Joint statement by the Department of the Treasury, Federal Reserve, and FDIC • Hacker News Board

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

#751

Post by dawsmik » Mon, Mar 13, 2023, 3:53 AM UTC

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…

It looks like they may have done a little bit of lying. https://nongaap.substack.com/p/sivb-held-to-mortem-governanc...

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

#752

Post by devmunchies » Mon, Mar 13, 2023, 3:54 AM UTC

Aperocky wrote: post #739

machina_ex_deus wrote: post #702

Earlier 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…

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.

Except in this case the CEO sold a few million in stock weeks ago.

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

#753

Post by BigCatStuff » Mon, Mar 13, 2023, 3:55 AM UTC

Aperocky wrote: post #739

machina_ex_deus wrote: post #702

Earlier 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…

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.

Do you really think the owners and senior management of SVB ended up with nothing? What about the stock sales they made right before the FDIC took over, or the bonuses given out, or even their compensation during the years in which this high-risk interest rate scheme was going on?

They have orders of magnitude more money than most people, and will get away with no liability.

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

#754

Post by sanderjd » Mon, Mar 13, 2023, 4:00 AM UTC

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…

My answer: It is a bailout. And that's ok, if it was the best of bad options. Must we play the silly semantic game? By your explanation, all the bailouts during the '08 financial crisis also weren't bailouts. But they were.

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

#755

Post by dragonwriter » Mon, Mar 13, 2023, 4:03 AM UTC

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…

Its a (potential, whether any funds will be necessary is unknown) bailout of depositors (not the bank or its shareholders) at the (potential) expense of other banks (not taxpayers).

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

#756

Post by sanderjd » Mon, Mar 13, 2023, 4:04 AM UTC

HPMOR wrote: post #606

The 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…

I don't get how your comment demonstrates that the rest of the conversation is inept. The whole conversation everywhere has been about this trade off.

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

#757

Post by Eji1700 » Mon, Mar 13, 2023, 4:09 AM UTC

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…

> and maybe stop tweeting images of guillotines when our employees are anxious about their next paycheck?

This is the unfortunate outcome of just mass producing us vs them rhetoric at EVERY level of discourse. Nuance is dead.

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

#758

Post by matheusmoreira » Mon, Mar 13, 2023, 4:10 AM UTC

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…

Huh. Looks like there's gonna be a bailout after all. Guess who's gonna pay for it.

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

#759

Post by nailer » Mon, Mar 13, 2023, 4:10 AM UTC

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…

> many of us have been outspoken about our disagreements with the techbro culture

This is an odd thing to read. I always thought you were one of the people that began SV techbro culture when you replied to David Miller’s technical critique of Solaris with “have you ever kissed a girl?”

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

#760

Post by icedistilled » Mon, Mar 13, 2023, 4:12 AM UTC

dehrmann wrote: post #123

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…

This probably sealed the deal: > We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. Two closures in three days is a sign that you have to take this very seriously.

I'm pretty sure there would have been a run some other large banks had they not taken these measures. I've gotten several emails from a major regional bank basically saying "WERE FINE TRUST US" over the last few days and I don't even have an account which means they're spamming all their email lists. I did apply for a position at them a while ago so that's my best guess why they are spamming me their unreassuring message. The several banks I actually use have not done that.