Less than 3% of deposits at SVB qualify for FDIC... hthnomad2007 said:
If we don't bail them out directly, we'd have to bail out the deposit insurance fund once it's drained.
So when he said the FDIC would be making all depositors whole....does that mean they're waiving basic requirements in this case?Furious said:Less than 3% of deposits at SVB qualify for FDIC... hthnomad2007 said:
If we don't bail them out directly, we'd have to bail out the deposit insurance fund once it's drained.
The issue isn't the $250k that can easily be paid out for everyone there. It's about the money well above that which is investment driven in most cases. Companies that put their Venture money there.nomad2007 said:
If we don't bail them out directly, we'd have to bail out the deposit insurance fund once it's drained.
^ This is the kind of rational and sensible thinking that must be silenced on social media.aggie93 said:The issue isn't the $250k that can easily be paid out for everyone there. It's about the money well above that which is investment driven in most cases. Companies that put their Venture money there.nomad2007 said:
If we don't bail them out directly, we'd have to bail out the deposit insurance fund once it's drained.
The reality is that even those companies will mainly be ok. The best startups will either get a line of credit while they wait to get their money when the assets are sold or they will simply be backed by their VC companies. Some of course will fail or have to sell on the cheap. In the end some employees will get screwed and some individuals that have really large individual accounts at SVB will get screwed (though likely eventually get most of their money).
Let the market sort it out and then afterwards we can look at potential reforms. Changing the rules midstream though to primarily protect wealthy investors who put money in startups though is crap. You take risks and you get rewarded or you sometimes lose and the reason for either is often not fair. That's the game.
Yes - they are fully guaranteeing everyone's deposits. The 250k limit does not apply to SVB so it's pretty much impossible to claim it applies at all anymore.nomad2007 said:So when he said the FDIC would be making all depositors whole....does that mean they're waiving basic requirements in this case?Furious said:Less than 3% of deposits at SVB qualify for FDIC... hthnomad2007 said:
If we don't bail them out directly, we'd have to bail out the deposit insurance fund once it's drained.
TheEternalPessimist said:
Don't think for 1 second we wont be bailing out these banks -- we are. And we, the taxpayers, get screwed again.
nomad2007 said:So when he said the FDIC would be making all depositors whole....does that mean they're waiving basic requirements in this case?Furious said:Less than 3% of deposits at SVB qualify for FDIC... hthnomad2007 said:
If we don't bail them out directly, we'd have to bail out the deposit insurance fund once it's drained.
They're bailing out the depositors.Quote:
Don't think for 1 second we wont be bailing out these banks
If they do this it certainly would seem people that have only gotten $250k when banks failed in the past should be able to sue.Furious said:Yes - they are fully guaranteeing everyone's deposits. The 250k limit does not apply to SVB so it's pretty much impossible to claim it applies at all anymore.nomad2007 said:So when he said the FDIC would be making all depositors whole....does that mean they're waiving basic requirements in this case?Furious said:Less than 3% of deposits at SVB qualify for FDIC... hthnomad2007 said:
If we don't bail them out directly, we'd have to bail out the deposit insurance fund once it's drained.
So, to be clear, you'd like to see Barney Frank made destitute, correct?Bubblez said:
Like in the previous banking crisis, those running the banks should have had all of their personal assets, retirement accounts, homes, cars, etc. seized and made destitute. At least the top two layers of management should have been wiped out.
It may just end up being a drop in the bucket compared to scale of the problem, but those people should be feeling the pain for the rest of their lives.
Yup. Which is fine. Good way to handle it.TriAg2010 said:nomad2007 said:So when he said the FDIC would be making all depositors whole....does that mean they're waiving basic requirements in this case?Furious said:Less than 3% of deposits at SVB qualify for FDIC... hthnomad2007 said:
If we don't bail them out directly, we'd have to bail out the deposit insurance fund once it's drained.
