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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

#571

Post by tz192045 »

treis wrote: post #546
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…

> changing the rules in the middle of the game Part of the rules are that the regulators are supposed to shut down a bank before the run happens. They're not supposed to let the run happen and let the poor saps that were too slow moving their money bear the brunt of the losses.

Yes, and had SVB (among others) not successfully lobbied Congress in 2018 to get big regional banks excluded from more stringent "stress test" requirements, perhaps the regulators could've detected faults in SVB's capital before it was too late.

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

#572

Post by machina_ex_deus »

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…

This is going to be the beginning of the end of the banking system. I foresee a huge dollar collapse, the US banking system has just lost its final shred of credibility. It's only a facade of a bank at this point. It's just privileged people with a government mandate to leverage on everyone else's money with no consequences.

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

#573

Post by dragonwriter »

IAmGraydon wrote: post #563

The market is buying this up, failing to realize that things will continue to break as interest rates are increased further. The Fed isn't interested in saving banks. They're there to quell inflation.

> The market is buying this up, failing to realize that things will continue to break as interest rates are increased further.

Expectations of Fed action haven’t changed, expectations of FDIC/Treasury action to protect banks have. The information not already priced in is positive.

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

#574

Post by nullc »

JumpinJack_Cash wrote: post #513
dev_tty01 wrote: post #287

Earlier quoted context omitted.

>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. No, there are systemic risk exceptions within the rules. If a bank is large enough, then the systemic risk to the economy as a whole is large enough to warrant this step. "Too big to fail" is…

> > Governments are supposed to act in the best interest of the governed Many of the governed see what policymakers and politicians call 'systemic risk' and 'instability' as a not so unwelcome wildcard considering that the wealthy of today are mostly descendants of wealthy land owners from the times of the Crusades. > > They did their job and did it quickly and effectively Where are the Fed , D.C. , the FDIC etc. whe…

> Many of the governed see what policymakers and politicians call 'systemic risk' and 'instability' as a not so unwelcome wildcard considering that the wealthy of today are mostly descendants of wealthy land owners from the times of the Crusades.

I'm curious if you have a citation to support that the wealthy in the US are descendants of wealthy land owners from the times of the Crusades at a substantially greater rate than the general population.

> Where are the Fed , D.C. , the FDIC etc. when a gas station goes belly up?

How much of their going belly up was due to Fed policy? Particularly driving and holding interest rates to near zero through market actions then pushing interest rates to nearly 5%?

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

#575

Post by smoovb »

hardstartuper wrote: post #568

$42B was withdrawn from SVB on Thursday. That's a lot of $$$ in one day. No wonder this collapsed. CRO/CEO should be held accountable, including their poor messaging that started this. So should anyone who was spreading the panic including some VCs and startups.

Poor messaging amplified by speed of light communications (twitter) and fast online redemptions. We're in a new era of flash mob bank runs. Likely time for a rethink on regulations - like moving to daily mark-to-market of bank security holdings.

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

#576

Post by blackoil »

reducesuffering wrote: post #247
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…

VC's and YC have burned a lot of credibility overnight with their tech employees during this mask-off moment. I wouldn't be surprised if this forum harbors long term resentment, lack of respect, and a more adversarial relationship going forward. I haven't ever seen such a large lack of respect for them as the past couple days. This industry has gone full Wall St. The next generation of individualist, regulation-disru…

> VC's and YC have burned a lot of credibility overnight with their tech employees during this mask-off moment

Why? It should be other way round. They worked hard to make sure that payrolls are met and jobs are secure, that is my most important expectation from my management and investors.

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

#577

Post by birdymcbird »

Taniwha wrote: post #318
fwlr wrote: post #238

A 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…

One reason why it's not (mostly) a bailout is that SVB's deposits are (as far as we know) still backed by bonds and mortgage backed securities, the problem is that those securities can't be easily sold right now (because people want higher valued investments) - a sudden forced sale means selling at a loss (or a cash flow crisis which is how SVB got into this state), holding on to them and letting them play out and th…

the problem is if I sell my own investments right now at loss nobody will come to pay my obligations. so why large institutions get to reap profit but get out of jail free when they screw up.. one set of rule for common man and another for investor..elite class.

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

#578

Post by fasthands9 »

hcknwscommenter wrote: post #541
bradleyjg wrote: post #160

So 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.

Your take does not seem to reflect reality to me. SVB did not offer particularly attractive interest rates to depositors. No one banked with SVB because of some extra APR on their savings/checking accounts. SVB mismatched interest rate risk and deposit flight risk, bungled a poorly timed asset sale and report thereof, and then compounded the problem with a few silly comments to the public at exactly the wrong time.

On some level I don't get this. Ultimately a bank is providing depositors a service. Maybe their interests rates weren't the absolute highest, but they were still solid AND they were able to spend a ton on marketers, engineers, reps etc. to keep clients happy.

Presumably there was a reason so many people choose them. They could have said "hey in order to make sure your money is safe we are actually going to offer a slate of services on par with our competitors" but instead they said "we are going to offer a slate of services equal or better than our competitors in every category"

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

#579

Post by tppiotrowski »

machina_ex_deus wrote: post #572
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…

This is going to be the beginning of the end of the banking system. I foresee a huge dollar collapse, the US banking system has just lost its final shred of credibility. It's only a facade of a bank at this point. It's just privileged people with a government mandate to leverage on everyone else's money with no consequences.

Crypto undergoes hard-forks when "special" circumstances arise. It's not immune to unpredictable events.

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

#580

Post by pmorici »

luckylion wrote: post #171
pmorici wrote: post #107

Earlier quoted context omitted.

Because a major component of this is human nature causing bank runs they are betting that by doing this upfront it will be cheaper than not doing it and risking a high number of similar bank runs in the coming month as word spreads it isn't safe to keep money over the insurance limit in banks because of the unrealized loses on bonds.

At the same time, they've essentially raised the insurance limit to infinity. Depositors will be made whole, and if they aren't the next time something happens, they'll need some very good arguments for why the 9th largest bank is now also too big too fail but e.g. the 11th largest isn't.

It is already substantially higher than $250k because you can spread your funds between multiple banks. There are even cash management accounts from Fidelity and others that automatically place your funds with multiple banks to get higher insurance levels for larger amounts of cash. Their Fidelity cash management account allows you to spread cash among 26 different banks so you could have 6.5 million FDIC insured. Fidelity isn't the only financial institution to offer this service.
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