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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

#131

Post by moffkalast »

mgraczyk wrote: post #61
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…

In cases where you can't predict the future appropriately, sometimes it's better to make prudent decisions that help everyone instead of attempting to punish the sinful. Keep in mind that bank shareholders and senior management are going to get wiped out and fired.

You mean those executives that sold their shares of the bank weeks before, ending up with with fat stacks and completely unaffected?

Yeah I kinda doubt they'll get what's coming to them unfortunately. Insider trading's only a crime when it's poor people doing it.

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

#132

Post by lotsofpulp »

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

“They” as a group then reduce the interest rates they can pay their depositors because they have extra costs to pay for SVB’s depositors gains.

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

#133

Post by spdustin »

belter wrote: post #73
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…

"...recovered by a special assessment on banks, as required by law..." - Would love to know what law/regulatory framework she is referring to. Janet Yellen is ready to become a US based Liz Truss... Now expect a contagion effect next week, if SVB liabilities are shown worst than currently known, and made to bare on other banks capital requirements... "US banks sitting on unrealized losses of $620 billion" - https://e…

12 U.S.C. 1817(b)(5) is the “regulatory framework” you’re looking for. The FDIC can levy a special assessment for literally any purpose it seems necessary.

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

#137

Post by coffeebeqn »

seo-speedwagon wrote: post #98

This is 100% a bailout and the wording that “no losses […] will be borne by the taxpayer” is a shameful misrepresentation. Just because a bunch of VCs and founders didn’t realize they were at risk of this happening if they kept all their money in one bank, they still bear the responsibility of their losses. Looking forward to this new future where uninsured deposits are actually 100% backed by the FDIC, so actually i…

What’s the moral hazard in the FDIC insuring a much larger number than 250k?

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

#138

Post by expazl »

oblio wrote: post #81
pdq wrote: post #68

Yet another new precedent by the Fed and FDIC. All depositors are now guaranteed their funds if a bank fails. This is the definition of Moral Hazard [1]. [1] https://en.wikipedia.org/wiki/Moral_hazard

If payment is done by other banks, doesn't that serve as mitigation? Sure, when the government pays, it's super risky. However if other banks pay, for sure they'll either self regulate or push for better legislation.

> If payment is done by other banks, doesn't that serve as mitigation?

Seems the exact opposite. Why would any bank ever conduct risk assessment if their potential failure will be paid by the industry as a whole. This effectively tells any other bank that might be fearing for a bank run to stock up on super risky assets and to let the dice roll to see if they end up winning big, or if their competitors end up paying for their losses.

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

#139

Post by weard_beard »

twiddling wrote: post #48
greatjack613 wrote: post #30

It’s not enough for senior management to be removed. Malfeasance like this needs to have real life consequences.

a stern talking to is in order

A stern talking to about using their infinite money wisely, and not charging customers for the convenience. Perhaps a finger wag about doubling overdrafts to pay for their infinite money. A tsk for tripling monthly payments for student checking accounts.

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

#140

Post by avalys »

balozi wrote: post #51

So, is this a bailout, that we are definitely absolutely not calling a bailout?

It's not a bailout. Silicon Valley Bank will cease operating, the shareholders get zero, anyone who loaned them money likely gets zero, the executives have been fired, the employees will all be laid off within two months.

The point of this action is to ensure that Silicon Valley Bank's customers, however, will not be harmed by doing business with a regulated major bank.

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