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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

#471

Post by cactusplant7374 »

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…

Startup founders are very sophisticated. Perhaps they were aware of the risks SVB was taking with their money?

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

#472

Post by School-Cotton »

chrisgd wrote: post #398
AviationAtom wrote: post #103

I'm surprised the top comment wasn't focusing on this bit of the statement: "We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority."

Crypto focused bank and pretty small, even in consideration of historical bank runs

Signature had 100Bn in assets and is the third-largest bank to have failed in US history (after WaMu and SVB).

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

#473

Post by shagymoe »

While I'm glad that no depositors will lose even a single dollar, can anyone justify how banks and the astonishingly rich continually take large, greedy risks only to be bailed out when they fail? I can't imagine the twists of logic it would take to accomplish that.

So, the government presumably creates money to cover, inflates the supply and the tax payer pays for the bailout and also gets punished with inflation. Say what you want about this being good for the depositors but it can't be sustainable. At some point, people and corporations need to be held accountable, monetarily, , suffer the consequences of their actions and be allowed to fail.

[edit] It seems that it's not a "full bailout" as shareholders won't be made whole but if the assets don't cover all the deposits, where is that money coming from?

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

#475

Post by bink »

hn_throwaway_99 wrote: post #181
mgraczyk wrote: post #61

Earlier 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.

I mostly agree with this, but I feel like the past 25 years or so, ever since "the Greenspan put", has just gone more and more in the direction of telling people that they don't need to worry about doing adequate risk assessments, because if you have powerful people that yell loud enough, and you can cause enough damage, that Washington will come to the rescue. Eventually, I just don't see this ending well. As someon…

I've been a student of housing bubbles for a long time. I remember back in 2003 I was participating in an online forum covering the bubble. The conventional wisdom back then was that when the bubble popped not even the Fed or Alan Greenspan and his helicopters could cover the losses. The hundreds of billions if not trillions of dollars that would be needed would cause runaway inflation.

Then, they did it. The bastards managed to somehow buy tens of billions of mortgage backed securities every month for years. They bailed out automakers and banks with backdoor 0% loans while claiming the "investments" were profitable for the average citizen. Zombie Fannie and Freddie are still out there gobbling up mortgages. It's insane.

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

#476

Post by tgsovlerkhgsel »

The load bearing statements seem to be these:

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

To me, this one sounds like "we'll cover even the uninsured amounts and make all banks pay for it"?

> Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.

This one sounds like it may mean "we'll print money so no bank goes bankrupt"?

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

#477

Post by beezle »

hn_throwaway_99 wrote: post #40

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…

Worse, it is also a lie that the cost will not be paid by taxpayer. Of course it will be - the remaining banks are going to pass the cost on via fees, higher loan rates and lower deposit rates?

Yellen is not clueless. She knows exactly how this will play out but as it will be spread over time and to many counterparts she simply does not care.

This is terrible moral hazard. Uninsured depositors should have taken whatever haircut would result after the auction. That is, after all, the meaning of uninsured.

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

#478

Post by WanderPanda »

Fede_V wrote: post #378
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…

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.

Agreed, I‘m a big fan of the all in podcast but this really showed them (especially Sacks) from their worst side. They clearly pressured the regulators by saying that everyone who has more than the amount insured by the FDIC in their account at a regional bank is stupid and reckless if they don‘t transfer it to one of the top four banks on Monday. The situation at SVB seemed very manageable but even a small chance of this „mind virus“ spreading would be so devastating that they decided to backstop the situation.

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

#480

Post by ETH_start »

These bailouts are very good for me in the short run, as I'm exposed to USDC, but they teach the wrong lessons, by redistributing the cost of a lack of depositor due diligence, to the general public.

This will only encourage more high-risking banking practices - by both the banks and their customers - in the long run. Regulatory regimentation is a poor substitute for meaningful market consequences.

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