SVB holds assets that are sufficient to cover their deposit liabilities. Their assets are largely treasury bonds, which are super safe. The problem for SVB is that (*) their depositors got spooked and started racing to withdraw their funds. To give clients their deposits, SVB has to sell those bonds prior to maturity. Due to rising interest rates, selling those bonds prior to maturity means selling them at a loss. Now there isn't enough cash available to give all clients their money back. Return to (*) to see how a bank run starts.
The government is roughly saying - we will give all the depositors their money back now, we will take possession all of those bonds, and when the bonds mature, everyone is made whole. Meanwhile, the SVB shareholders and some creditors lose everything.
This is a rational and effective approach if it's limited to a handful of banks. But if it's many banks than the US Government (ie all of us) end up holding assets that are currently not worth their face value. My beef with this is that the government is taking the underwater assets at par rather than their actual discounted value. Again, not a huge problem if it's limited but if contagion takes hold it is a bad deal for taxpayers.TriAg2010 said:nomad2007 said:So when he said the FDIC would be making all depositors whole....does that mean they're waiving basic requirements in this case?Furious said:Less than 3% of deposits at SVB qualify for FDIC... hthnomad2007 said:
If we don't bail them out directly, we'd have to bail out the deposit insurance fund once it's drained.
SVB holds assets that are sufficient to cover their deposit liabilities. Their assets are largely treasury bonds, which are super safe. The problem for SVB is that (*) their depositors got spooked and started racing to withdraw their funds. To give clients their deposits, SVB has to sell those bonds prior to maturity. Due to rising interest rates, selling those bonds prior to maturity means selling them at a loss. Now there isn't enough cash available to give all clients their money back. Return to (*) to see how a bank run starts.
The government is roughly saying - we will give all the depositors their money back now, we will take possession all of those bonds, and when the bonds mature, everyone is made whole. Meanwhile, the SVB shareholders and some creditors lose everything.
If Barney Frank is the CEO, President, CFO, COO, or any of their direct reports of a failed bank, then yes.notex said:So, to be clear, you'd like to see Barney Frank made destitute, correct?Bubblez said:
Like in the previous banking crisis, those running the banks should have had all of their personal assets, retirement accounts, homes, cars, etc. seized and made destitute. At least the top two layers of management should have been wiped out.
It may just end up being a drop in the bucket compared to scale of the problem, but those people should be feeling the pain for the rest of their lives.
As far as taxpayers this is President Biden's beliefsHumpitPuryear said:This is a rational and effective approach if it's limited to a handful of banks. But if it's many banks than the US Government (ie all of us) end up holding assets that are currently not worth their face value. My beef with this is that the government is taking the underwater assets at par rather than their actual discounted value. Again, not a huge problem if it's limited but if contagion takes hold it is a bad deal for taxpayers.TriAg2010 said:nomad2007 said:So when he said the FDIC would be making all depositors whole....does that mean they're waiving basic requirements in this case?Furious said:Less than 3% of deposits at SVB qualify for FDIC... hthnomad2007 said:
If we don't bail them out directly, we'd have to bail out the deposit insurance fund once it's drained.
SVB holds assets that are sufficient to cover their deposit liabilities. Their assets are largely treasury bonds, which are super safe. The problem for SVB is that (*) their depositors got spooked and started racing to withdraw their funds. To give clients their deposits, SVB has to sell those bonds prior to maturity. Due to rising interest rates, selling those bonds prior to maturity means selling them at a loss. Now there isn't enough cash available to give all clients their money back. Return to (*) to see how a bank run starts.
The government is roughly saying - we will give all the depositors their money back now, we will take possession all of those bonds, and when the bonds mature, everyone is made whole. Meanwhile, the SVB shareholders and some creditors lose everything.
