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How deep is the rot in America’s banking industry?
201–210 of 325 posts
Re: How deep is the rot in America’s banking industry?
#202Re: How deep is the rot in America’s banking industry?
#203All banks are suffering, buy some are suffering more than others. It's also unclear how the Fed's actions are going to impact the situation going forward. Here are my unanswered questions: 1. What's going to happen to risk management at banks now that the government has shown themselves willing to backstop all deposits. Is there really any reason to spend money hedging risk? 2. What's going to happen to the bond mark…
>Is there really any reason to spend money hedging risk?
Shareholder money is still on the line?
Re: How deep is the rot in America’s banking industry?
#204SVB executives knew exactly what they were doing.
The Greg Becker of the article (SVB CEO & president) was in SF Fed board of directors until Friday [1] and successfully lobbied for lax rules for banks like SVB. The current risk officer worked at NY Fed [2] and at Fitch Ratings (!) and Deutsche Bank [7]. Previous risk officer was director of Freddie Mac [3]. Yellen was the 11th President of the SF Fed [5] and the current president is her protégé [6].
They knew exactly what they were doing. The Fed looked the other way. They sold a lot of stock in the past month [8]. They are very well connected into the Fed and Treasury. I doubt anybody will get any kind of serious legal troubles.
[1] https://www.reuters.com/markets/us/ceo-failed-silicon-valley...
[2] https://www.svb.com/news/company-news/svb-hires-kim-olson-as...
[3] https://www.linkedin.com/in/laura-izurieta-1370144
[4] https://fortune.com/2023/03/10/silicon-valley-bank-chief-ris...
[5] https://en.wikipedia.org/wiki/Janet_Yellen
[6] https://en.wikipedia.org/wiki/Mary_C._Daly
[7] https://nypost.com/2023/03/13/silicon-valley-bank-execs-work...
[8] https://twitter.com/unusual_whales/status/163455502148748083
And this is just scratching the surface.
Re: How deep is the rot in America’s banking industry?
#205Is FDIC the only game in town? If you have ten million in the bank wouldn't you get private insurance for gap coverage?
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Re: How deep is the rot in America’s banking industry?
#206People seem to have a really hard time with the idea that, in the SVB debacle, the system worked effectively and pretty much the way it was planned to. It's not even clear what people are upset about. There's an article on the front page of The Atlantic today about how angry we should be about SVB, and if you read it, it's hard to figure out who those angry people should be. Equity is getting zeroed out. Management w…
I am one of those who has been harmed. I work at a different bank. The rates charged to banks for FDIC insurance have been based on the assumption that the FDIC would cover depositor losses up to the insured limit. By choosing to cover all losses even above the insured limit, we have chosen to put the burden for paying for those losses on all of the other banks (and indirectly on those banks depositors). I suspect th…
I keep reading comments like this, but I've seen no well sourced material saying that the FDIC is raising rates.
Do you have some reliable source about it?
(NOT a "look at it logically" or "here's how my health insurance works, why would the FDIC be different", or "do your own research" or anything else that's some random internet comment - I'm looking for real meat about this claim).
Re: How deep is the rot in America’s banking industry?
#207Is FDIC the only game in town? If you have ten million in the bank wouldn't you get private insurance for gap coverage?
This is known as "Massachusetts".
Specifically DIF:
Though DIF has only $500 million in assets and only services member banks in US state of Massachusetts.
Re: How deep is the rot in America’s banking industry?
#208I was pleased to read Nathan Tankus' take[1] on all this, although I wish I understood it better, which was that a lot of policy ideas that have been somewhat fringe are becoming mainstream in the last week: > The prospect of unlimited deposit insurance, whether de facto or de jure, is leading to a large-scale reconsideration of views among even “moderate” banking scholars. I imagine that's usually how real policy pr…
It depends on your view of "progress." Early in the pandemic, people thought you really could print money indefinitely and MMT was right. Now people see that classical notions of inflation are still valid.
Which people thought those things? I feel like at the time I was only hearing criticism.
Re: How deep is the rot in America’s banking industry?
#209Earlier quoted context omitted.
I am one of those who has been harmed. I work at a different bank. The rates charged to banks for FDIC insurance have been based on the assumption that the FDIC would cover depositor losses up to the insured limit. By choosing to cover all losses even above the insured limit, we have chosen to put the burden for paying for those losses on all of the other banks (and indirectly on those banks depositors). I suspect th…
> I am one of those who has been harmed. How were you harmed specifically? > you will not see the interest rate on savings accounts go up as much as it might have otherwise. Bullshit. Interest rates for savings accounts are and have been an absolute joke. Are they going to become a more hilarious joke? Probably but seriously, who cares? > I'm not saying this outcome is terrible, perhaps it was the best solution for t…
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Re: How deep is the rot in America’s banking industry?
#210Silicon Valley Bank was giving executives easy 50 y mortgages for mansions and commercial real estate. This is the garbage now in SVB's balance sheet. It's not just 10y treasuries. Read the actual reports.
In turn, VCs/founders/executives promoted SVB. And now they don't want to be their own counterparties on a bet gone wrong.
https://twitter.com/one4thecashbag/status/163533710637676953...