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Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
371–380 of 1001 posts
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#372So 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…
It's impossible to move on. There were insufficient funds to pay depositors; meaning, the money was gone - Since the money didn't vanish into thin air; somebody got that money through some scheme.
Now taxpayers are going to be footing the bill... It's a government-ordained transfer of wealth from good, honest taxpayers to whatever (possibly malicious) entities got that money.
It's theft. It's straight theft. Not even complicated. Theft is now legal depending on who you are.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#373A 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…
> the FDIC expects to recover 99% of the money Where do you see the 99%? My understanding is the bulk of their assets (long-term bonds) dropped 30% in value. If these bonds are sold on the market, they wont have 99% of the money. Maybe the treasury is giving them the money back of the bond?
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Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#374Earlier 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.
You mean those executives that sold their shares of the bank weeks before, ending up with with fat stacks and completely unaffected? Yeah I kinda doubt they'll get what's coming to them unfortunately. Insider trading's only a crime when it's poor people doing it.
This is … quite the misrepresentation though? No one sold their entire stake, one executive’s (albeit, sure, the CEO) pre-planned sale of a small portion of his holding executed two weeks ago.
Not a great look, but quite from what you’re insinuating.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#375So 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…
You're going too far by calling VCs "rent seekers". They do provide value with other peoples' money to build companies. No matter how much people love to hate them, they are a necessary part of the startup ecosystem. Most of them fail and end up in tears in the long run -- it's just the nature of VC. There's no need to punch them when they're down.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#376So 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…
There is nothing but economic interest. If you want to predict how any company, startup or not, will behave just look at how they make money. In 99% of the cases companies act according to their business model. It is that simple, there is nothing else. All the "we will make the world a better place" rhetoric and mission statements are just recruiting and PR BS.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#377It's a bailout.
They're putting the cost, presently unknown and probably not huge, on the other banks. But the message to depositors everywhere, of every size, is "don't worry about your bank's solvency, we'll protect you".
So market scrutiny is removed as a discipline on bank asset strategy. That leaves regulation as the only control. That politicizes and bureaucratizes bank lending. And the general presumption that Big Government will protect you from yourself is extended just another smidge.
If you had the wit to think "hey, maybe I should be careful with $5 million" and bothered to put it in T-bills or an insured sweep, you're just a nerd who should know the Government will take care of such things.
It isn't the end of the world, but it's a sign of how corrupt and complacent we've become.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#378So 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…
Joe Weisenthal (who is always worth listening too in matters of finance) put it well here: https://twitter.com/thestalwart/status/1634985524007157760?s...
Some VCs were definitely better than others: the very worse was probably the All In Crew who were trying to spread a bank run to tie the government's hand. Truly despicable.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#379This is 100% a bailout and the wording that “no losses […] will be borne by the taxpayer” is a shameful misrepresentation. Just because a bunch of VCs and founders didn’t realize they were at risk of this happening if they kept all their money in one bank, they still bear the responsibility of their losses. Looking forward to this new future where uninsured deposits are actually 100% backed by the FDIC, so actually i…
One of the key components of a bailout is that the company still exists. In this case, the company does not exist any more, and all shareholders have lost their stock. So whilst there may be some superficial appearance of a bailout (and we don't yet know how much that is, as we don't actually know the value of the assets that are recoverable), it is inaccurate to say that this is "100% a bailout".
I'm talking about the uninsured depositors. Who are first in line after the DINBoSC liquidates SVB's assets. And it doesn't matter what actually shakes out in the end; even if some miracle occurred and the FDIC convinced some other bank to buy out the rubble of SVB, or they managed to sell off SVB's assets without taking a loss (virtually impossible), that does not change whether or not this was a bailout.
Because before any of that was announced, the FDIC and Treasury said that no matter what, they will guarantee uninsured depositors will be made whole. That is not what the rules are, those depositors are getting special treatment not afforded to anyone else. They gambled (and most apparently didn't know it), lost, and the FDIC are going to make sure they don't take a haircut.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#380So 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.
Hey, there’s nothing wrong with the government protecting people when they lose everything due to circumstances beyond their control. I’m glad to see VCs finally fighting for their progressive ideals.