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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

#451

Post by tome »

spaceman_2020 wrote: post #394

Can anyone help me understand why would any bank practice proper risk management after this? SVB took on risk by catering to high risk clients (startups). Growth metrics were great as a result. And stock performed spectacularly (up nearly 6x from April 2020 lows at ath). More conservative banks like JPM, however, saw modest growth. If you're a banker and your salary is tied to stock performance, why not just adopt th…

> why would any bank practice proper risk management after this?

The incentive for depositholders to exercise oversight has been removed, but the incentive for shareholders seems strong now!

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

#452

Post by paulddraper »

version_five wrote: post #112

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…

I learned that VCs are protective of their investments.

Which, as an investee, is exactly what I want.

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

#453

Post by dismalpedigree »

tssva wrote: post #224
version_five wrote: post #112

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.

Agreed. This is what shocked me most. I have always thought VC = Vulture Capitalist.

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

#455

Post by noitpmeder »

cragfar wrote: post #164

It's pretty embarrassing how many people thought depositors should be on the hook for this. A banking system where companies or people would actually lose money due to bank failures (especially one caused by a run on the bank) would just lead to people only using BOA, JPM, and some merged WF/Citi/whoever else.

I think they are not completely blameless. Companies deposited money in a riskier-bank because they got more favorable terms/perks/... compared to other options. Now they don't have to bear the results of that risk because the Govt has stepped in.

Similar to the current US discussion around Student Loan repayment. Bailing students out of loans disadvantages everyone else who did not take those loans, or who paid them off already, because they had the foresight to choose a less-risky option.

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

#456

Post by garry »

ah765 wrote: post #441
version_five wrote: post #112

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…

Absolutely. People like Garry Tan, Sam Altman, Michael Seibel, Paul Graham, Mark Cuban, all pushed hard to keep their money, not caring if it's at taxpayer expense. Rich people tend to only care about helping others when it aligns with helping their own pockets. This may have been the most prudent decision by the government, though it'll be hard to say what would've happened otherwise. But in the end, it sounds like…

[flagged]

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

#457

Post by 0xDEF »

celestialcheese wrote: post #198

Does Signature failing mean crypto in the US is finally dead? Silvergate and Signature both going to $0 is a strong signal. Why would any bank want to work with crypto after this?

The Feds just saved a lot of crypto startups by doing this bailout. The crypto scam industry will be around for a few years more unfortunately.

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

#459

Post by mbesto »

LewisVerstappen wrote: post #235
version_five wrote: post #112

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…

> prominent VCs behaved during the brief period of uncertainty A ton of the prominent VCs were writing out checks from their personal bank accounts so that founders could meet payroll. > For some silly reason I had some respect for the startup industry before this, now I see it as a joke Wait seriously? You somehow lost more faith from this than you did from - crypto - Adam Neumann - $100m seed rounds and like 30 oth…

> A ton of the prominent VCs were writing out checks from their personal bank accounts so that founders could meet payroll.

Source? Who specifically, how much and can you independently verify that they actually did it?

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

#460

Post by Denvercoder9 »

unyttigfjelltol wrote: post #143
zamfi wrote: post #42

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 ru…

This round of bank failures was special because the debt held by these banks lost value because there is better stuff on the market, not because there was anything intrinsically uncollectable about the original debt. In fact, the debt probably is pretty similar to stuff held by everyone else in this ecosystem. This provides flexibility to meet the urgency of the situation, and FDIC, Fed, Treasury are simply saying "w…

> In fact, the debt probably is pretty similar to stuff held by everyone else in this ecosystem.

Anyone responsible that ended up holding similar bonds would've bought interest rate swaps to hedge their interest risk.

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