Socialism for VC but not for thee.
Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
311–320 of 1001 posts
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#312A lot of people are asking “how is this not a bailout?” right now. I would caution against dismissing them, it’s a legitimate question. Pointing to the “Taxpayers will not pick up the bill” line counts as dismissive: this is a press release, and it’s from the government, that’s two strong reasons for some skepticism. So, in earnest, how is it not a bailout? Feel free to offer your answer! Mine is: “Banks are required…
> If there’s a shortfall they will charge the banks a little extra in their next insurance payment, but keep in mind we’re talking about at most a few billion dollars spread over every bank; they are unlikely to pass on a small cost like that, but even if they do pass on the cost to the taxpayer it will be something like $10 per person maximum.
Sounds like a bailout at the taxpayers' expense, just with extra steps. A bailout of a few billion dollars that banks are allowed to pass on to their customers is still a bailout.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#313So 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…
I don't understand this comment. 1) SVB was not managed by VC's. 2) SVB went under because they bought US Treasuries, not because they took risky bets on startups.
wasn't it ultra low interest investments, but very long term? They should have known it wasn't going to stay like that after the crazy 2020 ride. :/
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#314Incredible that this can just be done over a weekend. Is there a good writeup of (what I assume is a mountain-load of work) of how this works, and what happens during this process? Also, will the FDIC just eventually feed SVB's MBSs back into its insurance fund once they mature?
Lehman Brothers collapse, bailout negotiations and bankruptcy happened over a weekend. AIG also bailed out 24hrs later
https://www.brookings.edu/research/history-credits-lehman-br...
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#315So 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…
>how prominent VCs behaved How did they behave? Try to pull their money out of a failing bank? I would too ...
People like Jason Calcanis were screaming on Twitter like the world was going to collapse and that the contagion would take down regional banks hurting ordinary consumers.
All because he wanted the government to bail out his startups.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#316Earlier quoted context omitted.
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.
>> and senior management are going to get wiped out and fired. Yeah, let's punish the management like we did in 2008... "SVB executive was Lehman Brothers CFO prior to 2008 collapse" https://m.economictimes.com/news/international/business/svb-...
And to really punish him, we shall strip him of his "Class A" shareholder status at San Francisco FED.
https://www.bloomberg.com/news/articles/2023-03-11/svb-ceo-b...
But not before we let him cash in $3.6M in stock. https://www.forbes.com/sites/brianbushard/2023/03/10/svb-fin...
Let this be a lesson to all of you other banks.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#317So depositors at banks taking on big risks get elevated interest rates or other perks for years, and when the shit hits the fan depositors that put their money in prudent banks get to bail them out through higher fees. And people wonder why turnout is low. There’s no way to vote for non captured politicians.
Actually a lot of depositors would be happy with a narrow bank that takes no risk, just holds the money at the Fed. But the Fed decided it's too safe so narrow banking is essentially banned. Seems fair if they ensure safety of deposits in return.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#318A lot of people are asking “how is this not a bailout?” right now. I would caution against dismissing them, it’s a legitimate question. Pointing to the “Taxpayers will not pick up the bill” line counts as dismissive: this is a press release, and it’s from the government, that’s two strong reasons for some skepticism. So, in earnest, how is it not a bailout? Feel free to offer your answer! Mine is: “Banks are required…
One reason why it's not (mostly) a bailout is that SVB's deposits are (as far as we know) still backed by bonds and mortgage backed securities, the problem is that those securities can't be easily sold right now (because people want higher valued investments) - a sudden forced sale means selling at a loss (or a cash flow crisis which is how SVB got into this state), holding on to them and letting them play out and they still have their value (worst case you sell them at a loss that is the difference between what they yield and what current investments yield)
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#319> Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
Not convinced both those statements can be true.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#320So 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…
VC insider types won this one in some sense but at the cost of some credibility (those most hysterically yelling om twitter at least)