2023 bank failures

[52-80 19,241]

FDIC is self-capitalized.  when they're short, they borrow from govt.  borrow - not take. 

[Trey3216 15,355]

14 minutes ago, TonyTexas said:

Lots of Wall Street types hanging out at wallstreetbets on Reddit huh?

Lots of people that have company supported access to Bloomberg terminals that work for companies that owned the largest # of shares, and can’t stand when “smallish hedge funds” get out over their skis.    
 

the bet was corrrect, it was a bankrupt company.  But the largest shareholder of GameStop was BlackRock.  They are also the largest manager of funds in the world.  Think they weren’t buying up options and turning a profit?   They increased their share ownership during the ordeal.   They weren’t the only one.  

[Neonmoon 38,130]

2 minutes ago, ChickenSandwich said:

Also a golden retriever, but how does the government guarantee full deposit restitution and zero tax payer losses?

 

Short term loans. Taxpayer money that will be paid back by banks. 

Both sides can now claim victory and fight to the death over semantics 

[52-80 19,241]

7 minutes ago, Sawbonz said:

The bank executives. That should be clear from my posts

they're out of a job. and probably subject to clawbacks and civil lawsuits from shareholders. 

what does this have to do with your remaining ire of the govt administration of the bank?

[Sawbonz 27,587]

Just now, 52-80 said:

they're out of a job. and probably subject to clawbacks and civil lawsuits from shareholders. 

what does this have to do with your remaining ire of the govt administration of the bank?

They are out of this job. They will wind up at another bank just like NFL coaches get recycled

 

I have no ire about this instance per se. I just am not gullible enough to think this is the last time this will happen

[Hefeweizen 5,332]

6 minutes ago, Sawbonz said:

They are out of this job. They will wind up at another bank just like NFL coaches get recycled

 

I have no ire about this instance per se. I just am not gullible enough to think this is the last time this will happen

Gerg is fucked.  He won’t work at a public bank again unless it’s as a teller.

[Brew 3,049]

24 minutes ago, Chopper said:

Oh? You should probably send an email to the motherfucking fdic. https://www.fdic.gov/resources/deposit-insurance/understanding-deposit-insurance/

That in no way, shape, or form matches up with what you typed above.

[52-80 19,241]

1 minute ago, Hefeweizen said:

Gerg is fucked.  He won’t work at a public bank again unless it’s as a teller.

At his last sale he reported ~$25M in equity ownership which is all toast too.  And what he's already cashed out possibly could be taken away

[Chopper 17,245]

11 minutes ago, 52-80 said:

FDIC is self-capitalized.  when they're short, they borrow from govt.  borrow - not take. 

What is "self-capitalized"? LOL. Do you maybe mean they're primarily funded by an insurance premium paid by banks on a per account basis? And who do you think pays the banks the money they need to pay the FDIC? You really do think the money is free.

[Sawbonz 27,587]

4 minutes ago, Hefeweizen said:

Gerg is fucked.  He won’t work at a public bank again unless it’s as a teller.

You sure about that

 

9 hours ago, Neonmoon said:

Now this is a fun fact 

 

 

[52-80 19,241]

Just now, Chopper said:

What is "self-capitalized"? LOL. Do you maybe mean they're primarily funded by an insurance premium paid by banks on a per account basis? And who do you think pays the banks the money they need to pay the FDIC? You really do think the money is free.

It means they operate without direct contribution from tax payer, as a direct response to question from ChickenSandwich (and earlier, Nicole)

What I really do think is either you're too dumb to understand that, or too angry to accept it.  But go off king.

[ChickenSandwich 9,852]

40 minutes ago, Neonmoon said:

Short term loans. Taxpayer money that will be paid back by banks. 

Both sides can now claim victory and fight to the death over semantics 

Who pays the interest on the loans?  The borrower/deposit holder?  Confused as to why another bank would need/want a loan to cover the failed bank’s deposits?

And assuming a sale of assets by the government, who covers the losses of these sales if they don't get 100% of their expected return due to forced sell off?  Wrong to assume anyone buying these assets won’t expect some sort of discount?

Edited March 13, 2023 by ChickenSandwich

[Bevo 13,600]

26 minutes ago, Hefeweizen said:

Gerg is fucked.  He won’t work at a public bank again unless it’s as a teller.