This is the attitude of the entire federal government unfortunately. It needs to be broken up and dispersed around the country. Washington DC is a giant echo chamber that tells everyone with a .gov email address that they are way more important and smart than they really are.richardag said:As far as taxpayers this is President Biden's beliefsHumpitPuryear said:This is a rational and effective approach if it's limited to a handful of banks. But if it's many banks than the US Government (ie all of us) end up holding assets that are currently not worth their face value. My beef with this is that the government is taking the underwater assets at par rather than their actual discounted value. Again, not a huge problem if it's limited but if contagion takes hold it is a bad deal for taxpayers.TriAg2010 said:nomad2007 said:So when he said the FDIC would be making all depositors whole....does that mean they're waiving basic requirements in this case?Furious said:Less than 3% of deposits at SVB qualify for FDIC... hthnomad2007 said:
If we don't bail them out directly, we'd have to bail out the deposit insurance fund once it's drained.
SVB holds assets that are sufficient to cover their deposit liabilities. Their assets are largely treasury bonds, which are super safe. The problem for SVB is that (*) their depositors got spooked and started racing to withdraw their funds. To give clients their deposits, SVB has to sell those bonds prior to maturity. Due to rising interest rates, selling those bonds prior to maturity means selling them at a loss. Now there isn't enough cash available to give all clients their money back. Return to (*) to see how a bank run starts.
The government is roughly saying - we will give all the depositors their money back now, we will take possession all of those bonds, and when the bonds mature, everyone is made whole. Meanwhile, the SVB shareholders and some creditors lose everything.
He was the single most powerful US financial legislator for years (as chairman of the House Financial Services Committee, responsible for initial drafting/legislation related to banks), drafting laws such as Dodd Frank and it's revisions, and is a board member at Signature Bank after lobbying to exempt them from the stress tests originally required by his own legislation.Bubblez said:If Barney Frank is the CEO, President, CFO, COO, or any of their direct reports of a failed bank, then yes.notex said:So, to be clear, you'd like to see Barney Frank made destitute, correct?Bubblez said:
Like in the previous banking crisis, those running the banks should have had all of their personal assets, retirement accounts, homes, cars, etc. seized and made destitute. At least the top two layers of management should have been wiped out.
It may just end up being a drop in the bucket compared to scale of the problem, but those people should be feeling the pain for the rest of their lives.
Former Rep. Barney Frank (D-MA) endorsed changes to his own Dodd-Frank law in 2018 that freed mid-sized banks from undergoing stress tests. He sits on Signature Bank's board, which just collapsed.
— Joseph Zeballos-Roig (@josephzeballos) March 13, 2023
I reached him via phone tonight and he declined to comment https://t.co/JY77rtNkHt
TriAg2010 said:nomad2007 said:So when he said the FDIC would be making all depositors whole....does that mean they're waiving basic requirements in this case?Furious said:Less than 3% of deposits at SVB qualify for FDIC... hthnomad2007 said:
If we don't bail them out directly, we'd have to bail out the deposit insurance fund once it's drained.
SVB holds assets that are sufficient to cover their deposit liabilities. Their assets are largely treasury bonds, which are super safe. The problem for SVB is that (*) their depositors got spooked and started racing to withdraw their funds. To give clients their deposits, SVB has to sell those bonds prior to maturity. Due to rising interest rates, selling those bonds prior to maturity means selling them at a loss. Now there isn't enough cash available to give all clients their money back. Return to (*) to see how a bank run starts.
The government is roughly saying - we will give all the depositors their money back now, we will take possession all of those bonds, and when the bonds mature, everyone is made whole. Meanwhile, the SVB shareholders and some creditors lose everything.
All of the accounts qualify for FDIC insurance. Only a small percentage of them held under $250,000 which would qualify them for full restitution.Furious said:Less than 3% of deposits at SVB qualify for FDIC... hthnomad2007 said:
If we don't bail them out directly, we'd have to bail out the deposit insurance fund once it's drained.
I read this as Barney Frank's male prostitute and thought "He we go again with this fella..."notex said:So, to be clear, you'd like to see Barney Frank made destitute, correct?Bubblez said:
Like in the previous banking crisis, those running the banks should have had all of their personal assets, retirement accounts, homes, cars, etc. seized and made destitute. At least the top two layers of management should have been wiped out.
It may just end up being a drop in the bucket compared to scale of the problem, but those people should be feeling the pain for the rest of their lives.
