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SVB customers who lost their deposits remain on the hook for loans

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Re: SVB customers who lost their deposits remain on the hook for loans

#71

Post by nickff »

award_ wrote: post #35
mdasen wrote: post #14

This article feels like rich people who were trying to get around US law/regulations/taxes now wanting the protections afforded by it. They deposited money in SVB's Cayman Islands subsidiary (a country that's a well-known tax haven). SVB goes under and the Cayman Islands have no deposit insurance so their deposits are wiped out. Now they want their money back or their debt forgiven. The SVB Cayman deposits didn't pay…

We don't want to incentivize people to dodge taxes while thinking they'll enjoy all the protections paid for by taxes. This exactly. Either the deposits were insured or they weren't (as it seems in this case). Can't have it both ways, having cake and eating it too.

What "protections paid for by taxes" are you talking about? FDIC isn't paid for by taxes.

Re: SVB customers who lost their deposits remain on the hook for loans

#72

Post by JCM9 »

These are folks that were trying to avoid US regulations and taxes via offshore accounts. But if you do that you also don’t get the protections that come with having a US bank account… like not losing your money. They got burned and are now crying. Most folks aren’t losing sleep over this.

Re: SVB customers who lost their deposits remain on the hook for loans

#73

Post by soderfoo »

jmyeet wrote: post #44
mdasen wrote: post #14

This article feels like rich people who were trying to get around US law/regulations/taxes now wanting the protections afforded by it. They deposited money in SVB's Cayman Islands subsidiary (a country that's a well-known tax haven). SVB goes under and the Cayman Islands have no deposit insurance so their deposits are wiped out. Now they want their money back or their debt forgiven. The SVB Cayman deposits didn't pay…

100% this. Here's the lesson I want people to take away from this: only when the government gives money to ordinary people is it somehow a moral hazard. The wealthy will never say no to government money. Worse, they will expect it and lobby for it. It's why student loan forgiveness is somehow a moral hazard but forgiving PPP loans isn't. So here you have a bunch of rich people who wanted to avoid paying any US taxes…

Wholly agree. One thing I do not miss about about the US is the erosion of empathy among the common folks, while the elite and ruling class rob the country.

Re: SVB customers who lost their deposits remain on the hook for loans

#74

Post by coldtea »

DelaneyM wrote: post #51
mdasen wrote: post #14

This article feels like rich people who were trying to get around US law/regulations/taxes now wanting the protections afforded by it. They deposited money in SVB's Cayman Islands subsidiary (a country that's a well-known tax haven). SVB goes under and the Cayman Islands have no deposit insurance so their deposits are wiped out. Now they want their money back or their debt forgiven. The SVB Cayman deposits didn't pay…

As a Caymanian I’m doing to take exception to your non-sequitur about Cayman being a “well-known tax haven”. Cayman is one of the most financially transparent, if not _the_ most financially transparent, location in the world. We fully comply with FATCA, CRS, and AEOI, to the extent that it takes even a native Caymanian multiple weeks to open a local bank account. The reason most foreign investors use Caymanian interm…

>to the extent that it takes even a native Caymanian multiple weeks to open a local bank account

To a local, yes. To a wealthy local, and even more so a wealthy foreigner or foreign company, no.

Re: SVB customers who lost their deposits remain on the hook for loans

#75

Post by s1artibartfast »

greenthrow wrote: post #67
s1artibartfast wrote: post #64

Earlier quoted context omitted.

I think it's actually more nuanced than you're making out to be. If a customer has both a bank loan and a bank account, I think it is reasonable that the customer received some of the proceeds when their loan is sold off.

That is not how it ever works. When my mortgage was sold by the original bank I didn't get anything.

Did your bank also go bankrupt and zero out your account? Because that's what's going on here.

It is a question of which debts a bank pays before its assets can be sold off to another bank.

In this case, I think it is reasonable that a bank use the assets it has to pay back depositors, before those assets can be sold to someone else.