Anyone have his CV? His Linked In doesn't say shit and his bio on SVB didn't say shit but he has been at SVB for 15 years. His name sounds familiar though. Maybe he was at one of the VC firms off of Page Mill.

[Dahobbs 17,683]

4 minutes ago, ChickenSandwich said:

Who pays the interest on the loans?  The borrower/deposit holder?  Confused as to why another bank would need/want a loan to cover the failed bank’s deposits?

And assuming a sale of assets by the government, who covers the losses of these sales if they don't get 100% of their expected return due to forced sell off?  Wrong to assume anyone buying these assets won’t expect some sort of discount?

The bank would pay interest on the loan. Basically an emergency measure if they need additional liquidity, but really this is just designed to keep people from panicking and pulling out their money (in this case avoiding more shit head tech guys in a chat together deciding to tank their own bank). 

Another bank would want to purchase SVB because they'll be able to get a good deal. The assets are fine, just poorly matched to their liabilities. Another bank, particularly a larger one, may have a more liquid set of assets and able, particularly with FDIC help, to absorb the short term issues with SVB. 

[Grade of D as in David 13,253]

37 minutes ago, Sawbonz said:

You sure about that

 

 

Just set up a calendar event for 2033 to see where this guy is working and short the shit out of their stock.

[Guest]

1 hour ago, Sawbonz said:

I’ve been involved in loans up to 25M and even those with rates as favorable as @LIBOR we have never had to hold ALL deposits at the lending institution. Are they paying you to take these loans?

I have too. It ebbs and flows and has my entire 25 year business career. My loan right now requires me to hold deposits there. It is an energy industry loan. Energy bank capital is so difficult to come by that you must hold deposits with the bank to provide you the loan. This is common knowledge.

SVB was the king of providing what are called capital call lines of credit. If you have this type of loan instrument, you are damn sure required to hold all of your deposits with that bank. 

[DalTxHornFan 3,116]

That FDIC press release is really dumb.  Love the "no cost to taxpayers" bit.  Are Men from Mars gonna fund it?

[Hefeweizen 5,332]

Just now, DalTxHornFan said:

That FDIC press release is really dumb.  Love the "no cost to taxpayers" bit.  Are Men from Mars gonna fund it?

Yeah that’s a lie.  But it was that or fuck around and find out with a contagion.  At least one other bank in the same boat immediately.  Watch next week.

[Guest]

1 hour ago, Brew said:

This is not how FDIC insurance works. Maybe you should read up on FDIC insurance.

He is *open* to correction. Have at it. I’m done. 

[DalTxHornFan 3,116]

The U.S. taxpayers are going to be buying a ton of underwater bonds from banks this week.  At par.  Guess who will take the hit?

[Chopper 17,245]

1 minute ago, Brew said:

That in no way, shape, or form matches up with what you typed above.

Interesting. Maybe you need to get your eyes checked.

1 minute ago, 52-80 said:

It means they operate without direct contribution from tax payer, as a direct response to question from ChickenSandwich (and earlier, Nicole)

What I really do think is either you're too dumb to understand that, or too angry to accept it.  But go off king.

So "self-capitalized" = no direct taxpayer contribution. Got it. Really bizarre term you used imo, esp because of the part where the US Treasury steps in with loans if the job is too big for the FDIC. That's not enough direct taxpayer involvement, being the guarantor for the entire operation? They're also literally funded by a fee/tax on their users who in turn pay the fee that the FDIC collects from the banks. In other words the fee comes from Ma and Pa who've set up their accounts and get hit with hefty bank fees motivated in part by the bank's need to recover what they're paying the FDIC. Speaking of "self-capitalized", how about Texas highways, which don't receive a direct contribution from the taxpayer but charge a user fee at the gas pump. Is TxDOT "self capitalized" too?

As you point out, I am but a simpleton and you are in the self-appointed genius category however I raised a flag about your use of the term "self-capitalized" because it struck me as some type of bullshit but admittedly I don't know your motivation for framing it that way. However, when it all comes out in the wash the fee that funds the FDIC is ultimately paid for by the taxpayer. The shifting of who pays the fee that funds the government program does nothing but keep taxpayers in the dark about the FDIC and also ensures that Congress gets few chances to influence the program and the funding.  Just my dumbass opinion.

[Hefeweizen 5,332]

I suspect the parsing of the statement is that the taxpayers are just carrying this for a little while as the assets are sold and depositors made whole.

