2023 bank failures

[Trey3216 15345]

31 minutes ago, Sawbonz said:

There no doubt would have been much more pain. Esp among the investment bankers whose bonuses were made whole with the bailout money. But we would have come out the other side likely without the second wave housing bubble, stock bubble and (now apparently) VC bubble to deal with. Oh well maybe actual individuals will be able to buy a house in metro areas now

Haha!  Dude, the housing bubble preceded the TBTF ordeal and was its primary cause 

[chainsaw 9859]

This whole thing is the financial equivalent of badly overthrowing your receiver on 4th and long and begging for a PI flag. Motherfucker you're the reason it was 4th and long.

[SL Xpress 7513]

4 minutes ago, Samson's Wig said:

I don't want to see depositors lose money, but I don't have a deep well of sympathy for a company that doesn't understand how to manage and mitigate that risk.  It's not difficult, and any company sitting on a significant chunk of cash in a single bank (absent recently transferred funds to cover payroll or a larger purchase that just had terrible timing) is not being operated properly - which is par for the course in the tech industry where any moron with an idea can get stacks of cash so long as they're charming, and said charming morons often ensure no CFO worth their salt gets anywhere near the operation to gum up the grift. 

Yeah, I don't have a deep well of sympathy, either. I would just like to see minimal disruption to the system as a whole. Which it looks like we're well on our way towards. 

There are some deep seated issues being revealed here that the government is going to have to address at other banks, and I don't pretend to know the best way to address those. 

[52-80 19147]

37 minutes ago, Sawbonz said:

I have had money spread over multiple banks since 2008 precisely to avoid the above. It can be a pain the ass moving things around to be sure. So many clicks…

And you also have inflows and outflows of 6 figures on weekly cycles dynamically balanced across these accounts, too

[ryskey 447]

There's something very visceral about bank failures that leads to a lot of strong emotions and speculation.  Kind of the same appeal of watching post-apocalyptic movies.  Doomporn or whatever.

A $15B business had liabilities exceed its assets.  That's not uncommon, and many businesses can survive that for a time.  This one happened to be a bank.  And the nature of this particular business has to plan around the self-fulfilling prophecy of contagious visceral fear and panic.  

Atrocious risk management by SVB.  I'm sure it's worked out before for others in that situation, but holy shit, hedge your risk. It's a stress test that takes 1 tab in a spreadsheet. It's not hard and not complicated.  If not interest rate swaps,  there are a million other ways to do this.  This is not the first time interest rates have shot up and it won't be the last.  This is either incompetence or negligence and the market taking care of a very poorly run business.  Worst case scenario, if someone values the loan book reasonably, depositors get 90% of their money back, and likely 100% when another bank wins the auction, so the fear is disproportional with respect to the real financial risk - which is $15B of equity and debt wiped out with depositors getting all their money but uncomfortable inconveniences in the meantime.

[Trey3216 15345]

8 minutes ago, Samson's Wig said:

I don't want to see depositors lose money, but I don't have a deep well of sympathy for a company that doesn't understand how to manage and mitigate that risk.  It's not difficult, and any company sitting on a significant chunk of cash in a single bank (absent recently transferred funds to cover payroll or a larger purchase that just had terrible timing) is not being operated properly - which is par for the course in the tech industry where any moron with an idea can get stacks of cash so long as they're charming, and said charming morons often ensure no CFO worth their salt gets anywhere near the operation to gum up the grift. 

But the very planet is at stake.   

[SL Xpress 7513]

15 minutes ago, Sawbonz said:

If you really believe that was the most likely outcome had we allowed things to play out without bailing out the “ most favored nations “ yes we should just agree to disagree 

 

and lessons were definitely learned. Make sure you are among the most favored

I absolutely believe that would have been the outcome if governments didn't turn on the firehose by pouring cash into the system. The global credit markets were completely frozen. Financial institutions were no longer shifting money between one another for fear of who was going to go down next because everyone knew the underlying assets weren't worth book value. The only lender out there were the national governments. 

