651–660 of 1001 posts
How is the taxpayer not bearing the losses? Did the gov't just make a special exception to release the treasury bonds SVB has in order to provide the missing liquidity? What exactly is happening?
God bless America!
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…
> 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. I don't get it. Doesn't the unlimited FDIC insurance encourage mega-banks? If funds were only insured up to 250k, wouldn't that just mean we would have to spread money across multiple banks. And sure some banks would be wiped out but new better banks would take their place. It's not a closed s…
I put the majority of my cash in one of the smaller banks. The news that has transpired in the past few days had me mulling moving those funds to a larger bank, likely Chase (one of the too big to fail ones).
Even with the FDIC guarantees, I was not at all confident that :
1. they actually had the funds to cover _many_ bank runs; and
2. it won’t take weeks if not months for me to recover my funds, if my bank fails.
It’s entirely possibly that these lines of thoughts will motivate many more people to consider this exact move, putting even more stress in the system.
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.
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…
Now, what if, I, as a senior banker, start to abuse this policy. I'm not sure how senior bankers can abuse this policy but this is the concern here. So basically, if the FED can guarantee 100% of deposits, it encourages riskier moves. Worst case my equity gets wiped out, i.e. most of my unsold compensation vaporizes but that's it.
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…
Empathy is completely irrelevant. You agreed to a particular financial contract, one that ended up being a mistake ex-post. Now you want to wind back the clock and pretend you agreed to a different contract, and leave other people on the hook for it. "Well, if you want to see startups solving hard technical problems we need to have some real talk about how that has to be structured financially" There are deep, functi…
Speaking of private markets, they should have bid higher. Instead the government won and will likely come out ahead with their arrangement. No taxpayer money is being spent.
Sounds like you’re just bitter about tech/biotech companies surviving?
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.
It's a bailout. They're putting the cost, presently unknown and probably not huge, on the other banks. But the message to depositors everywhere, of every size, is "don't worry about your bank's solvency, we'll protect you". So market scrutiny is removed as a discipline on bank asset strategy. That leaves regulation as the only control. That politicizes and bureaucratizes bank lending. And the general presumption that…