 

Fucking tired of government for the FAFO bailout but the alternative was pretty ugly.  Like at a minimum a lot of economic damage and at worst a loss of confidence in our banking system which is a huge set of promises.

[Chopper 17,245]

18 minutes ago, Bevo said:

Anyone have his CV? His Linked In doesn't say shit and his bio on SVB didn't say shit but he has been at SVB for 15 years. His name sounds familiar though. Maybe he was at one of the VC firms off of Page Mill.

What if I told you he previously was on the Board of Governors at the SF Federal Reserve?

[Sawbonz 27,587]

7 minutes ago, Porterhouse said:

I have too. It ebbs and flows and has my entire 25 year business career. My loan right now requires me to hold deposits there. It is an energy industry loan. Energy bank capital is so difficult to come by that you must hold deposits with the bank to provide you the loan. This is common knowledge.

SVB was the king of providing what are called capital call lines of credit. If you have this type of loan instrument, you are damn sure required to hold all of your deposits with that bank. 

So you are taking potentially a big risk and doing it with eyes wide open. Your other options are to get a higher interest loan from a bank that doesn’t have that requirement or, if they all require it, make sure it’s at a bank that carries additional deposit insurance on top of FDIC. Presumably those loans are more expensive. For people who don’t choose those options, I don’t have much sympathy if things go to shit. 

[Hefeweizen 5,332]

1 minute ago, Chopper said:

What if I told you he previously was on the Board of Governors at the SF Federal Reserve?

Yup.  Exactly right.

[Mullet Free 40]

There are some smart, experienced people on this thread. I’m curious what people think of this. Basically a subsidized way to get around losses on your books? Not sure I can grasp all the unintended consequences of such a drastic action. 
 

 

 

 

[DalTxHornFan 3,116]

3 minutes ago, Mullet Free said:

There are some smart, experienced people on this thread. I’m curious what people think of this. Basically a subsidized way to get around losses on your books? Not sure I can grasp all the unintended consequences of such a drastic action. 
 

 

 

 

Frankly, I think that the Fed should have done something like this way earlier.  So many banks had bond interest rate exposure.  And the OCC knew all about it.  The current administration simply wanted to wish the current interest rate environment as "transitory" -- 4-5 basis points is not "transitory"

Edited March 13, 2023 by DalTxHornFan

[Rimbo 26,075]

Oh, dear.

A founder of a couple of startups I worked for just made the most Pollyanna bullshit post about this on LinkedIn. Basically saying how smart the bank staff were and how everything would be okay on Monday...

Oh, dear, oh dear oh dear.

Edited March 13, 2023 by Rimbo

[Guest]

it’s not the last time it’ll happen, you’re clearly bothered by it, and you’re lashing out saying stupid shit. 

1 hour ago, Sawbonz said:

They are out of this job. They will wind up at another bank just like NFL coaches get recycled

 

I have no ire about this instance per se. I just am not gullible enough to think this is the last time this will happen

[Guest]

58 minutes ago, Chopper said:

What is "self-capitalized"? LOL. Do you maybe mean they're primarily funded by an insurance premium paid by banks on a per account basis? And who do you think pays the banks the money they need to pay the FDIC? You really do think the money is free.

The banks pay it. You cannot be this stupid. 

[Sawbonz 27,587]

7 minutes ago, Chopper said:

way. However, when it all comes out in the wash the fee that funds the FDIC is ultimately paid for by the taxpayer.

No. It’s only those who have accounts in an FDIC insured institution. Why you being deceptive?

[Sawbonz 27,587]

5 minutes ago, Porterhouse said:

it’s not the last time it’ll happen, you’re clearly bothered by it, and you’re lashing out saying stupid shit. 

It’s not the last time it’ll happen, you’re clearly worried it will be your bank, and you’re hoping you can ward it off saying stupid shit

[Jackson P. Neighbors 136]

4 minutes ago, Mullet Free said:

There are some smart, experienced people on this thread. I’m curious what people think of this. Basically a subsidized way to get around losses on your books? Not sure I can grasp all the unintended consequences of such a drastic action. 
 

 

 

 

Still digesting this, but this action shows/affirms that ALL banks nationwide are sitting on gigantic unrealized AOCI losses, SVB was not even close to being the worst bad actor. And as I’ve said in other posts, it’s a complete non-issue for 99% of them. Think my other post is in the Markets are falling thread but I digress.

