Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

home.treasury.gov

Post reply on HN
Print view View original

601–610 of 1001 posts

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

#601

Post by twblalock »

H8crilA wrote: post #596
twblalock wrote: post #591

Earlier quoted context omitted.

> Yellen has just broadcast that FDIC insurance is essentially unlimited, as long as you can threaten wider disruption to the economy. I think everyone knew that already. Since 2008 at least. It's very possible that if this is not done, the only banks left at the end of the week will be the "too big to fail" ones. A domino effect is very hard to prevent when it's based entirely on consumer confidence and those consum…

And perhaps there's no other way? The Japanese did the same with their overpriced real estate provlem, Europe did the same with their almost defaulting countries.

Think about who gets hurt if the banking system collapses. It ripples out into the rest of the economy, because in fact the economy runs on debt. It would be harder to maintain existing businesses and start new ones if there was a credit crunch -- we lived through a credit crunch after 2008 and it was very bad for everyone.

Even if you want certain people to get hurt by this (and there is definitely a baying mob that seems to want to cause as much suffering as possible because they just don't like certain classes of people), keep in mind that this could cause a 2008-style recession that hurts everyone.

Who do you think gets hurt more by an economic downturn? The billionaires who lose millions and end up still being rich, or the working people who lose their jobs and can't afford housing? This isn't a theoretical question, we know the answer because it happened before.

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

#602

Post by MrMan »

woeirua wrote: post #520
JamisonM wrote: post #194

Earlier quoted context omitted.

THEY ARE NOT IN A TOUGH SPOT!!!! They know (and it is obvious) that all deposits are going to be fine without any extra funds, wacko VC's and nutjob politicians are stoking the sort of flames that might cause a contagion so they are forced to make statements like this. The fact that the statement is so milquetoast is certainly on them, but being uber-conservative in your promises is generally a failing/asset for bank…

… which is why Signature Bank was also placed in receivership this weekend. The contagion was spreading, if they did nothing there would be runs on a number of banks tomorrow. There still may be runs tomorrow.

there is no contagion except that spread by these fucking criminal VCs on twitter.

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

#603

Post by divbzero »

To put things in perspective, the US government guaranteed $2.4 trillion in money market funds after the Reserve Primary Fund broke the buck in 2009 [1] and that guarantee came directly from the Treasury.

[1]: https://www.cnbc.com/id/48578949

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

#604

Post by hayst4ck »

mgraczyk wrote: post #61
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…

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.

By game theory, if you let sinners prosper, you will produce more sinners. In the most pure sense not punishing the sinful is wrong, always.

That misses the point that it is possible to both help everyone and punish the sinners.

Here is a game I recommend that you play: https://ncase.me/trust/

I think it gives a great explanation why what you are saying in good faith is not quite right. Not punishing the sinful both pushes the problem into the future and makes it bigger.

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

#605

Post by moose_is_loose »

hayst4ck wrote: post #604
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.

By game theory, if you let sinners prosper, you will produce more sinners. In the most pure sense not punishing the sinful is wrong, always. That misses the point that it is possible to both help everyone and punish the sinners. Here is a game I recommend that you play: https://ncase.me/trust/ I think it gives a great explanation why what you are saying in good faith is not quite right. Not punishing the sinful both…

https://twitter.com/petercontibrown/status/16350760923390525...

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

#606

Post by HPMOR »

The discourse on this thread and Twitter is astoundingly inept. If the FDIC had permitted uninsured depositors to not be made whole, there would’ve been a systemic risk to American banking. Confidence in the banking system is critical to its well functioning. Quite literally banks are built by confidence that their depositors will get their money back. Discussing whether SVBs depositors should’ve taken a haircut misses the point entirely.

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

#607

Post by tropicaljacket »

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…

How does this "special assessment on banks" work? Does the FDIC charge all US banks to cover the missing amount? How are the charges distributed? And what law is this?

Also if this option was available, why did they just bring it up now?

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

#608

Post by oldgradstudent »

Dem_Boys wrote: post #493

With this news, I'm opening a bank. Here is my business plan: 1. Make risky investments and offer better terms than other banks 2. Watch business flock to me 3. Get filthy rich on yearly bonuses 4. 10 years later my risky investments blow up (Make sure to sell stock before) 5. Get taken over by the FDIC 6. Don't return those years of bonuses 7. Let other banks pay for my wrongdoing with a "special assessment" 8. Walk…

Not very original. It's been done over and over again during the S&L crisis and later.

The Best Way to Rob a Bank is to Own One.

https://www.brookings.edu/bpea-articles/looting-the-economic...

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

#609

Post by martythemaniak »

bcantrill wrote: post #490

I 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 respect your work, but you have to realize that what many companies were doing with their money was the financial equivalent of developing by SSHing into prod and editing a 50kloc index.php.

And when they got into trouble, they did not stop to asses their situation (possible 5-10% haircut, nbd), but went into full blown existential meltdowns. One minute crying and begging, next minute threatening. In fact, after reading too many Twitter posts of founders complaining, they don't even seem remotely aware that they can even do things differently and properly.

And let's not even get into the outrageous behavior of tech leaders like Sacks et all. This episode makes me embarrassed to be part of this industry.

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

#610

Post by paulddraper »

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…

If the shortfall is indeed "small" as you claim, why not let it be borne, instead of redistributed?

I find the dissonance deafening.

Post reply on HN