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SVB chief pressed lawmakers to weaken bank risk regulations

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Re: SVB chief pressed lawmakers to weaken bank risk regulations

#31

Post by mistrial9 »

nico wrote: post #14
bratao wrote: post #8

I want to have sympathy for the depositors, but it is hard to knowing that they chose to keep their funds in an bank that was actively lobbying to weaken risk regulations. There multiple products that would help in this situation, such as insurances and virtual accounts that split between multiple FDIC accounts/banks. Bailing out these depositors would send the wrong message and encourage moral hazard, i.e., the beli…

> Bailing out these depositors would send the wrong message and encourage moral hazard This seems to be the way the financial system has operated in the last 20 years. So I’d expect a bailout. Also, SVB depositors weren’t just random individuals, they are some of the wealthiest people and organizations in the country or even the world. They are going to leverage their power and influence to recover as much as they ca…

> prefer their family/friends/network than some hardworking rando

this is naive and badly mistaken. This kind of criticism on a very large scale is exactly the driver the flavor of business today; constant, ruthless and formula-driven partnerships taking control and demanding new 'opportunities'.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#32

Post by mrkurt »

lp0_on_fire wrote: post #20
nico wrote: post #14

Earlier quoted context omitted.

> Bailing out these depositors would send the wrong message and encourage moral hazard This seems to be the way the financial system has operated in the last 20 years. So I’d expect a bailout. Also, SVB depositors weren’t just random individuals, they are some of the wealthiest people and organizations in the country or even the world. They are going to leverage their power and influence to recover as much as they ca…

> Also, SVB depositors weren’t just random individuals, they are some of the wealthiest people and organizations in the country or even the world. They are going to leverage their power and influence to recover as much as they can as quickly as they can. All the more reason regular people need to be screaming to high heaven that those rich and powerful people will get eaten if they push for and eventually receive a b…

There's no bailout. SVB is dead. People are pushing for depositors to get their money back. Which is, I think, reasonable.

Putting your company money in a bank account should be safe. We should regulate banks like SVB to make it more safe. We should also make sure when the regulations fail the people who use a bank, they can continue doing business.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#33

Post by mrkurt »

ProllyInfamous wrote: post #13
bratao wrote: post #8

I want to have sympathy for the depositors, but it is hard to knowing that they chose to keep their funds in an bank that was actively lobbying to weaken risk regulations. There multiple products that would help in this situation, such as insurances and virtual accounts that split between multiple FDIC accounts/banks. Bailing out these depositors would send the wrong message and encourage moral hazard, i.e., the beli…

"Privatize profits, subsidize losses." It's the global economy way! Hint: nothing will change, depositors and banks will get bailed out. Water is wet.

SVB isn't getting a bailout. That company is gone. Their shareholders lost everything they invested.

Depositors don't get bailouts. That's not what bailouts are.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#34

Post by capableweb »

nibbleshifter wrote: post #23
nico wrote: post #14

Earlier quoted context omitted.

> Bailing out these depositors would send the wrong message and encourage moral hazard This seems to be the way the financial system has operated in the last 20 years. So I’d expect a bailout. Also, SVB depositors weren’t just random individuals, they are some of the wealthiest people and organizations in the country or even the world. They are going to leverage their power and influence to recover as much as they ca…

> Also, SVB depositors weren’t just random individuals, they are some of the wealthiest people and organizations in the country or even the world Not anymore!

Even if you end up getting back "only" 250K USD, you end up being in the 1% of the world when it comes to wealth. That sort of cash is really not "normal" or "common" to have in a bank account, in the world at large. Looks differently in concentrated high-wealth areas like Silicon Valley of course, but still plenty of wealth compared to the rest of the world.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#35

Post by jcranmer »

epolanski wrote: post #10
zerop wrote: post #3

So gradually it's all opening up. The scams at those levels are most impacting one to people. I only see more fallouts in future.

It's amazing how post 2008 nothing was learned by US and pretty much no major bank but top 10 is expected to have more than 5/10% of cash-like collateral of deposits. In Europe, no single bank is allowed to have less than 100% collateral of deposits, not one, and yet they manage to make good money and profits nonetheless.

AIUI, both the EU and the US primarily rely on Basel III for regulations, which means there's no meaningful difference in collateralization requirements of banks.

Okay, there is one meaningful difference: larger banks have higher requirements, and since the US banks tend to be larger, that means that the US tends to have higher requirements than the EU...