What this would do is remove the AOCI component from the equity calculation in determining the borrowing capacity at the Fed window. At first blush, it makes sense. But also, consider that the Fed is the lender of last resort. You are on the verge of failure of you have to resort to Fed borrowing. The very fact that you are utilizing the window is a clear sign of a death knell to the markets. So I’m trying to process how this benefits any institutions but the most critically undercapitalized.

Day two of kiddos spring break and haven’t been off calls the whole time. Cmon guys! Time your banking crisis better!

 

[Bevo 13,600]

17 minutes ago, Chopper said:

What if I told you he previously was on the Board of Governors at the SF Federal Reserve?

I would then wonder what big time SF politicians and ex-politicians have money in SVB or in VCs who have SVB exposure.

[Guest]

27 minutes ago, DalTxHornFan said:

That FDIC press release is really dumb.  Love the "no cost to taxpayers" bit.  Are Men from Mars gonna fund it?

No. 

25 minutes ago, Hefeweizen said:

Yeah that’s a lie.  But it was that or fuck around and find out with a contagion.  At least one other bank in the same boat immediately.  Watch next week.

Not a lie. 

19 minutes ago, DalTxHornFan said:

The U.S. taxpayers are going to be buying a ton of underwater bonds from banks this week.  At par.  Guess who will take the hit?

Why?  Now that there’s some semblance of stability a more liquid bank will come in and buy these bonds and hold them to maturity. 

Guys this is pretty simple and the level of discourse is bad here. 

16 minutes ago, Sawbonz said:

So you are taking potentially a big risk and doing it with eyes wide open. Your other options are to get a higher interest loan from a bank that doesn’t have that requirement or, if they all require it, make sure it’s at a bank that carries additional deposit insurance on top of FDIC. Presumably those loans are more expensive. For people who don’t choose those options, I don’t have much sympathy if things go to shit. 

I’m taking zero risk. I would ask you about the right of offset, but I’m sure you wouldn’t grasp it. I have no other options that would allow me to hold deposits elsewhere if I wanted a loan. I also love how you’re giving me unsolicited advice as if you know more on the subject than I do. 

[Brew 3,049]

18 minutes ago, Chopper said:

Interesting. Maybe you need to get your eyes checked.

Are you really this stupid? They give you examples in what you linked if you would just read them. You don’t get $250k per account type. You don’t get multiple CD’s. It is per depositor, per insured bank, for each account ownership category not type. All of the accounts you listed are added together up to $250k per depositor, not $250k per bank account type. 

[Guest]

1 minute ago, Brew said:

Are you really this stupid? They give you examples in what you linked if you would just read them. You don’t get $250k per account type. You don’t get multiple CD’s. It is per depositor, per insured bank, for each account ownership category not type. All of the accounts you listed are added together up to $250k per depositor, not $250k per bank account type. 

Yes he is that stupid. Sawbonz is about there too. 

[Hefeweizen 5,332]

4 minutes ago, Porterhouse said:

No. 

Not a lie. 

Why?  Now that there’s some semblance of stability a more liquid bank will come in and buy these bonds and hold them to maturity. 

Guys this is pretty simple and the level of discourse is bad here. 

I’m taking zero risk. I would ask you about the right of offset, but I’m sure you wouldn’t grasp it. I have no other options that would allow me to hold deposits elsewhere if I wanted a loan. I also love how you’re giving me unsolicited advice as if you know more on the subject than I do. 

Not responding to make a longcat but if you think the other banking institutions participating in the FDIC are the backstop I have news for you.  This was brokered by the Treasury.

[Sawbonz 27,587]

6 minutes ago, Porterhouse said:

risk. I would ask you about the right of offset

Are you saying your debt to the bank will  be offset by the amount of your deposits lost if the bank fails? I wouldn’t call that “no risk” but it’s better than nothing I guess

[Parliament 14,292]

1 hour ago, 52-80 said:

 And what he's already cashed out possibly could be taken away

Well you'd sure hope they take it all.

[Mullet Free 40]

8 minutes ago, Jackson P. Neighbors said:

Still digesting this, but this action shows/affirms that ALL banks nationwide are sitting on gigantic unrealized AOCI losses, SVB was not even close to being the worst bad actor. And as I’ve said in other posts, it’s a complete non-issue for 99% of them. Think my other post is in the Markets are falling thread but I digress.