I don't believe people understand how reliant we are on economic growth for our society to function. There was a possibility that what happened in 2008 could have made the Great Depression look like Happy Time. But because it didn't go that way, we now minimize the danger we were actually in. 

[SL Xpress 7513]

5 minutes ago, Trey3216 said:

But the very planet is at stake.   

How is the planet at stake on this?

There was a lot at stake in 2008. I don't see this as the same thing at all. 

[Sawbonz 27542]

8 minutes ago, 52-80 said:

And you also have inflows and outflows of 6 figures on weekly cycles dynamically balanced across these accounts, too

Are there insurance vehicles other than FDIC available for those entities?

[DefinitelyNotHollywoodColt 12301]

2 minutes ago, SL Xpress said:

I absolutely believe that would have been the outcome if governments didn't turn on the firehose by pouring cash into the system. The global credit markets were completely frozen. Financial institutions were no longer shifting money between one another for fear of who was going to go down next because everyone knew the underlying assets weren't worth book value. The only lender out there were the national governments. 

I don't believe people understand how reliant we are on economic growth for our society to function. There was a possibility that what happened in 2008 could have made the Great Depression look like Happy Time. But because it didn't go that way, we now minimize the danger we were actually in. 

The run up to 2008 wasn’t economic growth, it was bankers inventing new products to make themselves and their shareholders insanely wealthy. The lesson learned is they can be however reckless and irresponsible in those pursuits and when they drive the car off the cliff they know the taxpayer will be there to bail them out.

[Sawbonz 27542]

7 minutes ago, SL Xpress said:

There was a possibility that what happened in 2008 could have made the Great Depression look like Happy Time. But because it didn't go that way, we now minimize the danger we were actually in. 

There were robust arguments made on both sides in the moment. It was a possibility sure. Very smart people made the argument it was not the most likely outcome. 
 

I wonder why the govt didn’t give money to all homeowners who were in danger of defaulting so they could get caught up and stay caught up with their creditors? 

Edited March 12, 2023 by Sawbonz

[wackawacka 177]

are we here yet?

[Sawbonz 27542]

18 minutes ago, Trey3216 said:

Haha!  Dude, the housing bubble preceded the TBTF ordeal and was its primary cause 

I said second housing bubble. 

[Sawbonz 27542]

29 minutes ago, 52-80 said:

The tenor of this question is exactly like the political point scoring battle of “are we technically in a recession”

Earnestly…what the fuck does it matter?

Its a cashflow issue. Not solvency. Bank is under govt administration to help short term business continuity, facilitate better-than-predatory asset recovery, and stave off contagion….in the end with little or no cost to taxpayer. 

So whether this govt action is called a bailout or not matters how? 

The billions in shareholder equity is already gone.

Lot of words to say you agree it’s a bailout

[Dahobbs 17527]

17 minutes ago, SL Xpress said:

Okay.

I would argue distortions occur through greed, through speculative behavior, through the natural inefficiencies in meeting supply and demand, through emotional decisions that aren't properly valued by the market, through the natural tendency towards monopolistic enterprises, through the limitations in the mobility of labor, among many others.

With government, rules and regulations by their definition create distortions in the market. Safety regulations create inefficiencies. Tax incentives create HUGE market distortions. Any rules preserving individual rights over private enterprises create market distortions. Any laws protecting the organization of labor introduces inefficiencies. Government subsidies create distortions. Implied government support creates distortions. The time and effort required to abide by government rules and regulations creates distortions. Torts create distortions. 

But I have a feeling we're defining the term differently.

Distortions are anything that prevent the market from properly accounting for costs and benefits of an activity. The market is a mechanism to help an economy maximize "good." As an example, a market that to fails to account for the negative consequences of an activity, say workers getting injured, isn't acting efficiently. Those injuries have a cost and they should be accounted for in the cost of the activity. Unfortunately, our system doesn't always require the economic actors responsible for the activity recognize that cost. Instead it ends up being borne by the individual workers and perhaps society as a whole in the form of emergency medical treatment. Safety regulations are one avenue that government has to correct that market distortion and account for negative externalities. But yes, such regulations can over correct and cause market distortions themselves. 