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#36

Post by mrkurt »

epolanski wrote: post #10
zerop wrote: post #3

So gradually it's all opening up. The scams at those levels are most impacting one to people. I only see more fallouts in future.

It's amazing how post 2008 nothing was learned by US and pretty much no major bank but top 10 is expected to have more than 5/10% of cash-like collateral of deposits. In Europe, no single bank is allowed to have less than 100% collateral of deposits, not one, and yet they manage to make good money and profits nonetheless.

Does the EU require 100% _liquid_ collateral? Because European banks are also at risk from bank runs. Any bank that makes loans is.

SVB (probably) more than 100% deposit collateral. It just lost value very quickly.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#37

Post by gregw2 »

mrkurt wrote: post #33
ProllyInfamous wrote: post #13

Earlier quoted context omitted.

"Privatize profits, subsidize losses." It's the global economy way! Hint: nothing will change, depositors and banks will get bailed out. Water is wet.

SVB isn't getting a bailout. That company is gone. Their shareholders lost everything they invested. Depositors don't get bailouts. That's not what bailouts are.

If taxpayers help wealthy depositors get more than their insured amounts, (and more than a normal liquidation of assets) that is a bailout

It may or may not be the right thing to do, but it most definitely is a bailout.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#38

Post by MrMan »

mrkurt wrote: post #32
lp0_on_fire wrote: post #20

Earlier quoted context omitted.

> Also, SVB depositors weren’t just random individuals, they are some of the wealthiest people and organizations in the country or even the world. They are going to leverage their power and influence to recover as much as they can as quickly as they can. All the more reason regular people need to be screaming to high heaven that those rich and powerful people will get eaten if they push for and eventually receive a b…

There's no bailout. SVB is dead. People are pushing for depositors to get their money back. Which is, I think, reasonable. Putting your company money in a bank account should be safe. We should regulate banks like SVB to make it more safe. We should also make sure when the regulations fail the people who use a bank, they can continue doing business.

depositors are only entitled to what is left over after resolution of the assets, nothing more! dont make this situation worse by advocating for something unethical and which is bad for the entire system

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#39

Post by hn_throwaway_99 »

bratao wrote: post #8

I want to have sympathy for the depositors, but it is hard to knowing that they chose to keep their funds in an bank that was actively lobbying to weaken risk regulations. There multiple products that would help in this situation, such as insurances and virtual accounts that split between multiple FDIC accounts/banks. Bailing out these depositors would send the wrong message and encourage moral hazard, i.e., the beli…

> Bailing out these depositors would send the wrong message and encourage moral hazard, i.e., the belief that someone else will always bear the costs of risky behavior.

Totally agree, and this is what makes me so furious. On one hand, you have all these business leaders demanding fewer regulations because they're "costly", but then when shit hits the fan suddenly everyone, from congresspeople on both sides, to billionaire investors and tech leaders, is crying on Twitter how it's the "end of civilization" if they don't get a bailout.

The whole purpose of things like insurance and regulations is so that you can plan for disasters before they occur. If political pressure can ensure a bailout regardless if depositors are over the FDIC limit, than we should just drop the pretense of there being "uninsured deposits" and demand that depositors pay for insurance, regardless of their deposit amount, up front.

At the very least they need laws in place so they can claw back money from those who took advantage of loose regulations (or prosecute egregious cases). The CEO of SVB sold millions of stock 2 weeks before it collapsed. He better be first in line to return money to make depositors whole if there is a bailout.

So sick of this "heads I win tails you lose" BS.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#40

Post by mrkurt »

gregw2 wrote: post #37
mrkurt wrote: post #33

Earlier quoted context omitted.

SVB isn't getting a bailout. That company is gone. Their shareholders lost everything they invested. Depositors don't get bailouts. That's not what bailouts are.

If taxpayers help wealthy depositors get more than their insured amounts, (and more than a normal liquidation of assets) that is a bailout It may or may not be the right thing to do, but it most definitely is a bailout.

Yes that's reasonable. That's probably not what's happening here. In some ways, the _promise_ of the FDIC getting depositors almost all their money back is enough.

The biggest problem people have right now is time. Over time, everyone will probably get most of their deposits from SVB back from SVB assets.

What people (the ones who know what they're talking about, anyway) are asking for is closer to taxpayers covering the costs of getting that money back sooner. There's a definite cost, but it's not taxpayers writing checks to cover deposit values.

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