What this would do is remove the AOCI component from the equity calculation in determining the borrowing capacity at the Fed window. At first blush, it makes sense. But also, consider that the Fed is the lender of last resort. You are on the verge of failure of you have to resort to Fed borrowing. The very fact that you are utilizing the window is a clear sign of a death knell to the markets. So I’m trying to process how this benefits any institutions but the most critically undercapitalized.

Day two of kiddos spring break and haven’t been off calls the whole time. Cmon guys! Time your banking crisis better!

 

So on the surface I guess it’s essentially $620B of potential stimulus if you think about it in an over simplified manner.
 

 

 

What I’m interested in are the unintended consequences. Basically you eliminate interest rate risk for banks. But any other entity is on the hook if bond prices fall. So why would anyone else buy bonds?
 

Basically the Fed and banking system will make up new rules keep the game afloat. 

[Neonmoon 38,130]

So no one was hedging interest risk? Seriously?

[David Dennison 18,946]

19 minutes ago, Hefeweizen said:

Not responding to make a longcat but if you think the other banking institutions participating in the FDIC are the backstop I have news for you.  This was brokered by the Treasury.

What happens when the FDIC doesn't have enough to cover the insured deposits?

[Captainant 27,762]

14 minutes ago, Mullet Free said:

So on the surface I guess it’s essentially $620B of potential stimulus if you think about it in an over simplified manner.
 

 

 

What I’m interested in are the unintended consequences. Basically you eliminate interest rate risk for banks. But any other entity is on the hook if bond prices fall. So why would anyone else buy bonds?
 

Basically the Fed and banking system will make up new rules keep the game afloat. 

This is a bad idea. It will lead to shiesty accounting that will offload all the dog shit onto the public while the corp rakes fat tasty shareholder profits. And by shareholder I mean executives

[ChickenSandwich 9,852]

1 hour ago, Dahobbs said:

The bank would pay interest on the loan. Basically an emergency measure if they need additional liquidity, but really this is just designed to keep people from panicking and pulling out their money (in this case avoiding more shit head tech guys in a chat together deciding to tank their own bank). 

Another bank would want to purchase SVB because they'll be able to get a good deal. The assets are fine, just poorly matched to their liabilities. Another bank, particularly a larger one, may have a more liquid set of assets and able, particularly with FDIC help, to absorb the short term issues with SVB. 

What “bank” would be paying the interest on the loan?  SVB is gone, and no longer in business so they wont be taking the loan. Wouldn’t the loan recipient be the depositor who needs more than $250k right away (can’t wait for asset sale), and they would pay the interest?
 

If i’m understanding, the government will use tax payer funds to guarantee all deposits while they sell the assets to other banks to recoup the money covered to depositors?

The chances of selling the remaining assets for 100% value would seem to be low (guessing), so would the taxpayer be responsible for any money not eared back through asset sales?  Just won’t know how much until months or years have passed and it’s out of the news?

Does the government project a profit from the sales?  Is There is no entity to pay back the Fed funds with interest etc like with TARP b/c the bank failed?

Edited March 13, 2023 by ChickenSandwich

[Neonmoon 38,130]

JPMorgan is stepping in to help First Republic 

 

Edited March 13, 2023 by Neonmoon

[washparkhorn 9,939]

Self-reinforcing power structures are inherently fragile and prone to exploitation.

[David Dennison 18,946]

6 minutes ago, ChickenSandwich said:

What “bank” would be paying the interest on the loan?  SVB is gone, and no longer in business so they wont be taking the loan. Wouldn’t the loan recipient be the depositor who needs more than $250k right away (can’t wait for asset sale), and they would pay the interest?

If i’m understanding, the government will use tax payer funds to guarantee all deposits while they sell the assets to other banks to recoup the money covered to depositors?

The chances of selling the remaining assets for 100% value would seem to be low (guessing), so would the taxpayer be responsible for any money not eared back through asset sales?  Just won’t know how much until months or years have passed and it’s out of the news?

The FDIC does not use taxpayer funds to insure deposits. 

[Sawbonz 27,587]

8 minutes ago, Neonmoon said:

JPMorgan is stepping in to help First Republic 

 

[Neonmoon 38,130]

4 minutes ago, David Dennison said:

The FDIC does not use taxpayer funds to insure deposits. 

He is referencing the deposits above 250K that the government said it will guarantee with short term loans. The FDIC will cover up to 250K 

Edited March 13, 2023 by Neonmoon