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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

#91

Post by nickff »

PragmaticPulp wrote: post #58
DelaneyM wrote: post #51

Earlier quoted context omitted.

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…

> The reason most foreign investors use Caymanian intermediaries is actually just that transparency, particularly when they’re being scrutinized by foreign regulatory bodies and don’t want their money to disappear into a Delaware numbered company. > It is, however, a particularly easy place to keep global funds in a law abiding and transparent way. I don’t doubt that Cayman is strict for individuals like yourself ope…

>"FTX very deliberately chose the Cayman Islands to stay out of the reach of stricter regulatory bodies."

FTX chose The Bahamas.

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

#92

Post by hughesjj »

notyograndma wrote: post #84
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…

Cayman isn't really a tax dodge. I've structured a few hedge funds in the Cayman Islands, and FATCA/CRS regime to which it strictly adheres prevents it from being one. Companies set up foreign financial entities in Cayman Islands because it's a tightly regulated financial center with well known laws, and because foreign investors want it because it's perceived (particularly by Chinese investors) as a safe haven. If t…

Lol I call [bullshit](https://www.investopedia.com/ask/answers/100215/why-cayman-i....)

Not surprised the person "who has structured several hedge funds" is spreading misinformation about finances and taxes.

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

#93

Post by flangola7 »

yieldcrv wrote: post #54
jmyeet wrote: post #44

Earlier quoted context omitted.

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…

thats not what happened its actually a bad take due to the inaccuracies it relies upon, I wrote the other view in a sister comment

It is what actually happened, and it is an accurate take. Your opinion or feelings about it don't change that.

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

#94

Post by accoil »

sokoloff wrote: post #65
skyyler wrote: post #61

Earlier quoted context omitted.

Isn't writing a check you know will bounce a crime?

How do I know it will bounce? Last I looked, the funds were there. I’ve been busy… If it turns out to be a crime, I think I’ll take my chances with a jury trial where all have to agree to convict.

Sounds like you don't know it will bounce? Which is a different scenario.

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

#95

Post by s1artibartfast »

imustbeevil wrote: post #85
s1artibartfast wrote: post #81

Earlier quoted context omitted.

yes, and I am saying the first bank should have to use the assets it has tied to you to pay off the debt it has to you, before it can sell them in bankruptcy to bank #2.

And we're saying that's not how that works. When the FDIC takes over the bank, they pay out all of the insured deposits, sell all of the assets, and distribute the remaining funds, which in cases like this one are not enough to cover uninsured deposits. https://www.fdic.gov/consumers/banking/facts/priority.html https://www.fdic.gov/resources/deposit-insurance/faq/

yes, And I am saying that it is not unreasonable that the bank should have to pay back individuals with assets for sale before covering those without assets.

It all comes down to priority in asset recovery.

There is no moral, philosophical, or biblical truth that FDIC insured depositors must be paid out first. It is just as conceivable to have a system where customers with both bank assets and debts have higher priority to recovery, at least for to funds recovered from their assets..

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

#96

Post by theRealMe »

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 might not like it, but the Caymans are absolutely known as a tax haven. You can’t really be arguing that people stash money in the Caymans “because of the transparency”…

“The Cayman Islands are considered a tax haven because the Caymans do not impose a corporate tax, making it an ideal place for multinational corporations to base subsidiary entities to shield some or all of their incomes from taxation. The Cayman Islands do not impose taxes on residents. They have no income tax, no property taxes, no capital gains taxes, no payroll taxes, and no withholding tax.”

https://www.investopedia.com/ask/answers/100215/why-cayman-i....

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

#97

Post by greiskul »

_armchair wrote: post #38
hanniabu wrote: post #18

Earlier quoted context omitted.

Why can't people sell the bank's debt to them?

They could try, but who would pay for it at a worthwhile price? The bank already defaulted. The loan has value and can be sold because the borrower is still solvent.

MSTR bought out it's own Silvergate loan when it collapsed.

So depending on the the loan, you might be able to buy it so you can pay it off at a discount.

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

#98

Post by lowbloodsugar »

nickff wrote: post #71
award_ wrote: post #35

Earlier quoted context omitted.

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.

US banks are regulated by the US government. One part of that regulation is that they must pay into a government body called the FDIC. Most people would say that if the government adds to your cost of doing business by forcing you to pay money proportional to some amount of money you collect or spend, then that's taxes.

Ultimately, the FDIC is backed by "the full faith and credit of the United States government", which means if push comes to shove, it's backed by taxes.

Regardless of whether it really is taxes or not, it is an extra cost of doing business that the Cayman islands do not have, and therefore do not pass on to their customers. So reasonably, if one puts money in the Cayman Islands one is enjoying the benefits of looser regulation, i.e. lower costs. You can't then complain when that looser regulation includes not enforcing deposit insurance and you lose all your money.

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

#99

Post by refurb »

theRealMe wrote: post #96
DelaneyM wrote: post #51

Earlier quoted context omitted.

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 might not like it, but the Caymans are absolutely known as a tax haven. You can’t really be arguing that people stash money in the Caymans “because of the transparency”… “The Cayman Islands are considered a tax haven because the Caymans do not impose a corporate tax, making it an ideal place for multinational corporations to base subsidiary entities to shield some or all of their incomes from taxation. The Cayman…

I think you two are using different definitions of "tax haven".

You're using it (and your source) as "low or minimal taxes" are levied against corporations and people in the Cayman islands.

The grandfather's definition is "a great place to hide your money so you don't have to pay the taxes you're supposed to pay".

I would normally define "tax haven" as the second.

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

#100

Post by imustbeevil »

s1artibartfast wrote: post #95
imustbeevil wrote: post #85

Earlier quoted context omitted.

And we're saying that's not how that works. When the FDIC takes over the bank, they pay out all of the insured deposits, sell all of the assets, and distribute the remaining funds, which in cases like this one are not enough to cover uninsured deposits. https://www.fdic.gov/consumers/banking/facts/priority.html https://www.fdic.gov/resources/deposit-insurance/faq/

yes, And I am saying that it is not unreasonable that the bank should have to pay back individuals with assets for sale before covering those without assets. It all comes down to priority in asset recovery. There is no moral, philosophical, or biblical truth that FDIC insured depositors must be paid out first. It is just as conceivable to have a system where customers with both bank assets and debts have higher prior…

Anyone using the bank signed a contract that defined how a failure affects them. There is absolutely a moral, philosophical, and biblical truth behind honoring that contract.

Galatians 3:15: "To give a human example, brothers: even with a man-made covenant, no one annuls it or adds to it once it has been ratified."

Proverbs 17:18: "One who has no sense shakes hands in pledge and puts up security for a neighbor."

Outside of that fact, the reason that the system is designed this way is to protect normal people from Rich people destroying these banks. If it were the way you're proposing, only the Rich people taking on the most risk and debt would get paid out, and every normal person using the bank would lose everything. We know this, because that's exactly what happened before the FDIC, which is the entire reason it exists.

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