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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

#151

Post by JohnFen »

DelaneyM wrote: post #145
2OEH8eoCRo0 wrote: post #63

Earlier quoted context omitted.

https://en.wikipedia.org/wiki/Cayman_Islands > The nation's low tax rates have led to it being used as a tax haven for corporations; there are 100,000 companies registered in the Cayman Islands, more than the population itself. The Cayman Islands have come under criticism for allegations of money laundering and other financial crimes, including a 2016 statement by former US president Barack Obama that described a par…

Our decision to have lower taxes, because we don’t need to raise more money, seems an odd thing to criticize us for. Companies do not choose Cayman. They choose “not my home/operating country”, then as a well regulated and safe third party location many of them end up in Cayman. And you should be glad they do, because here they operate transparently and legally, and if it’s for tax benefits whatever tax loopholes exi…

> Our decision to have lower taxes, because we don’t need to raise more money, seems an odd thing to criticize us for.

I don't see where the Cayman Islands were criticized.

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

#152

Post by yieldcrv »

HWR_14 wrote: post #133
yieldcrv wrote: post #50

Earlier quoted context omitted.

mmmm not quite > SVB Cayman Islands … which had deposits from the bank’s clients in China, Singapore and other parts of Asia, including venture-capital and private-equity firms A) non-Americans should never bank directly in the US given the option of the Cayman Islands because the US not a competitive jurisdiction in comparison to more competitive jurisdictions such as the Caymen Islands, its way more than just the t…

> A) non-Americans should never bank directly in the US given the option of the Cayman Islands because the US not a competitive jurisdiction It's pretty competitive when your couterparty goes bankrupt. If you opt out of US protections, congrats, you've opted out of US protections.

So the FDIC shouldn’t have made it riskier than it was then

They opted out of US protection and got US receivership of the worst kind

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

#153

Post by Volundr »

DelaneyM wrote: post #141
jrflowers wrote: post #62

Earlier quoted context omitted.

Cayman is factually a place that is very commonly regarded as a tax haven. You appear to think that that near-ubiquitous reputation is because of some sort of misunderstanding? Can you explain why you think the Cayman Islands does have that reputation? Is it the result of some sort of conspiracy? Angry people weaving tales to assail the reputation of the citizens of Cayman?

Many people misunderstand the difference between legal tax mitigation and tax avoidance. If your country allows companies or individuals to not be taxed on assets they locate overseas somehow, that’s on your country, not on us. And it has nothing to do with the money being here. All we can do is ensure that money flows are transparent and legal, which we do. We put a lot of effort into being the world’s safest and be…

> If your country allows companies or individuals to not be taxed on assets they locate overseas somehow, that’s on your country, not on us.

Who is blaming the Caymans? They Caymans is commonly used as a tax haven for US companies due to US laws. It's on the US to fix those laws. Correctly observing the Caymans is used as a tax haven does not imply the Caymans should change, and I'm not aware of anyone in the US calling for holding the Caymans responsible. I am aware of many calling for reform on the laws that make havening profits in a foreign country possible.

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

#154

Post by s1artibartfast »

HWR_14 wrote: post #130
s1artibartfast wrote: post #128

Earlier quoted context omitted.

in the USA, the order is: Assets -> cash -> forgive any loans to the people who had accounts -> payoff FDIC insured accounts -> distribute remainder according to the courts This is what happened for US customers with both loans and unsecured accounts. bank #2 says they dont have to forgive the loans specifically for some customers.

Technically it goes: FDIC takes over bank -> FDIC allows people to pay off their loans with the same bank using funds at the same bank -> FDIC pays off insured accounts and takes on debt from the bank -> Sells Assets -> Uses cash to pay itself back by being first in line with the courts. If it gets to Bank #2, it's not their problem and they specifically don't have to. Also, this wasn't a US bank! It wasn't under FDI…

>Also, this wasn't a US bank! It wasn't under FDIC control

That's the part that I disagree with. My understanding is that FDIC took possession and sold off the International loans to bank number two, but did not discount them by the international account balances.