[SL Xpress 7513]

3 minutes ago, Sawbonz said:

There were robust arguments made on both sides in the moment. It was a possibility sure. Very smart people made the argument it was not the most likely outcome. 
 

I wonder why the govt didn’t give money to all homeowners who were in danger of defaulting so they could get caught up and stay caught up with their creditors? 

Can you point to me some of those very smart people? You're saying their argument is that if national governments around the world had done nothing to address the crisis, everything would have turned out fine? I've read plenty of people saying governments did too much. I don't think I've ever read anyone that I considered smart who said governments should have done nothing. 

Probably because they would have had to determine who should and who shouldn't have received those loans in the first place. They did freeze foreclosures, which is not the same thing I know. 

Ruling classes favor the rich. Newsflash at 10! If you're expecting that to change outside of some kind of violent revolution that simply puts new overlords in place, you're going to live a life of disappointment in that regard. Which doesn't mean you shouldn't do what you can to fight it. Just be somewhat realistic about what can be done. 

Outside of the whole overthrow thing. Nothing like chopping a few heads off of entitled rich people to change the whole dynamic. 

[Dahobbs 17527]

31 minutes ago, 52-80 said:

The tenor of this question is exactly like the political point scoring battle of “are we technically in a recession”

Earnestly…what the fuck does it matter?

Its a cashflow issue. Not solvency. Bank is under govt administration to help short term business continuity, facilitate better-than-predatory asset recovery, and stave off contagion….in the end with little or no cost to taxpayer. 

So whether this govt action is called a bailout or not matters how? 

The billions in shareholder equity is already gone.

I don't think it really does. But @Porterhouse was vehemently arguing it wasn't a bailout and that the use of the term was of importance. So your issue isn't with @Sawbonz, but the person he was responding to. 

[Sawbonz 27542]

Just now, SL Xpress said:

You're saying their argument is that if national governments around the world had done nothing to address the crisis, everything would have turned out fine

How do you read this into what I wrote?

I didn’t say there was a good argument to do “nothing. “. You can search google if you are interested in the arguments for reasonable options other than what ultimately was done. No one can argue in good faith that there were none
 

As far as how it would turn out, define “fine”.  Things would certainly be different. I have mentioned some of those differences upthread 

[Trey3216 15345]

21 minutes ago, SL Xpress said:

How is the planet at stake on this?

There was a lot at stake in 2008. I don't see this as the same thing at all. 

Some Twitter post I saw that said the planet is at stake because a bunch of green startups Bank with SVB.   I was making fun of the histrionics. 

[SL Xpress 7513]

1 minute ago, Dahobbs said:

Distortions are anything that prevent the market from properly accounting for costs and benefits of an activity. The market is a mechanism to help an economy maximize "good." As an example, a market that to fails to account for the negative consequences of an activity, say workers getting injured, isn't acting efficiently. Those injuries have a cost and they should be accounted for in the cost of the activity. Unfortunately, our system doesn't always require the economic actors responsible for the activity recognize that cost. Instead it ends up being borne by the individual workers and perhaps society as a whole in the form of emergency medical treatment. Safety regulations are one avenue that government has to correct that market distortion and account for negative externalities. But yes, such regulations can over correct and cause market distortions themselves. 

So we're on the same page regarding the definition, then.

My point, and I'm sure we're on the same page here, is that such distortions are necessary. Market economies shouldn't be some kind of religion or ideal or aspiration. It's a tool. There are limited resources and we have to come up with some kind of system to disburse them. The first job should be to maintain the civilization in its current form, or there's no point. Might as well throw the baby out with the bathwater. Have a revolution or get conquered, or die out, or whatever and start over. The second job should be to reflect whatever values the civilization collectively holds. So if a society doesn't value human life relatively speaking, have rules and regulations that reflect that, but make sure there are plenty of babies being born, whatever that takes. 

