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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

#41

Post by AH4oFVbPT4f8 »

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.

Why are you happy for the depositors? They took a risk depositing more than what was covered by fdic.

to clarify, i'm happy for the employees, workers, etc that will remain employed while their company made poor decisions. My beef is that companies knowingly took risks. Would this even be an issue if all the VC companies didnt all try to pull their money out on Thur/Fri ?

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

#42

Post by zamfi »

Wow, here’s the real news:

> Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.

Note the uninsured depositors clause in there — FDIC &co seem to have acted unilaterally to extend deposit insurance beyond the 250k and to the full amounts of any deposit account.

And they are charging the banks for it.

If this doesn’t stop a run on the banks, nothing will, frankly.

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

#43

Post by morelisp »

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.

The depositors were largely those with means to manage risk but not doing so. Surely you mean you're happy for the workers, clients, contractors, etc., not the depositors? Right? The backstop was sold on the backs of those people, and if they're not the overwhelming beneficiary it means the depositors might not have been totally honest with us about their motives!

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

#44

Post by zachrip »

AH4oFVbPT4f8 wrote: post #41
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.

Why are you happy for the depositors? They took a risk depositing more than what was covered by fdic. to clarify, i'm happy for the employees, workers, etc that will remain employed while their company made poor decisions. My beef is that companies knowingly took risks. Would this even be an issue if all the VC companies didnt all try to pull their money out on Thur/Fri ?

I'm very ignorant on the subject - what else would they do with the money?

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

#45

Post by toomuchtodo »

AH4oFVbPT4f8 wrote: post #41
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.

Why are you happy for the depositors? They took a risk depositing more than what was covered by fdic. to clarify, i'm happy for the employees, workers, etc that will remain employed while their company made poor decisions. My beef is that companies knowingly took risks. Would this even be an issue if all the VC companies didnt all try to pull their money out on Thur/Fri ?

This is a reasonable middle ground. Depositors are made whole and taxpayers aren’t on the hook directly (although this will filter down to them in aggregate in a de minimis manner).

To those with large amounts of fiat hanging around: please don’t fuck around again. Spend a few hours with your finance team to minimize risk. It is straightforward and well within the means of anyone with these cash or cash equivalents on hand (sweep accounts, short dated treasuries, etc). Build it into your runbook. Costs are minimal, consider them an insurance premium.

Edit: if you don’t have a finance team, you can get the same help from a contract finance professional. There is some responsibility that must be taken.

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

#46

Post by hoytschermerhrn »

AH4oFVbPT4f8 wrote: post #41
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.

Why are you happy for the depositors? They took a risk depositing more than what was covered by fdic. to clarify, i'm happy for the employees, workers, etc that will remain employed while their company made poor decisions. My beef is that companies knowingly took risks. Would this even be an issue if all the VC companies didnt all try to pull their money out on Thur/Fri ?

It’s simply unrealistic for businesses to not exceed the $250k insurance limit.

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

#47

Post by wmf »

yawnxyz wrote: post #27

Incredible 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?

People can work fast when it matters. https://patrickcollison.com/fast

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

#49

Post by loeg »

shippintoboston wrote: post #9

How exactly are they guaranteeing all deposits? They claim to not be bailing them out and they haven't found a seller. I'm smelling bullshit.

I take Treasury statements at their word, and I'm not sure why you wouldn't too. We'll find out the details soon enough.
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