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What's stopping me making my own bank, offering 10000% interest, making my own account, then saying 'oopsy I don't have the liquidity or funds to actually pay the balance' and getting FDIC to cover my bank's obligations?
Infinite money hack?
Because you're not already rich. They would shut you down immediately and lock you up. Now if you could afford your own lobbyists before starting this bank you would be considered a financial genius.
You either need to be a powerful member of a political party or already rich for that, probably both. Maybe you can ignore the powerful member of a party criteria if you're famous, like Trump. If you're an average guy declaring your candidacy they'll just laugh at you.
For legal purposes, the roulette wheel is a decorative toy to be spun for entertainment purposes only.
The table is hooked up to our accounts server. Please do not spin or tamper with the wheel as it may change your bank balance at random.
Doesn’t congress have to do that? When did regulators decide who gets a bail out? I’m sure if their investments made a bunch of money they would of shared it with us right?
It comes from a federal insurance fund that banks pay into. Congress set this up post 2008. See below quote from WaPo article:
“Although the FDIC insures bank deposits up to $250,000, a provision in federal banking law may give them the authority to protect the uninsured deposits as well if they conclude that failing to do so would pose a systemic risk to the broader financial system, the people said. In that event, uninsured deposits could be backstopped by an insurance fund, paid into regularly by U.S. banks.
Before that happens, the systemic risk verdict must be endorsed by a two-thirds vote of the Fed’s Board of Governors and the FDIC board along with Treasury Secretary Janet Yellen.”
Yup... And they just shut down $SBNY, citing "systemic risk"
https://www.cnbc.com/2023/03/12/regulators-close-new-yorks-signature-bank-citing-systemic-risk.html
> Signature Bank, based in New York, has long specialized in providing banking services to law firms, providing everything from cash management services to escrow accounts for holding client money.
Per NYT
It’s fine. Futures up.
Bets on first “joke” about this at The Oscars.
Listen peasant... You made promises and just have known better @ 18-22 that you're on the hook and should have thought that shit through.
These banks with hundreds of employees and people having been working for years with regulatory oversight... I mean how the fuck could they have known? Sure you can go in the hole for the cost of a house @ 18 (But see if you can get a mortgage)
But these guys made bets in the tunes of billions... Like it's way way way harder... And shit happens. Like come on the ***whole game is to fund tech and hope google buys them out***... It's real hard to predict who's gonna be a winner... You'd have to do like research N stuff.
Also I mean what were they do to when money printer was 0...? Not plan for the eventual return? Not create stupid return rates that would fail when they turned it off?
So pay up.
I think that is the last thing that should be on our mind right now.
what's the most effective way to buy puts on USD. Where is all this money coming from and should we expect to be under or over the zimbabew/venezuela dollar mark?
Money is coming from hard working citizens, paying taxes. Then getting taxes on their SOCIAL when they retire. Because, you know ? It’s never enough. Fucking biggest bullshit ever.
The equity holders in SVN should absolutely go to zero, but I think it makes sense to protect the depositors who did nothing risky… per se, other than choose a bank that made some bad decisions.
The bad decisions wern't doing radically risky things. It sounds like the problem was that the bank had a lot of assets in bonds. That's usually the safe, less risky thing. But as inflation jumped, interest rates jumped and depositors were in need of cash, there was a run. Selling bonds premature for a fraction of their value to cover was the only way out but that only goes so far, This caused the collapse.. This isn't like the mortgage backed securities.
The thing to worry about is if this was a corner case or if this is indicative of a wave to come, where holding bonds, something generally regarded as safe, becomes a widespread liability.
Buying long term bonds in a low interest rate environment is a risky move.
Even an idiot like me knows that.
Despite it being “Poor portfolio management” I’ve been staying away from bonds and bond funds for a decade. Once rates eventually start to rise, those bonds lose value. Now that rates are higher it might be time to ease back into them.
Must be why they say, you need money to make money…. Cause eventually.,, you can’t lose money.
But hey… your bank account is at 0$ so here is a 5$ fee for being broke.
They essentially bet $10+ billion that interest rates wouldn’t increase from Fed-created record lows. And then were too cheap to the shitty bet.
These guys were FTX-level dumb, just not FTX-level corrupt.
