It's interesting to see how this started just before the weekend and how they're seemingly working hard towards a solution before the markets open tomorrow.
Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
531–540 of 1001 posts
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#532So 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.
Think of it a different way. Wells Fargo/BoA are "too big to fail" institutions in the United States. They got significant back hand, handshake deals, from Washington institutions to not only stay afloat, but for hundreds of little issues. In essence, the FDIC is a well crafted "redistribution," of all the under the table benefits Wells/BoA get from lobbying the Feds, to the smaller banks. The US has a deep interest…
>Banks similar to Silicon Valley Bank are essential because they undercut BoA, and prevent the "Canada" situation.
>Unfortunately, SVB blew its top off. But the system itself is good.
Yes. Canadians who brag about how none of their banks had to be bailed out in the 2008 crisis are a) wrong (they received tens of billions from Ottawa, and US TARP money), and b) don't realize that the Big Five Canadian banks have far, far, far more market share than the US's Big Four. As you said, there is no equivalent of a Silicon Valley Bank in Canada. There are no regional banks whatsoever; no smaller player that may be more friendly to startups, or otherwise more flexible, than the Big Five.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#533The shear volume of misinformed, misleading, or malicious takes produced over the weekend, priced at a buck each, could probably cover whatever losses are eventually realized in this mess.
I don’t mean to minimize this severity of the problem - if a bank can follow the rules, and be undone so easily, the rules need to be reevaluated. SVB management was negligent in their risk and deserves to be wiped out. But in a disaster precipitated and fueled by panic, professional and amateur purveyors of opinion and analysis should take more care to be well reasoned and factual.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#534They should tell everyone that the government issues USD and therefore doesn’t need to first obtain the reserves from tax payers before making them available to protect bank depositors.
If they were honest about this and everyone realised it, they could go one step further and eliminate involuntary unemployment overnight with a job guarantee.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#535So 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.
Think of it a different way. Wells Fargo/BoA are "too big to fail" institutions in the United States. They got significant back hand, handshake deals, from Washington institutions to not only stay afloat, but for hundreds of little issues. In essence, the FDIC is a well crafted "redistribution," of all the under the table benefits Wells/BoA get from lobbying the Feds, to the smaller banks. The US has a deep interest…
[deleted]
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#536What if the Federal Reserve offered retail banking. Would it stabilize the banking sector? They wouldn’t be forced to try to find loans to pay interest on deposits. Where do private banks add value over what the Fed could do. ELI5.
Thats what China does and what CBDCs are about. See: Tofu Dreg projects and social credit score system. With privatization you get decentralization.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#537Yellen 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…
> Yellen has just broadcast that FDIC insurance is essentially unlimited, as long as you can threaten wider disruption to the economy.
yup. it doesn't matter how big you fuck up if you are too big a risk to US economy. the US govrt (American tax payers) will bail you out.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#538Yellen 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…
>"At the same time, this is yet another example of changing the rules in the middle of the game. Yellen has just broadcast that FDIC insurance is essentially unlimited, as long as you can threaten wider disruption to the economy."
Rules exist to serve a purpose. If one risks fucking up the economy with the only goal that the rules are preserved - it could end up with pitchforks.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#539Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#540I have never seen such cognitive dissonance here at HN -- which I feel is really saying something! As an SVB customer who had to wire payroll on Tuesday, our perspective is naturally sharpened, but I found the lack of empathy here over the weekend galling. On the one hand, this is understandable, and Silicon Valley has done much to earn collective distrust. On the other hand, this is emphatically not all of us: many…
I Do have a lot of empathy for those impacted here, but I think people are also reasonably angry about having the costs foisted onto them. Some people struggle to entertain or express both concepts at once.
It is like having sympathy for your friend that is mugged, but being angry that when the police came, they took money from your pocket to reimburse them.