Right now based on our rules and regulations, I'd argue we value allowing people to amass vast quantities of wealth over having some kind of equitable distribution. I don't see how that's sustainable, and since I believe job one is to maintain the civilization, something needs to be done to move that pendulum, otherwise we're going to cease to exist at some point (as a society, not as a species). I also believe we've become stratified, with measurable losses in upward mobility from one generation to the next. That's dangerous, IMO. 

I believe these frictions are reflected in this thread - but everywhere really. 

You keep telling me that no one is calling for the depositors to lose their money, but I just went to the first page of this thread and there alone are multiple posts calling for exactly that. It's repeated throughout the thread. I feel like you're gaslighting me when you claim something else. That's exactly what a lot of posters on here want. They want the depositors to lose their money above the uninsured amount. 

It's my opinion that's not helpful to the system, but I also don't think it matters, because like you've said, they're going to be made whole whether people want that or not. 

[Neonmoon 38129]

30 minutes ago, SL Xpress said:

How is the planet at stake on this?

There was a lot at stake in 2008. I don't see this as the same thing at all. 

Recalibrate your sarcasm meter. 

[SL Xpress 7513]

7 minutes ago, Trey3216 said:

Some Twitter post I saw that said the planet is at stake because a bunch of green startups Bank with SVB.   I was making fun of the histrionics. 

Sorry. I have made several posts with various degrees of histrionics, so I thought it was directed at me. My mistake. 

[SL Xpress 7513]

1 minute ago, Neonmoon said:

Recalibrate your sarcasm meter. 

I understood it was sarcasm. My question was in reference to why anyone would think the planet is at stake here. Trey3216 answered the post was based on a Twitter feed he read, not on this thread. 

[Trey3216 15345]

4 minutes ago, SL Xpress said:

I understood it was sarcasm. My question was in reference to why anyone would think the planet is at stake here. Trey3216 answered the post was based on a Twitter feed he read, not on this thread. 

It was in the Markets Falling Like Whoa thread in 6th Street…  just posting for reference

 

 

[52-80 19147]

1 minute ago, SL Xpress said:

You keep telling me that no one is calling for the depositors to lose their money, but I just went to the first page of this thread and there alone are multiple posts calling for exactly that. It's repeated throughout the thread. I feel like you're gaslighting me when you claim something else. That's exactly what a lot of posters on here want. They want the depositors to lose their money above the uninsured amount. 

It's my opinion that's not helpful to the system, but I also don't think it matters, because like you've said, they're going to be made whole whether people want that or not. 

They want to satisfy their juvenile sense of retributive moral righteousness. Thats it. 

With a $5M stash, if you have it in 20 separate accounts, FDIC will insure it all. Clearly, there is no additional net cost to the “system”. 

So the difference between literally of thousands of people getting their paycheck or not, through no fault of their own, will be the result of an action of no negative consequence to you or me.

I will take no joy if these workers dont get paid (or lose their job entirely). But some others do…because…justice?

[Dahobbs 17527]

2 minutes ago, SL Xpress said:

You keep telling me that no one is calling for the depositors to lose their money, but I just went to the first page of this thread and there alone are multiple posts calling for exactly that. It's repeated throughout the thread. I feel like you're gaslighting me when you claim something else. That's exactly what a lot of posters on here want. They want the depositors to lose their money above the uninsured amount. 

You're over generalizing and exaggerating what is being said. You keep saying people "want" the depositors to lose all their money. No one wants that to happen in the sense that they are rooting for it. And certainly no one is suggesting that the government intervene to make it happen. What people are saying is that the depositors shouldn't receive additional governmental protection. That isn't the same thing as wanting them to lose all their money. But, if them losing their money is a consequence of this event, then so be it (but it will not be). I don't think this event is a harbinger of broader economic collapse, so I don't see any reason to provide additional protections. 

 

[SL Xpress 7513]

13 minutes ago, Sawbonz said:

How do you read this into what I wrote?

