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

Post by IgorPartola » Mon, Mar 13, 2023, 7:46 AM UTC

markus_zhang wrote: post #656

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…

I think the concern is: this time they covered every cent of deposits to prevent systemic risk from spreading. Now, what if, I, as a senior banker, start to abuse this policy. I'm not sure how senior bankers can abuse this policy but this is the concern here. So basically, if the FED can guarantee 100% of deposits, it encourages riskier moves. Worst case my equity gets wiped out, i.e. most of my unsold compensation v…

Post by noobermin » Mon, Mar 13, 2023, 7:50 AM UTC

mixologic wrote: post #840

VoodooJuJu wrote: post #834

We deserve to see more useful top comments on this matter. The top ones in this and the main announcement thread [1] are just ad hominem complaining against some ostensibly "salty" or "cognitively dissonant" majority. Let's talk about skin in the game and bailouts. Explain to a peasant why he should have to share the risk you took with your money. Explain to him this game being played where he gains nothing when you…

All banks take risks with the money that their customers deposit with them. Sometimes those risks are bad, and banks cannot fulfill their obligations to their customers, so the FDIC, which is funded by banks (its deposit insurance ) steps in and fixes a bank so that customers of that bank do not get screwed by picking a bad bank. I dont see how any peasants are 'sharing any risk' here. Everybody who held stock in SVB…

Post by pc2g4d » Mon, Mar 13, 2023, 7:53 AM UTC

Post by eru » Mon, Mar 13, 2023, 7:58 AM UTC

A4ET8a8uTh0 wrote: post #837

VoodooJuJu wrote: post #834

We deserve to see more useful top comments on this matter. The top ones in this and the main announcement thread [1] are just ad hominem complaining against some ostensibly "salty" or "cognitively dissonant" majority. Let's talk about skin in the game and bailouts. Explain to a peasant why he should have to share the risk you took with your money. Explain to him this game being played where he gains nothing when you…

I disagree with this non-bailout bailout, but I can somewhat easily generate one such response without even engaging my brain. As a member of this society, you, by default, have skin in the game. If you do not want to see a run on more banks as a result of wide-spread panic that would effectively undermine the entire system and result in unpredictable chaos ( as opposed to predictable anger that can be managed ), the…

Post by eru » Mon, Mar 13, 2023, 7:59 AM UTC

dumdumdumdum wrote: post #729

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…