It doesn't seem right to me that the FDIC can say "it's not my problem we don't have control“ while simultaneously taking and selling the international loans

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

#155

Post by hanniabu »

epgui wrote: post #30
hanniabu wrote: post #18

Earlier quoted context omitted.

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

They probably could, but who would “buy” a liability? If someone wanted to sell you their problems, how much money would you pay for the privilege of the burden?

> who would “buy” a liability?

This is literally what this thread is about, people's debt getting passed on from the bank to someone else

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

#156

Post by epgui »

hanniabu wrote: post #155
epgui wrote: post #30

Earlier quoted context omitted.

They probably could, but who would “buy” a liability? If someone wanted to sell you their problems, how much money would you pay for the privilege of the burden?

> who would “buy” a liability? This is literally what this thread is about, people's debt getting passed on from the bank to someone else

No, when people owe money to the bank, that's an asset on the bank's balance sheet. That's the opposite of a liability. Companies will purchase the bank's assets, because the bank's assets (which are your liability) are worth something.

It doesn't work the other way around: if your end of it is a liability (your loan/mortgage/whatever), nobody wants to buy that from you, because it's worth a negative amount of money, it's a burden, a liability. Companies want to purchase the other end of the deal, because it's what makes them money: it has a positive value.

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

#157

Post by epgui »

red-iron-pine wrote: post #150
omnimus wrote: post #120

Earlier quoted context omitted.

Play capitalism games, win socialism prizes. Thats what they would like.

i.e. socialize the losses, capitalize the gains. see also COVID PPP loans

Whatever issues these may have, they are completely irrelevant to the topic or to this thread.

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

#158

Post by [deleted] »

DelaneyM wrote: post #139
PragmaticPulp wrote: post #58

Earlier quoted context omitted.

> 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…

There’s tax mitigation and tax avoidance, and I feel like you’re conflating the two. If your country allows a company to locate money somewhere else and not be taxed on it, that’s on your county, not on us. The best we can do is make sure it’s visible, which we do.

[deleted]

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

#159

Post by HWR_14 »

s1artibartfast wrote: post #154
HWR_14 wrote: post #130

Earlier quoted context omitted.

Technically it goes: FDIC takes over bank -> FDIC allows people to pay off their loans with the same bank using funds at the same bank -> FDIC pays off insured accounts and takes on debt from the bank -> Sells Assets -> Uses cash to pay itself back by being first in line with the courts. If it gets to Bank #2, it's not their problem and they specifically don't have to. Also, this wasn't a US bank! It wasn't under FDI…

>Also, this wasn't a US bank! It wasn't under FDIC control That's the part that I disagree with. My understanding is that FDIC took possession and sold off the International loans to bank number two, but did not discount them by the international account balances. It doesn't seem right to me that the FDIC can say "it's not my problem we don't have control“ while simultaneously taking and selling the international loa…

You are right the FDIC did take control. International accounts of the FDIC ensured banks are explicitly not protected.

In any case, those people who complain should take it up with the FDIC.

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

#160

Post by TheAlchemist »

DelaneyM wrote: post #137
TheAlchemist wrote: post #83

Earlier quoted context omitted.

I thought it's a joke, but apparently not. It can be both - transparent, and a tax heaven. And it's one of the most well-known. Sorry, but in at least 2 countries where I lived, if you hear Cayman, you immediately think "tax evasion". I get that you're offended though - when you see the Swiss - that somehow managed to turn their most shady banking system into a national pride thing - and admired but others too !

It’s mostly Grisham’s fault from his 90’s book “The Firm”, IMO. Also, like much of the world, before global money laundering laws and regulations came into being there _was_ a lot of tax evasion happening here. But that hasn’t been the case for twenty years, we grew up.

That's interesting ! I would like to read a bit more about it - any pointers ?
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