I didn’t say there was a good argument to do “nothing. “. You can search google if you are interested in the arguments for reasonable options other than what ultimately was done. No one can argue in good faith that there were none
 

As far as how it would turn out, define “fine”.  Things would certainly be different. I have mentioned some of those differences upthread 

There's a question mark there for a reason. I'm asking. I'm not a mind reader. I'm asking for clarification. If I get something wrong I appreciate being corrected.

I'm asking for anyone you value that argues the position you hold as a reference to better understand where you're coming from. Google is not going to provide that. 

I don't think it's ever clear in the middle of a crisis what should or shouldn't be done. I've read plenty of arguments about what should or shouldn't have been done. Since we only have one course of action we can demonstrably measure, it becomes difficult to make legitimate comparisons. What I'm saying is that if nothing had been done it would have upended the global order on a bigger scale than what we saw in the 30s and 40s. A lot less would have had to be done if Lehman Brothers hadn't been allowed to just shut its doors. But of course that then creates its own issues. But that is absolutely the event that created the global freeze in the credit markets which brought the system to its knees.  

[Dahobbs 17527]

Just now, 52-80 said:

They want to satisfy their juvenile sense of retributive moral righteousness. Thats it. 

With a $5M stash, if you have it in 20 separate accounts, FDIC will insure it all. Clearly, there is no additional net cost to the “system”. 

So the difference between literally of thousands of people getting their paycheck or not, through no fault of their own, will be the result of an action of no negative consequence to you or me.

I will take no joy if these workers dont get paid (or lose their job entirely). But some others do…because…justice?

I'm entertained that you've managed to turn this whole thing on its head an argue that intervention would be about protecting the common worker. I've seen nothing to indicate any substantial disruption in paychecks for a significant number of workers will occur here. If that occurs, it can be dealt with separately. 

[Macanudo 12975]

I realize the bonuses were for 2022 but...    WTF? 

Article on CNBC says they ranged from $12,000 (rank and file) to $140,000 (Managing Director.)   As of 12/31/22, SVB had just over 8,500 employees.  IF, and that's a not what happened, everyone only got the minimum, that comes out to over $100,000,000 paid in bonuses.  Another WTF?   I work for a fairly large financial services company with over 35,000 employees.   The rank and file get between around 1/4 of SVB's low end.    How does SVB justify the overall bonus policy?   This is outside the scope of the failure issue but it seems to me like this was a fialry poorly run enterprise from the get go.

[SL Xpress 7513]

4 minutes ago, Dahobbs said:

You're over generalizing and exaggerating what is being said. You keep saying people "want" the depositors to lose all their money. No one wants that to happen in the sense that they are rooting for it. And certainly no one is suggesting that the government intervene to make it happen. What people are saying is that the depositors shouldn't receive additional governmental protection. That isn't the same thing as wanting them to lose all their money. But, if them losing their money is a consequence of this event, then so be it (but it will not be). I don't think this event is a harbinger of broader economic collapse, so I don't see any reason to provide additional protections. 

 

I guess. If you want to feel like I'm overgeneralizing and exaggerating what is being said, that's a perception on your part. I'm not going to argue you're wrong. It's your perception.

But it's MY perception that people ABSOLUTELY want to see depositors lose their uninsured money. There's a righteous moral indignation involved. They were stupid. They should have known better. They're all tech bros and cancers on society. There's almost a celebration on this thread that it might occur. I don't know how it can be interpreted differently than that. 

I don't think this is a harbinger of a broader economic collapse, either, but I do think it sends a harmful market signal (that's only MY opinion, and I do not expect others to share it) if the depositors ended up losing their uninsured deposits. Which you and I agree they won't. 

[TonyTexas 10508]

Man, this thread had gone off the rails. Take it to the Viva la Révolution thread. 

[SL Xpress 7513]

Just now, Macanudo said:

I realize the bonuses were for 2022 but...    WTF? 

