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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

#221

Post by giraffe_lady »

version_five wrote: post #112

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 "foun…

Does realizing this, that they were always like this change your perception of the last decade in any particular way?

I'm genuinely very curious. I've always considered them a bunch of smarmy opportunistic cutthroats, but that shift must be jarring right? Again I don't mean this negatively, genuinely interested in how it changes your understanding of the "startup era," pandemic, etc.

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

#223

Post by [deleted] »

toughlover917 wrote: post #148
beebmam wrote: post #93

Earlier quoted context omitted.

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."

EXACTLY! This will be born by the taxpayer. What were all the VCs f*cking thinking concentrating all their portfolio companies in one financial institution? This was terrible decision making on their part (and by the portfolio companies). Why does this all of a sudden become a taxpayer liability? Because All-In bros got on Twitter and started spamming people?

[deleted]

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

#224

Post by tssva »

version_five wrote: post #112

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 "foun…

The thing I'm most confused about in this comment is that you ever believed that VC's and startups were some kind of noble class.

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

#225

Post by unity1001 »

debacle wrote: post #66

How is this not a bailout?

It is a bailout - the 2008 bailouts were done to save the deposits and investments inside the banks, not 'the shareholders' as so many seem to try to use as an escape argument. Its because if the banks' hollowed assets were not 'made whole', the depositors would not have their money anymore.

Precisely the case with SVB as of this very moment - a sunken bank that does not have enough assets to cover its deposits is being bailed out by the state.

By the state and taxpayer money, make no mistake - even if the funds will not directly come from the US govt., the fees that they will impose on the banks by using the nation-wide bank insurance fund will eventually get imposed on everyone with a bank account in the US by those very banks in turn. So again, the public will pay.

Actually, its beyond using taxpayer money - if you are a taxpayer and your children have bank accounts too, they will also pay the fee instead of just you paying a tax.

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

#226

Post by 2OEH8eoCRo0 »

mortenjorck wrote: post #159
noelsusman wrote: post #15

It's a bit embarrassing to have to invoke the systemic risk exception when regulations on these banks were relaxed in 2018 on the theory that they wouldn't pose a systemic risk if they got into trouble. This should spark some serious soul searching from everyone involved in that effort, but I'm not holding my breath. Anyway, I'm happy for all the depositors.

I think there was an air of "hey, it's been ten years since 2008, the system is working; we can relax Dodd-Frank a little bit." After March 2023, the message should be an unequivocal "no, not even a little bit."

No more polio! We can stop getting polio vaccines!

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

#227

Post by TacticalCoder »

dzink wrote: post #129

So 3 out of 7 Circle USDC bank partners failed in a week. https://www.coindesk.com/markets/2023/03/10/scrutiny-falls-o...

> So 3 out of 7 Circle USDC bank partners failed in a week.

It's almost as if when a company (Circle) had actual assets under management, it was very hard to find honest banks able to deal with actual billions without fucking it up and you're better served yourself. Like Circle which decided to put 80% of the USD it holds to back USDC in short term US treasuries: 80% not at banks, 80% not in long term investments... But 80% in the one most stable and safe asset of them all. And Circle got in trouble for the 20% in actual USD which they thought they could entrust to banks.

Kudos to Circle if they get out of this fine because it certainly seems hard to do business with monkeys.

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

#228

Post by dehrmann »

radicaldreamer wrote: post #151
dehrmann wrote: post #123

Earlier quoted context omitted.

This probably sealed the deal: > We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. Two closures in three days is a sign that you have to take this very seriously.

This is going to put every regional bank on the map for short sellers as equity holders are being wiped out in these cases without depositors being affected. Why would anyone invest in any regional bank with the risk of a equity wipeout day to day?

Reminds me of a knee-jerk post someone made here promoting credit unions. They didn't intend for this reaction, but credit unions actually have the same risks as SVB because their member pools aren't diversified. The ironic lesson was that you should bank with JP Morgan, Citi, or BofA.

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

#229

Post by dragonwriter »

radicaldreamer wrote: post #151
dehrmann wrote: post #123

Earlier quoted context omitted.

This probably sealed the deal: > We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. Two closures in three days is a sign that you have to take this very seriously.

This is going to put every regional bank on the map for short sellers as equity holders are being wiped out in these cases without depositors being affected. Why would anyone invest in any regional bank with the risk of a equity wipeout day to day?

> This is going to put every regional bank on the map for short sellers as equity holders are being wiped out in these cases without depositors being affected. Why would anyone invest in any regional bank with the risk of a equity wipeout day to day?

Why would anyone invest in any business when the risk of bankruptcy exists (FDIC bank takeovers and their resolutions, with or without application of systemic risk exception, are in effect a specialized form of bankruptcy, with a different set of priorities for who gets a haircut, but equity holders are always low on the list for either these or conventional bankruptcies.)

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

#230

Post by mtremsal »

patientplatypus wrote: post #193
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 was reading this and came across "No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer." What does this "special assessment on banks" mean in practice? Do they just go to all the bulge bracket banks and demand that they buy the outdated Treasuries at a loss? How does this work?

IIRC banks pay a fee to the FDIC in exchange for providing insurance, and because the FDIC is not funded by taxpayer money, the fee simply goes up when needed.
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