Silicon Valley Bank

So to recap, according to you:

1. Dodd Frank's Fault
2. Then, bank executives fault
3. No, then it was DEI fault
4. Then, it was COVID's fault
5. Now, federal regulator's fault for doing the right thing.

Everyone is to blame except the people who allowed this to happen.

 

Treasuries that they couldn’t hold until maturity or otherwise when there was a run. Big picture is: what is gong on in other banks? Did they do the same? Institutions buy treasuries. Generally stable assets.

 

the feds didn't make them buy the bonds, didn't make them hold the bonds until they were short cash, didn't make them go an extended periods without a risk compliance officer, and didn't make them pay the lobbyists to pay the pubs to make sure they were lumped in with the credit unions that needed relief from Dodd-Frank to remove fed control thru risk compliance reporting. and the feds certainly didn't make their insiders sell off a bunch of their stock which is what likely led Thiel to pull cash and send out an alarm that led to the run on the bank. other than all that, yeah, the feds raised rates to cool inflation

 

This isn’t a bail out of the bank. The bank has substantial assets to make payroll etc for the companies that depend on it. It is not a bad loan failure. The government will have to cover that gap.

 

The rise in interest rates is not to unprecedented rates. But it has been a rapid and dramatic increase. This is an unintended consequence, but this is not surprising

 

The Fed are the architects of what the economy has been doing for over 30 years. Yellen herself is a liar on TV by saying what they did for SVB is not a bail out, but it is. Just be honest with people. Just say we are doing this now so we don't do it later. Like starting a brush fire in order to prevent a forest fire. Just don't babble your way through an interview by telling lies because too many people will expose you and then you become disingenuous and nobody believes a word you say.

 

So the FDIC is going to insure all of the deposits, over and above the standard $250k.

Redistribution, through taxes, from the taxpayer to the Silicon Valley depositors.

Tell me again how the Democrats (and certainly not the Republicans) care about the common man. We are simply pawns in their little wealth building scheme. At what point do people wake up?

 

No taxpayers don’t pay for anything, that was explicitly stated, and investors in the bank get wiped out. That’s 10’s of billions of wealth wiped out. I didn’t think they would, but it seems their hand was forced over the weekend. I can see an argument that protecting payroll and other such small business depositors is protecting “the common man” even if those accounts are above $250k or even many millions. They could have stipulated “only to make payroll”, but the FED likely doesn’t have the capacity to go that granular, and it also implies depositors/customers of these banks would be “allowed” to make payroll and then expected to close up their business and cut their losses.

I think this was done to prevent the panic from expanding to other banks, which gets exponentially more costly.

 

So if taxpayers don't pay for anything, where does the money come from that insures the deposits?

 

I don’t think it’s inaccurate to say “not a bailout”, as everybody at SVB is fired, and investors will be wiped out. They aren’t being “bailed out”. Only depositors are being protected.

In the 2009 banking crisis, some banks (actually ALL banks) received capital directly from the govt taking direct ownership through a special class of shares. No investors were “wiped out”, although their common shares were temporarily suppressed in a big way by the govt having its shares. That situation would be more appropriately called a bailout. The thing is, that bailout actually worked brilliantly for its intended purpose - which was to stem the tide of an all out banking collapse. In retrospect if the govt had acted sooner back then (before Lehman) it could have been alot less messy. Although fundamentally, that mortgage backed securities fiasco was a completely different animal.

 

Banks pay for FDIC insurance. So in essence customers of banks pay to insure their deposits. Of course that insurance is only supposed to cover $250k. If the FDIC fund were theoretically wiped out by multiple bank failures, then yes, taxpayers might be on the hook. But the 2009 crisis also showed a different model for dealing with bank runs, recapitalization of banks using the FED’s balance sheet. I think that would be the model before any massive taxpayer bailout.

 

Right, I didn't phrase it correctly I guess. Who pays for the deposits above $250k, since they have been guaranteed?

 

Supposedly the Fed is going to swap those low interest securities backing the deposits for cash at face value so they don't have to realize losses. It's all magic.

 

So in other words, the taxpayers will foot the bill through the Dept. of Treasury

 

Doesn't look that way.

https://www.cnbc.com/2023/03/13/wal...-svb-and-signature-deposit-relief-plans-.html

 

Quick money to be made in BTC if this continues

 

True, but that's just skirting around the definition. I call it Transitive Bailout. They took over SVB, fired everyone that works for SVB but then turned over the operation to another bank. That bank was given money to prevent it from collapsing, so it was bailed out. It's the same thing except in this case, the bailed out bank was the surrogate bank that took over for the failed bank. The end result is the same.