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

681–690 of 1001 posts

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

#681

Post by jtr1 »

nrmitchi wrote: post #669
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 understand what you mean here. I don't think it's people having no empathy for employees (or even founders) who did not act in bad faith. We are (or were) in a situation where the entire ecosystem blew up because VCs and funds inadvertently incited a bank run. Backstopping capital so payroll can be made obvoiusly helps out employees, founders, and companies alot, but the ones that benefit the most financially on an…

As an employee of an otherwise decent company who happened to bank with SVB, I was mainly resentful of being stuck in the same boat as the latter group

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

#682

Post by JamisonM »

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.

Looking at other banks that maybe be in a similar position and taking prompt action is competence to be celebrated, I view it as more evidence that despite weaknesses in the regulatory framework they are not in a tough spot at all. They know they can act decisively without fear.

A tough spot would be an environment where they let the SVB situation drag out and didn't act on Signature until a run was in motion and had both to deal with at once.. then they would be fighting to restore confidence.

If you look at the numbers from 2007-08 and this stuff, plus the much tougher regulatory environment (despite SVB's ability to fall under a lot of thresholds) there just isn't the sort of systemic risk at play here that folks seem to be implying. Also this isn't a replay of the S&L Crisis of the 1980's because those lessons were actually learned but some institutions are still going to screw up because a rising interest rate environment is still challenging in the current regulatory regime.

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

#683

Post by akrymski »

"Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks" - a "special" money printer?

"U.S. banking system remains resilient ... due to reforms that were made after the financial crisis " - more lies.

Majority of US banks are not required to follow the NSFR or LCR standards at all. Fed took advantage of the fact that the Basel Accords are only internationally agreed to apply to “large, internationally active” banks. While most jurisdictions apply the Basel rules to their entire banking system anyway, the US has a strong and powerful community bank lobby, so only the largest international banks were subject to the full Basel NSFR requirements.

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

#684

Post by csomar »

chernevik wrote: post #377

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…

This.

It makes sense that someone with $1.000 shouldn't have to worry about T-bills, interest rates or splitting his risk across multiple banks. The $250k more than covers that.

But someone that has $250m should be able to understand that money is not really the same at such scale and that storing it is not possible without exposure) to interest rates. He can buy T-bills, sweep accounts, or take the risk. But when your wealth is a few millions or you are managing a few hundred millions, you should know (or your money managers) better.

Welcome to the new old world. Crypto is pumping 10% this morning on this news.

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

#685

Post by zfell »

chernevik wrote: post #377

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…

Another concerning factor is that many large VC firms sent emails to their portfolio companies (hundreds or more at a time) warning them to withdraw funds, triggering the run.

An alternative could have been for this group of already closely connected individuals to call an emergency meeting and agreeing to send the opposite message to their portfolio companies to avoid the crisis. Given SVBs issue was really about profitability and not solvency without the bank run.

I'm skeptical a real lesson will be learned here, and we lose the opportunity to build scar tissue. Instead, we wake up from a nightmare, brush it off, and move on.

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

#686

Post by draw_down »

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…

[dead]

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

#687

Post by im_down_w_otp »

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…

I don't get it. The FDIC insurance threshold is the bare minimum provided by law. SVB's assets are being sold off or restructured to protect depositors. This is literally the whole point of the receivership process. This appears at this point to be a fairly pedestrian FDIC bank take-over, save for all the culture war B.S. that's cropped up around it.

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

#688

Post by [deleted] »

temp_praneshp wrote: post #588
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…

It's 0 % shocking to see the lack of empathy and schadenfreude, if you've been in H1B related discussion on this site over the years.

[deleted]

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

#689

Post by t3rmi »

spaceman_2020 wrote: post #394

Can anyone help me understand why would any bank practice proper risk management after this? SVB took on risk by catering to high risk clients (startups). Growth metrics were great as a result. And stock performed spectacularly (up nearly 6x from April 2020 lows at ath). More conservative banks like JPM, however, saw modest growth. If you're a banker and your salary is tied to stock performance, why not just adopt th…

This looks like the playbook for small scale banks now. Just gamble and say oops I fkd up, can the govt pretty please make my clients whole?

2 years later bam start the same bank again 2.0.

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

#690

Post by fwlr »

paulddraper wrote: post #610
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.

“Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”

I don’t think they have a choice. Congress decided for them.

Post reply on HN