Article on CNBC says they ranged from $12,000 (rank and file) to $140,000 (Managing Director.)   As of 12/31/22, SVB had just over 8,500 employees.  IF, and that's a not what happened, everyone only got the minimum, that comes out to over $100,000,000 paid in bonuses.  Another WTF?   I work for a fairly large financial services company with over 35,000 employees.   The rank and file get between around 1/4 of SVB's low end.    How does SVB justify the overall bonus policy?   This is outside the scope of the failure issue but it seems to me like this was a fialry poorly run enterprise from the get go.

I don't know that it is outside the scope of the failure issue. I wouldn't expect gross incompetence to be limited to one area of the business. 

They were obviously very good at obtaining huge deposits. It's unclear what else they were good at. 

What's the mechanism for holding management accountable? You mention SVB justifying the policy. Who do they end up justifying this whole thing to? Does someone end up with the Kareem Serageldin treatment?

[Sawbonz 27542]

9 minutes ago, SL Xpress said:

What I'm saying is that if nothing had been done it would have upended the global order on a bigger scale than what we saw in the 30s and 40s

I know of no one who made the argument that nothing be done. I certain haven’t. I get most of my news from NPR and BBC and I recall there was robust argument at the time. If you truly weren’t exposed to any alternatives to what ultimately was chosen I suggest you start there. 
 

 

[52-80 19147]

6 minutes ago, Dahobbs said:

I'm entertained that you've managed to turn this whole thing on its head an argue that intervention would be about protecting the common worker.

try entertaining what the #1 cost to a corporation is, and what happens when it doesnt have access to its cash stash

[Sawbonz 27542]

7 minutes ago, SL Xpress said:

But it's MY perception that people ABSOLUTELY want to see depositors lose their uninsured money

I don’t want this to happen, but allowing the precedent to be set that a depositor can expect to be made whole for amounts above the policy limit is terrible IMO. Should I only purchase 100k of homeowner’s insurance and then be reimbursed for a complete rebuild if my house burns down?

[Macanudo 12975]

5 minutes ago, SL Xpress said:

Does someone end up with the Kareem Serageldin treatment?

Of course not.    No one will be held accountable and everyone involed will either continue living as a filthy rich person or end up in another job where they'll just keep on keepin' on.

[SL Xpress 7513]

4 minutes ago, Sawbonz said:

I know of no one who made the argument that nothing be done. I certain haven’t. I get most of my news from NPR and BBC and I recall there was robust argument at the time. If you truly weren’t exposed to any alternatives to what ultimately was chosen I suggest you start there. 
 

 

I was plenty exposed. Still am. I enjoy reading about what transpired from various points of view. I was asking for a specific recommendation if you had any. I appreciate your response. 

[wildcat09 29347]

 

The quoted tweet is fucking amazing. These people are so stupid.

[Sawbonz 27542]

7 minutes ago, Macanudo said:

Of course not.    No one will be held accountable and everyone involed will either continue living as a filthy rich person or end up in another job where they'll just keep on keepin' on.

 

4 hours ago, Neonmoon said:

Now this is a fun fact 

 

 

[Bevo 13570]

Silicon Valley is and always has been a good ole boy network - the good ole boys are just different from the good ole boys in the South - They are Harvard Educated, Stanford Educated, Cambridge Educated, Karolinska Institute Educated, Indian Institute of Technology Bombay Educated, and Peking University Educated. SVB was the bank of the good ole boy network. And since money is at the center of Silicon Valley, SVB was the heart of the good ole boy network.

And while the schooling is impeccable, I'm not so sure common sense is any more common than in the South. Fractional Banking is the cornerstone of capitalism and reserves and liquid assets are always very limited. Some really crappy control of interest rate risk took place, but to me, the bigger issue is the nature of the bank. SVB had an extremely high ratio of Dollars per Customer and losing a small number of customers had a big effect on the bank's solvency. That coupled with the good ole boy nature of the area, doomed the bank. Thiel and his fund had problems with transfers so his VC fund pulled its money out. Thiel informed his buddies what he was doing and recommended that they do the same. A bank run ensued and SVB was gone in very short order.

