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

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

#961

Post by logifail »

FT Alphaville hits the nail on the head:

The fault, dear VCs, is not in your stars. It's in you.

"As the news of the Silicon Valley Bank collapse reverberates through the technology ecosystem — and investors and founders alike furiously Google terms such as “available-for-sale” and “held-to-maturity” — even some of our most prominent financiers, like ‘PayPal Mafia’ member David Sacks, are learning once again how banks work, the hard way."

https://www.ft.com/content/6ba95c9b-9be6-4d62-b4ac-b12e1e7ed... ( https://archive.is/4cnog )

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

#962

Post by JPKab »

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…

Yellen is an incompetent ideologue. I studied applied economics in university, and the first code I wrote for a real application were inflation simulations. When she and the Fed made the claim a few years ago that "inflation was transitory" I ended up calling several of my smartest classmates. It was a nice excuse to reconnect, and universally all of us were asking what she was smoking.

It wasn't just us. Larry Summers was prominently and publicly stating that the inflation was definitely not transitory. But the banks believed her, and continued in 2021 to buy these securities as if interest rates were going to be going low again in the near future.

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

#963

Post by sebzim4500 »

wheelerof4te wrote: post #894
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'll just copy one of my previous comments on this, but this time I'll leave out the /s "Hey, the FDIC coould raise the limit to, say, 10 million, and just let the FED reserve print out the moneys to everyone. Not much different than what the US government is already doing. Reached the debt limit? Just raise it again, lol."

This but unironically. In Germany the government guarantees every deposit in a regulated bank. The US should do the same, even if that means substantially tightening the regulations on banks.

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

#964

Post by sebzim4500 »

paulddraper wrote: post #610
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…

If the shortfall is indeed "small" as you claim, why not let it be borne, instead of redistributed? I find the dissonance deafening.

Because even a single dollar disappearing from someone's bank account will drastically decrease confidence in the US banking sector. Modern society requires people to trust banks, if everyone tries to pull their funds and hide it under their mattress we are fucked.

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

#965

Post by sebzim4500 »

ah765 wrote: post #441
version_five wrote: post #112

So they made their decision, everyone can move on. I just hope nobody forgets how prominent VCs behaved during the brief period of uncertainty. The idea of some noble class of investors championing disruption is dead. They're just a bunch of rent seekers like everybody else. For some silly reason I had some respect for the startup industry before this, now I see it as a joke. It's great at a personal level that "foun…

Absolutely. People like Garry Tan, Sam Altman, Michael Seibel, Paul Graham, Mark Cuban, all pushed hard to keep their money, not caring if it's at taxpayer expense. Rich people tend to only care about helping others when it aligns with helping their own pockets. This may have been the most prudent decision by the government, though it'll be hard to say what would've happened otherwise. But in the end, it sounds like…

Should they not push for a good policy just because it benefits them? I don't really get the criticism, unless you think they were hiding the fact they had skin in the game.

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

#966

Post by treis »

tz192045 wrote: post #571
treis wrote: post #546

Earlier quoted context omitted.

> changing the rules in the middle of the game Part of the rules are that the regulators are supposed to shut down a bank before the run happens. They're not supposed to let the run happen and let the poor saps that were too slow moving their money bear the brunt of the losses.

Yes, and had SVB (among others) not successfully lobbied Congress in 2018 to get big regional banks excluded from more stringent "stress test" requirements, perhaps the regulators could've detected faults in SVB's capital before it was too late.

Isn't that between SVB (among others) and the regulators?

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

#967

Post by spywaregorilla »

JPKab wrote: post #962
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…

Yellen is an incompetent ideologue. I studied applied economics in university, and the first code I wrote for a real application were inflation simulations. When she and the Fed made the claim a few years ago that "inflation was transitory" I ended up calling several of my smartest classmates. It was a nice excuse to reconnect, and universally all of us were asking what she was smoking. It wasn't just us. Larry Summe…

> Yellen is an incompetent ideologue. I studied applied economics in university, and the first code I wrote for a real application were inflation simulations.

Damn if only the US government could find someone with credentials as strong as yours

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

#968

Post by cryptonector »

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 thought the old $100k limit was statutory. Then in 2008 it was changed by the executive w/o Congress approving it (or has it, since?). Now it's being changed no limit and fees are being raised. These are fees charged by a government entity, so one would expect Congress to have to be involved. Can a depositor sue to have the old fees restored? Can a bank sue to have the old fees restored?

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

#969

Post by op00to »

sanderjd wrote: post #754
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.

A "bailout" implies taxpayer money going towards business owners. This is not the case.

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

#970

Post by bjornsing »

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…

The “run with the herd” crowd likes it this way sine it means they will be bailed out, but not their independent-minded competitors.
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