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Fed and FDIC discussing backstop to make SVB depositors whole, stem contagion

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Re: Fed and FDIC discussing backstop to make SVB depositors whole, stem contagion

#81

Post by ivalm »

comte7092 wrote: post #41
ivalm wrote: post #32

Earlier quoted context omitted.

If you mark to market the assets are less than liabilities. It’s unlikely government will keep to maturity a bunch of 30 year mortgages. At the same time, we should just make FDIC limit infinite and make depositors whole.

The fed already has billions of dollars worth of mortgage backed securities on its balance sheet right now.

I mean sure, but when it transacts it will be marked to market, it won't be just valued at the original hold to maturity so fed will take a loss. Also, fed is trying to shrink its balance sheet, presumably.

Re: Fed and FDIC discussing backstop to make SVB depositors whole, stem contagion

#82

Post by flandish »

paxys wrote: post #23
paulpauper wrote: post #18

No one know what is going happen. If I had to guess, there will be no lifeline. Populist pressure too strong.

Yup the government isn't spending tens of billions to bail out a bank with "Silicon Valley" in its title. Supporting it is an instant election loss for any politician on either side of the aisle.

I disagree - it’ll be bailed out in the same manner by which “pro labor” (yet actually a scab) Biden promised to help the workers at railways - but instead made it illegal to strike.

Rep and Dem alike - this election season is going to be worse than 2016. Strap in.

Re: Fed and FDIC discussing backstop to make SVB depositors whole, stem contagion

#83

Post by the-grump »

jacooper wrote: post #67
paxys wrote: post #20

Earlier quoted context omitted.

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?

The big, big banks (Chase, BofA) are too big to fail and are also subject to more thorough stress tests. That's one option. You could also deposit in multiple banks to stay below 250k. There are institutions that automate that.

Another option is to deal directly with the federal government and buy bonds from them (likely through a bank but your money doesn't have to stay there for long). Then only the most catastrophic scenario would see you losing money. You are still subject to inflation and interest rate risk.

But honestly at that point, worry about having guns and knowing how to use them, not where your money is.

One last edit to add that Treasury is making all depositors whole. So, really, all of this is moot... besides the guns :)

Re: Fed and FDIC discussing backstop to make SVB depositors whole, stem contagion

#84

Post by hello_moto »

AmVess wrote: post #71
hello_moto wrote: post #58

Earlier quoted context omitted.

You ran a bank before? You better hope people don't lose confidence on their Bank by Monday.

The people running SVB seem to never have run a bank before. Do you know how I know that? THEY ARE OUT OF BUSINESS BECAUSE THEY FLEW IT INTO THE GROUND.

Love the simplistic views of avg HNers

Re: Fed and FDIC discussing backstop to make SVB depositors whole, stem contagion

#85

Post by xboxnolifes »

grogers wrote: post #56
machina_ex_deus wrote: post #38

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.

Government already has quasi-unlimited tracking and control over your transactions through banks. $10,000 deposits are reported. Suspicious activity on anything over $5,000 is reported. These are small sums of money from the perspective of a government. They're easily small enough that any individual who tries to step out of the lower class easily gets under the eyes of government.

Re: Fed and FDIC discussing backstop to make SVB depositors whole, stem contagion

#86

Post by pseudo0 »

labrador wrote: post #72
pseudo0 wrote: post #63

Earlier quoted context omitted.

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…

As explained by Lawrence O'Donnell, the capitol police were out-numbered and could not safely take anyone into custody, and doing so would take them away from their duties to protect the capitol. At that point they were escorting him to a safe place.

If the footage had been made available as legally required, they could have figured issues like that out during trial. Unfortunately the footage was not made available by the state, and now it's questionable whether Chansley will appeal, given how he will be released shortly. Jonathan Turley has a good summary of the situation: https://jonathanturley.org/2023/03/08/did-the-qanon-shaman-g...

Re: Fed and FDIC discussing backstop to make SVB depositors whole, stem contagion

#87

Post by grogenaut »

tome wrote: post #44
grogenaut wrote: post #24

Earlier quoted context omitted.

what kind of due diligence are you imagining that I, a depositor with under 250k should / am doing on a bank? What do you believe, I, as a single depositor of 250k CAN DO to audit a bank or otherwise make sure it's safe for my deposit?

Oh, when I say "bail out" I mean bail out of depositors with more than $250k of deposits, less than $250k already being well-understood to be covered. You, as a single depositor of $250k are fine. If you have $1m then you spread it out amongst 4 banks and are fine. If you have more then you'd better use your own nous or hire a financial advisor.

thanks for clarifying... that nuance wasn't clear. I literally thought you were going on the true libertarian bent of I as some dude with $100 needs to be responsible for all parts of the system.

Re: Fed and FDIC discussing backstop to make SVB depositors whole, stem contagion

#88

Post by Overtonwindow »

Overtonwindow wrote: post #68

Those lobbyist are hard at work. Treasury Secretary, Janet Yellen may have said that there will be no bail out, but mark my words: The vultures will get their money back. I have worked in government, both policy, and political, for 22 years. The only thing that makes the government actually move is money. The majority of the powers that be cannot afford to alienate Silicon Valley campaign cash. Be thankful for your g…

As I said. They got bailed out.

Re: Fed and FDIC discussing backstop to make SVB depositors whole, stem contagion

#89

Post by frgtpsswrdlame »

hanklazard wrote: post #45
frgtpsswrdlame wrote: post #8

Earlier quoted context omitted.

Why should it matter whether it's deposits or equity or bonds? The instrument is irrelevant to the logic - if I have to back it on the downside then I want a piece of the upside too.

Businesses aren't making upside by putting their working capital in a bank checking account. Mine was making like 0.1%, it's negligible. I would be happy to socialize that upside for higher limits on deposit protection. Equity and bond holders are a totally different group of people, they are investors in that bank. They are explicitly taking risk on the bank as an investment , not as a basic piece of their financial…

>I would be happy to socialize that upside for higher limits on deposit protection.

Glad we agree then, that's pretty much all I'm looking for.

Re: Fed and FDIC discussing backstop to make SVB depositors whole, stem contagion

#90

Post by comte7092 »

ivalm wrote: post #81
comte7092 wrote: post #41

Earlier quoted context omitted.

The fed already has billions of dollars worth of mortgage backed securities on its balance sheet right now.

I mean sure, but when it transacts it will be marked to market, it won't be just valued at the original hold to maturity so fed will take a loss. Also, fed is trying to shrink its balance sheet, presumably.

I don’t believe the fed typically marks its assets to market, though I’d be open to a correction on that point. Typically they just roll off the balance sheet by letting assets mature and not re purchasing.

They are indeed trying to shrink their balance sheet, but at the volumes they are working at, the entirety of SVBs assets amount to a few months of the fed’s current volumes.

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