71–80 of 90 posts
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You mean the business that is now out of business and needs many billions in bailout cash. THAT business?
You ran a bank before? You better hope people don't lose confidence on their Bank by Monday.
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Only the Jan 6 protest outside the in-use government buildings was constitutionally protected. As far as I know the congress does not have to allow random people to disturb them while in session and can enforce that. In general, it's safe for the police to do so, I think they should arrest all rioters on basic misdemeanor charges, do a bit of investigation, and then let those go who did not do anything. Obviously in…
That video of the Capitol Police escorting the QAnon shaman through the building and opening doors for him is pretty damning. If he was not authorized to be there, the police should have thrown him out, not given him a guided tour. Charging him after the fact seems highly suspect. If he had a good faith belief that he was authorized to be there, because of the actions and statements made by police officers, then he s…
A.k.a. “moral hazard”. When people take financial risks (such as holding more than $250K in FDIC insured bank account), why should taxpayers cover their losses?
In what bizarro world should holding cash in a perfectly legitimate bank to earn a negligible interest rate be considered "taking a financial risk" on par with like buying crypto or something???
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> Banks that may be otherwise solvent may become insolvent because of a domino risk of bank runs. That to me implies the bank was never solvent in the first place. You could have easily created a bank that is always solvent, see the case of The Narrow Bank , but the Fed wouldn't allow it.
I don’t disagree with narrow banking. But the situation we are in is all based on the banking system we have today. And that banking system does have real systemic risk today.
A.k.a. “moral hazard”. When people take financial risks (such as holding more than $250K in FDIC insured bank account), why should taxpayers cover their losses?
> why should taxpayers cover their losses It doesn’t follow that there will be any losses to cover. The government can take ownership of the assets of the bank and won’t be stuck having to sell them at a loss.
After two years, that bond now has FMV of 1000/(1.02^8) = $853. But then interest rates increase to 4%, so its FMV drops to 1000/(1.04^8) = $731.
If we sold today at the FMV then we'd realize an $89 loss from our purchase price. That's neither better nor worse than holding to maturity, though--that's what makes it the FMV. In the case where we sell, we'd get $731 now, but we could reinvest it at 4%. After the remaining eight years, that would give us 731*(1.04^8) = $1000, exactly the same as if we'd held.
HTM accounting treats the two cases as different, but that's an arbitrary regulatory decision, untethered from any economic reality. It has no meaning outside that narrow compliance purpose. The SVB's decision to treat that accounting fiction as if it were economically meaningful appears to be a major part of how they blew themselves up.
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Depositing >250K cash in a bank carries similar risk, so not a different matter at all.
If depositing money in a bank is risk, where should I put my money then?
It's not the taxpayer's burden to insure >250k worth of your cash in one location.
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This is referring specifically to deposits not equity or corporate bond holders, management, etc. The depositors are not making a sizable returns, they’re just wanting to keep their money in a bank account.
The problem is that continuing to bail out depositors means that they'll never do due diligence on their banks and therefore bank executives will keep trying risky strategies that increase their bonuses.
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Anecdotally, most founders are extremely busy and much of their financial success is in finding product/market-fit to maximize equity value. Therefore, learning about maximizing interest and managing dozens of bank accounts to minimize insolvency risk didn’t seem like a good use of time. Parking cash in SVB, which had been around for 40 years (with some investors even requiring startups to bank with them), seemed lik…
Sure but don't they hire a CFO who knows what to do with financial instruments?
If this happens, banks have officially lost all their legitimacy and all banks should have their priviledges revoked. There is absolutely no reason banks should be given the priviledge of being the only way to deposit money, while playing with those customers money and simultaneously having zero risk on that money. These banks are getting 10 to 1 leverage, from me, captive customer. Break their monopoly. I want an ac…
You want a quasi-government agency to have unlimited tracking and control over your transactions? Banks may suck but a CBDC is straight up scary. It's bad enough we have to put up with the capriciousness of the Fed's monetary policy, the less power they have the better.
People have been known to overthrow their own governments because of fuckery.
Corporations have been known to lobby gov and hire thugs to keep upset labor and customer pools held down.
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In what bizarro world should holding cash in a perfectly legitimate bank to earn a negligible interest rate be considered "taking a financial risk" on par with like buying crypto or something???
So they are earning an interest? As long as that is above 0 and not negative they should expect that some gambling is going on. After all there is no risk free investment.
You don’t open a savings acct and get told “you could lose this money.”
You’re given a sold-to-you contract from the bank for a specific rate of return for the privilege of them being allowed to hold and work with your money.
If one chooses to dep >250k - that’s on them.