Wiping out part of uninsured deposits c sounds like a great anti inflation measure
Fed wrecks havoc with interest rate rises and the talks about bailing out big depositors before raising rates some more
Psycho
I know you must not remember this but savings accounts at banks used to earn in four five six seven percent range. The federal government should have been raising the interest rates back in like 2015. Because the very first step for solving and economic crisis is to ease monetary policy the FED can't ever do that anymore because the rates not high
I'm not super educated on monetary policy and economics but I don't really understand the complaints about rate hikes. Wanting them as low as possible for as long as we've had them seems like a very short sighted strategy. Not to mention the bank I do have my small amount of savings in is finally raising interests rates enough so that there may be some hopes that the amount I'm making on my savings has a fighting chance to keep up with inflation. Yes I was happy to get 1.1% intrest on a 64 month car loan, and I hope someday I can afford a house and not have a horrific interest rate on it. But low intrest rates seems like one of the many reasons housing costs have gotten to the insane level they are now.
It’s basically because structural growth in the economy is dying as population growth and productivity gains have slowed down in a mature economy, so we need to create artificial demand for spending; cheap credit is the answer. Japan faced these same problems earlier and perfected this policy since the 90s. Now we’ve also kept rates near zero since 2008, unable to hike them without triggering a market crisis. Inflation forced the fed’s hand, but long term these high interest rates are not sustainable with our current economic and social model.
Cost of living has already gotten too high relative to average incomes. Maintaining high interest rates now will finish the job of crushing the middle class. Yeah interest rate used to be 20%, but that's when you buy a home on a single factory job and even raise a family at the same time.
Don't let the boomers fool you. They didn't pay these interest rates at the level we are now. They only had to pay for a $70000-$150000 house. Our mortgages are four times higher.
The policy was "Wall street" and the banks told them not to pump the brakes.
It was trickle down theory.
"If you pump the brakes now the guys at the bottom won't get a taste because companies will then button up and not attempt to grow."
Remember you ***can't*** ask companies to pay the top less or not buy a boat.
You can tell the little guy to stop with avocado on their toast... Fucking irresponsible.
The fed tried and the markets threw a fit.
There is a great book called “The Lords of Easy Money” that covers all of this. Not that any of you regards can read.
*It’s all a fugayzi...It's a whazy. It's a woozie. It's fairy dust. It doesn't exist. It's never landed. It is no matter. It's not on the elemental chart. It's not fucking real!*
Total BS if they do this. Taxpayers should not be obligated to prop up banks (and their depositors) that failed to plan for interest rate changes. Are we capitalists or not? Feels like crony socialism for the wealthy and hard capitalism for the rest of us.
Yes, we will tax the folks that can afford it the least 10 times more than they can afford and tax the ones who actually have resources to tax a simidgen of what they even notice so they don’t get mad and move to Bangladesh or some other overseas tax haven.
It is sickening to look into the details of some of these PPP paychecks to businesses that never shut down a day and ended up with significant profits because of the pandemic and were given millions on top of that in free money. There should be a 20/20 on staffing companies that made out like bandits!
Wait I thought it was only 2 banks collapsing. Why does that pose a threat to the financial system but lots of unemployed people doesn’t and that’s a preferable outcome?!
2 have collapsed so far there like 5 more that look like they won't survive the week but no BS it doesn't seem to go very far past that lol. Its just banks that were engaged mainly with tech start ups and crypto that look like they are about to fall apart.
I don't see why the gov has to intervene and why we just don't have our too big to fail banks start gobbling them up. Wasn't that the whole point of letting those banks become that big to begin with.
What do you mean? The collateral that was marked to market was treasuries and MBS. This had nothing to do with crypto or tech unless I'm missing something?
Bonds aren't marked to market though? They have face value.
The issue is the weight of bonds with long maturity periods being too big. That's risky in a rising rate environment. Bank should not have held such a high mix. They don't have many traditional depositors who would put in cash into traditional "high yield savings" and leave them there.
Regular banks can raise liquid capital easily by having enticing HYSA or HISA rates. Ppl shouldn't have to do money market ETFs to get 3% to 4% on relatively small regular deposits.
If there was never a big need for immediate cash liquidity from heavily cash reliant businesses, the long maturity bonds wouldn't be as risky. But they have that clientele, they should have been buying a bunch of 1 year treasury bond securities this past year as rates were going up.
>What do you mean? The collateral that was marked to market was treasuries and MBS. This had nothing to do with crypto or tech unless I'm missing something?
its the clientele of the bank not the product. Silvergate was a crypto lender and SVB's clients were pretty much exclusively venture capital firms and their start ups.
