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Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
731–740 of 1001 posts
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#732Yellen 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.
> This appears at this point to be a fairly pedestrian FDIC bank take-over,
You believe invocation of the systemic risk exception is the norm?
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#733Yellen 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…
SVB was publicly traded, and it’s not being bailed out. Who do you think owns the now-worthless stock?
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#734Earlier 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…
Not sure I follow the logic. SVB is done right? Saving the companies that banked there is very different than saving the bank. Yes, it might invite more risk by big banks if they know there is a parachute for their clients, but if we close the bank anyways or clear out all parties involved and they have large black marks then there are deterrents (theoretically at least). I like that the gov is acting more like a scr…
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Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#735Yellen 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…
> Yellen has just broadcast that FDIC insurance is essentially unlimited, as long as you can threaten wider disruption to the economy. yup. it doesn't matter how big you fuck up if you are too big a risk to US economy. the US govrt (American tax payers) will bail you out.
The bank shareholders are not getting made whole, and the bank management have lost their jobs.
The only people being bailed out are the depositors, who were not being irresponsibly risky.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#736Yellen 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…
This is a direct path to a central bank (digital) currency that they are the depository institution for individuals.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#737Earlier quoted context omitted.
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?
Not sure why you’re being downvoted, that analysis is correct.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#738Earlier quoted context omitted.
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?
> (indirectly bank customers)
That's not a given since it may just reduce profits. Banking is a very competitive environment.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#739Yellen 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…
The banks are still gone though, once they get taken over, their equity zeroes out.
All owners of the bank will end up with nothing, I think that's a good enough deterrence against bad things.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#740I 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…
hilariously "15 person company run by a Mom out of ohio" was literally one of the tweets going around trying to get empathy for people who had money at svb https://twitter.com/lcmichaelides/status/1634654751479541760