331–340 of 1001 posts
So 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.
Evidence that SVB paid higher interest than other banks? This doesn’t seem to be the root cause here. They had a huge volatility in deposit base.
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…
1. By next month banks and companies will realize there is no limit to the printer at all. After 2008, we've seen the banks and financial sector misbehave constantly, so expect massive deliberate tanking of entire sectors of the economy because why work when infinity bail money exists.
2. People in the country are already agitated by many social and economic grievances. The average American savings account balance is $4,500. This will one million percent cause a social backlash that will make the Trump movement seem like a child's party. Both the left and right radicals view silicon valley as the center of fascism/wokism, and the average person is barely scrapping by in a time of rampant grocery store inflation. Twitter/Reddit/Etc are full of people taking pictures of their grocery store carts and comparing costs.
Examples need to be made to restore faith in the system, Yellen and the Biden could have used this moment to restore faith by punishing the banking executives.
Political instability and extremism will now increase dramatically.
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.
https://github.com/Qbix/Platform
I believe in gift economies (science, wikipedia, open source) being superior to capitalism and private ownership of platforms.
Instead of Zuck, Elon and Bezos we could use more Linus, TimBernereLee and Vitalik.
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 part that annoys me the most is the idea that all the depositors are mom and pop small businesses or early stage startups. I’ve heard it said that Circle and USDC have an amazing business model: create a coin, call it a dollar, and deposit real dollars in the bank for interest while customers hold the coin. You don’t even have to offer a percent for the deposit like a normal bank. You can then make a couple perce…
This is not a story of class struggle. This is about a government driving confidence in property rights.
So 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.
Yeah, shit is gonna hit the fan over this in terms of domestic turmoil. All those people who took PPP loans and Silicon Valley VCs getting bailed out who railed against student debt relief, it's just mind boggling. Just wait until student borrowers start getting squeezed and the Supreme Court nixes the debt relief. This is not good for long term political stability.
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…
This has happened before in 2008. Secretary Yellen's announcement is important to secure depositor confidence, so the contagion doesn't spread to more banks. If depositors are confident that the government has their back, there's no reason to pull money out.
The “special assessment” is levied directly on banks, and is referenced in 12 U.S.C. 1817(b)(5): In addition to the other assessments imposed on insured depository institutions under this subsection, the Corporation may impose 1 or more special assessments on insured depository institutions in an amount determined by the Corporation if the amount of any such assessment is necessary (A) to provide sufficient assessmen…
I love how © makes a and b pointless.
It’s not like a programming type system where C widens the type to make A and B meaningless. It’s that A and B are communicating intent. “It’s meant for these things… and maybe something else we don’t yet know.” Apparently this is important if you ever had to fight over it.
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…
What did VCs do wrong here? They warned of impending solvency problems at SVB and told founders to withdraw their money ASAP. And indeed, the bank failed the next day. The companies in trouble are those who didn't listen to the VCs.
VCs Group-B to Z were too late so they asked Govt to help them.
It's not just founders who put their money there, VC funds are there as well and they are probably close to 100% uninsured (cause it's the Fund Series I - XXX).
If you get your hands on the list of depositors, you'll see the list of Funds Series from VCs.