, I wasn't fussing at you, I was just ranting in general. I've been in tech since I was a little kid in 1983, and it's all gone to pot, taken over by money men corrupting the hope that it once was.
Earlier quoted context omitted.
Everyone knew FDIC limited to $250k an account. They put more in anyway and got bailed TF out. It's a bailout of depositors who didn't hedge risk among multiple accounts. Make no mistake, it's a bailout. I'd be more OK with it if regular citizens didn't get shafted at every opportunity but the wealthy always get a pass. Steal a $2 bag of chips, get a year in jail. Take a stupid risk on overfunding your account over F…
I don't know that "bailout" is quite an accurate description of what is happening. AFAIK it isn't as if the money was/is lost; it is more of a timing issue that is being bridged. > regular citizens didn't get shafted at every opportunity but the wealthy always get a pass. Not in this case in my view, but generally I would agree with you. Unfortunately, this is how power works... and I don't know that any society, bar…
Bridging that timing issue will cost a few billion dollars in real cash, and other banks are being fined to make up the difference.
Earlier quoted context omitted.
I don't know that "bailout" is quite an accurate description of what is happening. AFAIK it isn't as if the money was/is lost; it is more of a timing issue that is being bridged. > regular citizens didn't get shafted at every opportunity but the wealthy always get a pass. Not in this case in my view, but generally I would agree with you. Unfortunately, this is how power works... and I don't know that any society, bar…
>I don't know that "bailout" is quite an accurate description of what is happening. AFAIK it isn't as if the money was/is lost; it is more of a timing issue that is being bridged. Bridging that timing issue will cost a few billion dollars in real cash, and other banks are being fined to make up the difference.