Re: SVB customers who lost their deposits remain on the hook for loans

#76

Post by zeruch »

DelaneyM wrote: post #51
mdasen wrote: post #14

This article feels like rich people who were trying to get around US law/regulations/taxes now wanting the protections afforded by it. They deposited money in SVB's Cayman Islands subsidiary (a country that's a well-known tax haven). SVB goes under and the Cayman Islands have no deposit insurance so their deposits are wiped out. Now they want their money back or their debt forgiven. The SVB Cayman deposits didn't pay…

As a Caymanian I’m doing to take exception to your non-sequitur about Cayman being a “well-known tax haven”. Cayman is one of the most financially transparent, if not _the_ most financially transparent, location in the world. We fully comply with FATCA, CRS, and AEOI, to the extent that it takes even a native Caymanian multiple weeks to open a local bank account. The reason most foreign investors use Caymanian interm…

You can take all the exceptions you wish, but the truth is while its a great spot for certain legitimate above board financial vehicles, its also a tax haven. The two can in fact cohabitate, and in the case of the Caymans, do.

Caymans in particular has a decent level of transparency around trusts and the like, but its banking system still records the de-minimus KYC it can get away with (including uneven FATF compliance).

Re: SVB customers who lost their deposits remain on the hook for loans

#77

Post by 14u2c »

DelaneyM wrote: post #51
mdasen wrote: post #14

This article feels like rich people who were trying to get around US law/regulations/taxes now wanting the protections afforded by it. They deposited money in SVB's Cayman Islands subsidiary (a country that's a well-known tax haven). SVB goes under and the Cayman Islands have no deposit insurance so their deposits are wiped out. Now they want their money back or their debt forgiven. The SVB Cayman deposits didn't pay…

As a Caymanian I’m doing to take exception to your non-sequitur about Cayman being a “well-known tax haven”. Cayman is one of the most financially transparent, if not _the_ most financially transparent, location in the world. We fully comply with FATCA, CRS, and AEOI, to the extent that it takes even a native Caymanian multiple weeks to open a local bank account. The reason most foreign investors use Caymanian interm…

Why exactly do you think people use the Caymans at all then? If it's as you claim the surely keeping the money domestic makes more sense? Of course the truth is more complicated, and you even skirt around it with "global funds", i.e. a way to operate without repatriating the money and paying taxes.

Re: SVB customers who lost their deposits remain on the hook for loans

#78

Post by [deleted] »

DelaneyM wrote: post #51
mdasen wrote: post #14

This article feels like rich people who were trying to get around US law/regulations/taxes now wanting the protections afforded by it. They deposited money in SVB's Cayman Islands subsidiary (a country that's a well-known tax haven). SVB goes under and the Cayman Islands have no deposit insurance so their deposits are wiped out. Now they want their money back or their debt forgiven. The SVB Cayman deposits didn't pay…

As a Caymanian I’m doing to take exception to your non-sequitur about Cayman being a “well-known tax haven”. Cayman is one of the most financially transparent, if not _the_ most financially transparent, location in the world. We fully comply with FATCA, CRS, and AEOI, to the extent that it takes even a native Caymanian multiple weeks to open a local bank account. The reason most foreign investors use Caymanian interm…

[deleted]

Re: SVB customers who lost their deposits remain on the hook for loans

#79

Post by imustbeevil »

s1artibartfast wrote: post #75
greenthrow wrote: post #67

Earlier quoted context omitted.

That is not how it ever works. When my mortgage was sold by the original bank I didn't get anything.

Did your bank also go bankrupt and zero out your account? Because that's what's going on here. It is a question of which debts a bank pays before its assets can be sold off to another bank. In this case, I think it is reasonable that a bank use the assets it has to pay back depositors, before those assets can be sold to someone else.

If your bank sells your mortgage to another bank, the second bank now owns that debt. If the first bank goes out of business, you very obviously (separately from the previous transaction) lose any money that isn't insured. I'm not sure what else you would expect to happen.
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