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

721–730 of 1001 posts

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

#721

Post by ashwagary »

machina_ex_deus wrote: post #702
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…

Banks have lost all excuses to be making money out of other people's deposits. If those deposits are guaranteed by the government, and backstopped by the government, then there's absolutely no reason banks should be able to invest any of them. There's absolutely no excuse left for why banks get to invest any of their clients money. They get free leverage from their clients for free. They can send it to zero and the e…

>If those deposits are guaranteed by the government, and backstopped by the government

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

Does this mean all American banks (indirectly bank customers) will pay to cover depositor losses that exceed insurance funds?

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

#722

Post by xmonkee »

voisin wrote: post #720
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…

> broadcast that FDIC insurance is essentially unlimited Shouldn’t it be? The government is in the best position to regulate and manage the risk of these institutions. We cannot expect average depositors to be financial analysts with the capacity to assess financial institutions.

what’s stopping a bank from making really risky loans, give super high yields? Everyone will go to that bank since there is no risk to them?

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

#723

Post by koolba »

nullc wrote: post #597
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…

There are a lot of vicious and blood thirsty people on the internet. It isn't specific to you or this event. Hardly any big event goes by without calls for executions.

Asking for equal treatment of the law as it is written is hardly a blood thirsty call for execution. It’s a call for fair treatment for all. Not special handouts to favored entities.

The actions of the Fed plainly stated that the rules don’t matter. Take risks, fuck up, and no big deal. We’ll just magically save everybody.

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

#724

Post by HWR_14 »

mitthrowaway2 wrote: post #127
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.

"Punishing the sinful" isn't about morals, it's about incentives, and ensuring a level playing field where sinning doesn't improve your long-term competitiveness. Will senior management have to return their 2021 performance bonuses? If not, successful sinning is just a matter of ensuring you cash out early.

Their 2021 bonuses? What about their 2022 bonuses that were paid our hours before the feds took over the bank.

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

#725

Post by [deleted] »

im_down_w_otp wrote: post #687
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.

[deleted]

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

#726

Post by twblalock »

bko wrote: post #628
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…

> 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…

The entire regulatory system encourages mega-banks. The entire “too big to fail” concept encourages it. Complex regulations benefit those who can afford the legal costs of compliance. Dodd-Frank probably made this outcome more likely.

The role of the government in letting this happen has been under-covered so far. Weren’t they supposed to be overseeing things, stress-testing banks, etc? Regulators either were not looking, or were looking but did not notice. Regardless, there is not much sense to the argument that the government is “stepping in” tonight, because it was always involved.

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

#728

Post by Montaque »

machina_ex_deus wrote: post #702
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…

Banks have lost all excuses to be making money out of other people's deposits. If those deposits are guaranteed by the government, and backstopped by the government, then there's absolutely no reason banks should be able to invest any of them. There's absolutely no excuse left for why banks get to invest any of their clients money. They get free leverage from their clients for free. They can send it to zero and the e…

What's the point of cake if you can't eat it? You'd have to start charging for having the cake. The current practice of limited investment is reasonable and helps keep the system self funded without much in the way of account fees. It's not as if banks are investing the funds in the equity market. Appreciate I'm commenting from afar and without emotion but these failures are normal. This kind of chaos makes the system stronger. And I think most commentators can agree that this is largely a symptom of a swift increase in the repo rate shortly after significant bond purchases by SVB. There are lessons to be learnt but I don't think if you were sitting on the SVB board and were part of the decision to purchase these low risk bonds did you in any way think it would lead to this outcome.

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

#729

Post by dumdumdumdum »

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…

> 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.

The criteria isn't threatening a "wider disruption to the economy", it's threatening the quality of life of a certain class of people. When unions threaten a wider disruption to the economy for maintaining their quality of life, they'll do their damnedest to not give in. They'll pass laws outlawing strikes. Or send in "law-enforcement". As the saying goes, laws are for the poor.

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

#730

Post by j16sdiz »

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 guess liquidity problem should be treated differently from solvency problem.

With FDIC take over the bank asset, this is not paying from taxpayer's money ..

Post reply on HN