I just gotta say, banking has changed a ton since 1870. Then banks going bust was normal. Now everyone freaks out. It must be nice having a banking system where “bank loses my money” is not the major systemic risk.
Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
671–680 of 1001 posts
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#672its always fun when the cops show up to the bank and won't let you withdraw your own money.... I guess no one wants to address that issue.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#673The 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 miss…
When the future cannot be predicted accurately, it may be wiser to prioritize making prudent decisions that benefit everyone, rather than seeking retribution against wrongdoers. It's important to consider that both bank shareholders and senior management could face significant losses and lose their positions.
Why? It's completely unnecessary that bank deposits should face this much risk.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#674Yellen 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?
Revenue comes from a fee banks pay based on insured deposits. It’s been around 8 cents per $100 insured: https://www.fdic.gov/analysis/quarterly-banking-profile/fdic...
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#675Yellen 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…
1) why shouldn’t it be unlimited and 2) if it is, why are banks private?
This is exactly the way I’d expect a good government to respond: protect the people who could not have known better and fuck the rest.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#676What does it mean "Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer."? 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?
Yeah this all stinks. I think they are playing games with words. The US taxpayer was the beneficiary of those cheap bonds, so releasing them early IS the taxpayer footing the bill.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#677Yellen 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.
If this wasn't done... nobody in the world is going to trust their bank within a few days (possibly faster than that thanks to twitter, et al), which would trigger Global Depression II
If someone in 1930 overheard a time traveler referring to World War 2.... the shock would have been overwhelming.
In the same way, seeing the start of World Depression II isn't something I could bear.
It must be true that bank deposits are safe.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#678Yellen 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…
Well, paying for it by a special assessment on banks means the banks aren't going to get a free ride. They, as a group, have to get their shit together otherwise they will pay dearly
If they all have to pay for it, none of them do - we do instead.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#679[deleted]
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#680The 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 miss…
When the future cannot be predicted accurately, it may be wiser to prioritize making prudent decisions that benefit everyone, rather than seeking retribution against wrongdoers. It's important to consider that both bank shareholders and senior management could face significant losses and lose their positions.
To play devil's advocate:
Toilet paper consumers should know the risk of not having 30 rolls of toilet paper stashed at all times and should face the consequences for that risk.