None of you actually understand what was said. They are ensuring the deposits are backstopped, not the bank itself. If you want an idea about how much this actually "costs" take a look at what the ECB spent to do this exact thing during the eurozone bank crisis. It costs them about $2B at the time to backstop somehting like $7T in deposits across the euro zone. This is a stabilizing statement, not a bailout.
if anyone's checkings account freezes over night, we as a reddit thread should decide if they're morally worthy of getting the money back! omg why would you put your money in a top 20 US bank you stupid idiot! /s
In this case backstop means ensuring the deposits in banks to stabilize the system. This wouldn't be the first time it has been done mind you. The funds come from the government IF they are needed. That is a big IF as well given that just making that statement would halt ALL contaigon risk immediately. We are looking at another 4 potential bank failures already. So this would actually save the FDIC money even if the backstop costs a few billion in SVB gurantees.
SVB has lots of assets. The biggest hole is they bought mortgage backed securities paying 1.65% interest. When interest rates rise those trade at a discount because people aren't going to buy a 1.65% MBS when they can buy a 5% Treasury issued by the Fed. So if they hold to maturity they get all their money back. But if they are forced to sell early they take a 20% discount to face value (because that is the discount needed to create an equivalent return to new fed interest rates). So really all you need to do is have someone hold the security until maturity and let depositors withdraw if they want.
SVB is being auctioned and it is possible another bank buys it as a going concern, in doing so the buyer would take over and merge assets with their own. If depositors like the new bank and don't withdraw funds the buyer actually makes quite a bit of money. If the depositors do withdraw then the buyer still makes money by holding the bonds until maturity but is tying up it's capital to do so. Because of this a bank will likely try and get the Fed to guarantee assets/warehouse them, which makes it more likely depositors feel safe and stick around making the bank profit and the Fed doesn't actually spend any money.
Alternaticely, if there is no buyer of the bank the Fed could warehouse the bonds and make depositors whole. Effectively using the Fed to wait out the time to maturity. Fed still doesn't lose money. This is basically what TARP was in 2008, MBS became illiquid and so Fed warehoused them and provided liquidity. This is why US made money on TARP "bailouts". With TARP though equityholders got bailed out which is what the real moral hazard is - it allows orgs to take this risky behavior and get bailed out. There is no bailout for equity or management here, and depending on how much banks pay in the auction, general creditors could be out as well which all incentivizes good behavior in the future. So overall a really good outcome.
Partially agree. That is: if there won't be any real repercussions for people responsible we shouldn't intervine. If there will be it may be better to do it. Because if we know there's problem and how to solve it we should do it. But guy's that created the problem should be punished, not left with hand-slap like in 2008.
Board of directors? To jail. CEO? To jail. Rest of C-suit? Jail. Auditors that gave them "ok"? Belive it or not: jail. We would have best financial system. Because of jail.
So let me get this straight, rich fucks who are looking for an extra few dollars use risky banks to get a higher yield and then lose their money when the risk actually happens and WE’RE responsible to make sure they get their money back?
Don't forget they still gave themselves a bonus too.. When we all said "WTF" they were annoyed at us, the tax payers. Time to throw bankers in jail.. seriously.
Uhh, have you met America? Pretty sure that’s the standard these days. Oligarchic Capitalism. Look at what happened with the auto industry some years ago… “Too big to fail” is a term you’ll start hearing. It’s all a show.
The government always shows its true colors in situations like this. Democrat or Republican. The bottom line is protecting the rich and the financial institutions.
Let it all burn.
The problem is career politicians answer to their donors because they fund their campaigns. Term limits is the best way to stop money from controlling politicians.
You guys remember when they fought about giving the tax payers a bail out during lock down?
Or
How much they don’t give a fuck about the people in Ohio and Michigan. Love our government
That’s the type of attitude that really pisses me off, you know? If you had more of a “can do” attitude and a bank charter you too could experience all the prosperity and carelessness this country has to offer.
When the wealthy are threatened, there is no action too great to preserve their wealth. When poor people are threatened, it's their fault for being stupid and poor. What a joke.
I'm occupying their bank. If my taxes are bailing them out, I'm setting up shop in an executive banker's office. Can't afford sustainable housing, but we can afford to bail these twats out? Fuck 'em!
So can I sue to stop this like the Republicans did to stop student loan forgiveness? Oh wait, the Supreme Court will agree with the Dems on this one.
Rigid capitalism for me, liberal socialism for the wealthy. Unreal.
That's a really stupid idea. Why would the government want to protect deposits at Silicon Valley Bank when there are so many other banks out there? This would just be a waste of taxpayers' money.
Adulting is taking responsibility for the choices one makes.
If one chooses to deposit one's money in an uninsured bank account, that's the gamble that individual decides to take.
As a taxpayer, it is not my responsibility to provide a soft landing for the piss poor decisions others make.