[SL Xpress 7513]

17 minutes ago, wildcat09 said:

 

The quoted tweet is fucking amazing. These people are so stupid.

@Jackson P. Neighbors has a great post on page 5 where he talks about some of the amounts involved:

"What we saw yesterday should not happen. $42B deposit outflow and resultant -$958M cash position in one day is worthy of Congressional investigation in my opinion, and I have zero axes to grind. Previous posters showed the data on deposit size % which is spot on. Prudential regulators are going to have to reassess the entire playbook on liquidity management after this. Bank failures occur mostly due to liquidity, but it happens over weeks and months and quarters which gives the bank and regulators time to find buyers for assets, etc. Technology, an astute and influential client base, and a huge average relationship balance meant that this could happen with unprecedented speed."

Here's an interview with a different CEO who describes her company's mad scramble between 12pm and 3pm to move all their cash above the $250k threshold somewhere else:

 

Edited March 12, 2023 by SL Xpress

[Guest]

3 hours ago, Dahobbs said:

2. What are you talking about? You asked if TARP was a bailout. It bailed out a lot of entities. I'm going to ask, what is your definition of bailout? You appear to have some specific conception that is not matched with the general use of the term. 

3. The answer is it depends. It has several mechanisms to shore up funds when necessary. I'm not assuming that the Treasury will be accessed. I'm just saying it is in fact one of the fail-safes for the FDIC. I'm also saying it doesn't fucking matter where the money comes from. The the FDIC risks its own resources to keep an entity or entities from suffering extreme hardship, then that is a bailout. Whether the bailout is good or not depends on a lot of factors. 

2. It did NOT bail out any banks. That’s why I’m talking about. Are you under the simple impression it did? Which banks?

3. So your contention is, the FDIC May access the Treasury, even though it did not during the Great Recession, and you’re not talking about bailouts in terms of being “good”. Lol. 

[Dahobbs 17527]

17 minutes ago, 52-80 said:

try entertaining what the #1 cost to a corporation is, and what happens when it doesnt have access to its cash stash

The companies that had all their cash tied up in SVB and no other source for temporary funding probably don't have much in the way of employees. The other companies will continue to make payroll, but struggle with or delay paying other debts. I also expect the overall number of workers that would be affected would be quite small. And I think all the employees will eventually be made whole, although some may have to find new jobs (not uncommon for those working in this space). At any rate, there are a number of mechanisms already available to assist any employees who aren't paid. The call for additional government action here isn't to protect the employee payroll, but rather the equity of those invested in the companies. It is disingenuous to suggest otherwise.  

[Smax 3800]

I'll chime in, yes the depositors should lose their money.
Am I rooting for it, no but their ignorance or arrogance shouldn't be the tax payers fault

[Macanudo 12975]

Hang on...  If Thiel pulled his money before the Treasury issue hit the fan and he know about it, how is this not something related to insider trading?  Or is that narrowly defined as "making money" on insider knowledge related to the sale of stock?

BTW, everthing I know about Thiel makes me dislike him immensely.

[Guest]

3 hours ago, Neonmoon said:

That’s not what happened at all. 

It’s definitely one half of the equation.

 

2 hours ago, Dahobbs said:

Wait, I just caught this. When do you think TARP was passed? When do you think new GM went into bankruptcy? When do you think old GM and new GM received TARP funds? These things did not occur "years" apart. They didn't even occur a year apart. They all occurred in 2008-2009.  

I’ve slept since then. Bailouts were synonymous with banks. And you got me on GM. 

2 hours ago, Sawbonz said:

I assume they increase premiums. 
 

do you know what %of total liabilities fdic is supposedly required to keep in reserve? Do you know what % is currently in reserve?

You’re missing key words in your question. 

2 hours ago, Sawbonz said:

Just to clarify there are posters here who think a company receiving funds from sources not available to everyone via conventional avenues in order to stave off collapse is *not* a bailout?

