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Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

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Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#111

Post by saurik »

mixdup wrote: post #79
hn_throwaway_99 wrote: post #40

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…

Well, paying for it by a special assessment on banks means the banks aren't going to get a free ride. They, as a group, have to get their shit together otherwise they will pay dearly

I think (but am honestly not 100% sure here) that the argument is if other banks are going to have to pay for SVB being greedy, it is in some sense punishing banks for not being greedy enough; as while, sure, the SVB investors are getting hit: 1) a lot of them already made a lot of money years ago (and potentially exited), 2) many of the executives apparently literally sold out last month, and 3) they were hoarding a lot of deposits that other banks couldn't get because they weren't being risky enough. But so like, saying banks are paying dearly for this is strange, as it is the wrong banks... and, by extension, the customers at those banks, who are in turn making decisions about what bank to use in the future.

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#112

Post by version_five »

So they made their decision, everyone can move on. I just hope nobody forgets how prominent VCs behaved during the brief period of uncertainty. The idea of some noble class of investors championing disruption is dead. They're just a bunch of rent seekers like everybody else. For some silly reason I had some respect for the startup industry before this, now I see it as a joke.

It's great at a personal level that "founders" and startup employees didn't have to do without. But it's important to remember that they no longer automatically deserve any credit for taking risks and doing something new. It might as well be a bunch of FAANG employees

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#114

Post by spdustin »

The “special assessment” is levied directly on banks, and is referenced in 12 U.S.C. 1817(b)(5):

In addition to the other assessments imposed on insured depository institutions under this subsection, the Corporation may impose 1 or more special assessments on insured depository institutions in an amount determined by the Corporation if the amount of any such assessment is necessary

(A) to provide sufficient assessment income to repay amounts borrowed from the Secretary of the Treasury under section 1824(a) of this title in accordance with the repayment schedule in effect under section 1824(c) of this title during the period with respect to which such assessment is imposed;

(B) to provide sufficient assessment income to repay obligations issued to and other amounts borrowed from insured depository institutions under section 1824(d) of this title; or

(C) for any other purpose that the Corporation may deem necessary.

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#115

Post by MuffinFlavored »

zamfi wrote: post #42

Wow, here’s the real news: > Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law. Note the uninsured depositors clause in there — FDIC &co seem to have acted unilaterally to extend deposit insurance beyond the 250k and to the full amounts of any deposit account. And they are charging the banks for it. If this doesn’t stop a ru…

> Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed.

how do you interpret this part? what is an example of somebody who would be an unsecured debtholder? as in somebody with a stake in SVB the buisness?

https://finance.yahoo.com/quote/SIVB/

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#116

Post by [deleted] »

zamfi wrote: post #42

Wow, here’s the real news: > Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law. Note the uninsured depositors clause in there — FDIC &co seem to have acted unilaterally to extend deposit insurance beyond the 250k and to the full amounts of any deposit account. And they are charging the banks for it. If this doesn’t stop a ru…

[deleted]

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#117

Post by unethical_ban »

beebmam wrote: post #93
hn_throwaway_99 wrote: post #40

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…

How do you square this statement of yours: > Yellen has just broadcast that FDIC insurance is essentially unlimited, as long as you can threaten wider disruption to the economy. with this quote from the Treasury Dept statement? > "No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer."

"Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law."

The fungibility of money aside, my personal taxes will not pay for this.

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#118

Post by salawat »

morelisp wrote: post #14
serf wrote: post #8

> No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer. i'm out of touch with how much of this works, can someone explain how this is paid without burden to the taxpayer?

It's coming out of the insurance fund, which is paid into by banks. So the cost is still ultimately borne across a wider sphere, but not the government per se. (This is what's meant by "Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.") The costs aren't borne by "the taxpayer", but an awful lot of taxpayers who had nothing…

Translation: cost is being bore by the taxpayer but people are staking out the stop posts on their analysis to avoid admitting it.

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#120

Post by siavosh »

hn_throwaway_99 wrote: post #40

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…

I view it kind of like parenting. Depending on what kind of kid you’ve raised you may not want to signal to them that no matter what you’ll financially bail them out. Hoping they’ll make the right choices.
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