When those companies never needed it, asked to not be a part of it, never used the $, and returned it at first opportunity, with coupon, absolutely. 

2 hours ago, Dahobbs said:

Here is the thing. The depositors money isn't really substantially at risk. Just when they'll be able to get it. I absolutely believe some lessons need to be learned the hard way in order to create the right market incentives. 

And that’s fine if you believe that. I think things have the potential to get a lot worse before the depositors are made whole. All so what?  Populists’ message is delivered to the banking industry that is in fine shape, and what happened with SVB cannot be repeated?  

2 hours ago, Chopper said:

You've misstated Peter Thiel's role. He took his money out and then sent an email around that caused a panicked run on the bank.

Is it "populist" to believe that insurance limits are there for multiple reasons, all of which are meant to limit risk in the system, and that you ignore the FDIC incentives at your own potential peril? If so, then I guess I'm a populist.

Thiel did nothing wrong. You’re sensationalizing his role without any knowledge backing up your assertions other than Twitter speculation. 

2 hours ago, Dahobbs said:

Wait, so your solution to this is to just make every bank "too big to fail?" 

Again, none of that really matters here. The depositors' money isn't really at risk. SVB equity is going to take a blood bath, as it should. And more than a few in SVB management probably should face significant personal liability. 

Are you being intentionally obtuse?  That’s not the solution. That is what the result of doing nothing will be. It doesn’t matter that, and I agree, the depositors money will be mostly safe. 

[GringoSalado 1651]

I can't find a link but upthread somebody posted that SVB incented clients to keep more deposits with them via favorable loan terms? So it sounds like Roku et. al. may have maintained deposits in excess of insured-levels not because they did no risk mgmt. but because they needed/wanted those better terms. Maybe we shouldn't allow that (banks to encourage customers to exceed insured deposit level).

It also sounds like a lot of their customers don't have significant revenue so their deposited loan is how they make payroll, next week and every week after that. So without any cash flow to fund ops, you are more likely to see a bank run.

 

But I'm an idiot.

Edited March 12, 2023 by GringoSalado
moron

[Dahobbs 17527]

13 minutes ago, Porterhouse said:

2. It did NOT bail out any banks. That’s why I’m talking about. Are you under the simple impression it did? Which banks?

3. So your contention is, the FDIC May access the Treasury, even though it did not during the Great Recession, and you’re not talking about bailouts in terms of being “good”. Lol. 

2. You said in blanket terms that TARP wasn't a bailout. It was. You didn't say anything specific about banks, and neither did I. But, yes, funds from TARP went to banks to help stabilize them (e.g., Wells Fargo). That is a bailout as the term is used. Have you looked up when GM was bailed out and when TARP was created yet?

3. It is a fact that the FDIC is backed by the full faith and credit of the US government. It is a fact that it can directly access the Treasury if it needs to. It is a fact that it has never needed to do so. It is my opinion that I wouldn't expect FDIC to need to do so if it guarantees SVB deposits. It is my opinion that a guarantee of SVB deposits is unnecessary. I really have no idea what you're trying to say here. 

[GringoSalado 1651]

3 minutes ago, Dahobbs said:

 I really have no idea what you're trying to say here. 

That TARP wasn't a bailout?

[Bevo 13570]

5 minutes ago, Macanudo said:

Hang on...  If Thiel pulled his money before the Treasury issue hit the fan and he know about it, how is this not something related to insider trading?  Or is that narrowly defined as "making money" on insider knowledge related to the sale of stock?

BTW, everthing I know about Thiel makes me dislike him immensely.

If he was investing in SVB and pulling that investment due to insider knowledge then it would be insider trading. Pulling your money out of a bank because you don't trust it or for any reason is not against the law. Now if he was on the board of SVB, then there are other issues but it still wouldn't be insider trading.

One issue that could come up in the future is the power of social media. Presumably, people could crowd source companies and cause stock fluctuations from which they could profit. It seems like it would be pretty easy to do with small companies on the exchange.