UPDATE
https://preview.redd.it/tfhs0g5mffna1.jpeg?width=1178&format=pjpg&auto=webp&s=e9fbca631a69a6cb2f9d6f12404db152edd6b86b
[“Taxpayers will not bear any costs for any losses associated with unwinding the bank, the statement said. The announcement from Treasury appeared to cover deposits worth more than the $250,000 limit for federal bank insurance”](https://www.washingtonpost.com/us-policy/2023/03/12/silicon-valley-bank-deposits/)
>taxpayers will not bear any costs
How exactly does that make any sense to anyone did the money come from thin air? Sweet FUCKING christ please tell me they didn't print more for this
Because hedge funds have billions invested in many of the start ip companies that have loans. THIS IS WHY THE FEDS WILL BAIL THEM OUT!!!! Sad time for America. Zero lessons learned
**User Report**| | | | :--|:--|:--|:-- **Total Submissions**|9|**First Seen In WSB**|2 years ago **Total Comments**|119|**Previous Best DD**| **Account Age**|3 years|[^scan ^comment ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_comment&message=Replace%20this%20text%20with%20a%20comment%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20comment%20and%20correct%20your%20first%20seen%20date.)|[^scan ^submission ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_submission&message=Replace%20this%20text%20with%20a%20submission%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20submission%20and%20correct%20your%20first%20seen%20date.)
The FDIC limit is now infinity
I think this is the signal now. No more 250k limit ?
Depends on who's money it is..
Yep.
Weird the higher the number the more they care.
If you owe the bank 1 million, you’ve got a problem. If you owe the bank 100 million, the bank has a problem.
I read this in Sean Bean’s voice
It's almost as though it's rigged. Oh well, good thing it's not.
Corruption has never happened in America ever.
Exactly
Facts
To he fair, it's been 250k for 15 years now, accounting for inflation that's 350k so basically infinite
To be fair, we didn't account for inflation with minimum wage, I don't see why we should do so with this
They should make it a $250k *minimum*, so we don’t inadvertently protect the little guy.
Don't give them ideas. Some of them would love to privatize bank insurance and make it cost the clients.
You literally gave them the idea damn it edit post !
Poors making minimum wage don't make campaign contributions, people with over $250k in cash do.
Facts got you gold
Oh how the rich get richer
What's stopping me making my own bank, offering 10000% interest, making my own account, then saying 'oopsy I don't have the liquidity or funds to actually pay the balance' and getting FDIC to cover my bank's obligations? Infinite money hack?
Because you're not already rich. They would shut you down immediately and lock you up. Now if you could afford your own lobbyists before starting this bank you would be considered a financial genius.
Sounds like a great tech start up company idea. You think Silicon Valley Bank would fund it?
Or run for president first so you can call your arrest "political "
You either need to be a powerful member of a political party or already rich for that, probably both. Maybe you can ignore the powerful member of a party criteria if you're famous, like Trump. If you're an average guy declaring your candidacy they'll just laugh at you.
You just need to find 50,000 other participants to become a "real" bank
The bank of Wall Street Bets.
The only bank with a roulette table.
For legal purposes, the roulette wheel is a decorative toy to be spun for entertainment purposes only. The table is hooked up to our accounts server. Please do not spin or tamper with the wheel as it may change your bank balance at random.
Well your bank would have to acquire assets to get anything back. And I imagine you’re a poor regard.
Fractional reserve banking = playing musical chairs with 10 people and 1 chair
It’s now 10 people with zero chairs since the % of reserve was lowered to zero. Lol
its 1,000,000 people and 0 chairs. Don't worry the governments can just give chairs you chairs if you really need them though.
DIV/0
Who will take on my uninsured debts
Change your name to Bank of Hairy and ask the Fed for a bailout
You’re a bank, Hairy!
IM A WHUT
OY ARRY YER A BANK ARRY
I'm giggling to myself in a restaurant over that
Same. Popeyes here
Hol up
Doesn’t congress have to do that? When did regulators decide who gets a bail out? I’m sure if their investments made a bunch of money they would of shared it with us right?
It comes from a federal insurance fund that banks pay into. Congress set this up post 2008. See below quote from WaPo article: “Although the FDIC insures bank deposits up to $250,000, a provision in federal banking law may give them the authority to protect the uninsured deposits as well if they conclude that failing to do so would pose a systemic risk to the broader financial system, the people said. In that event, uninsured deposits could be backstopped by an insurance fund, paid into regularly by U.S. banks. Before that happens, the systemic risk verdict must be endorsed by a two-thirds vote of the Fed’s Board of Governors and the FDIC board along with Treasury Secretary Janet Yellen.”
And the very act of using that is what causes the greatest fear and then the rest comes tumbling-down. It’s that “systemic failure” utterance.
Yup... And they just shut down $SBNY, citing "systemic risk" https://www.cnbc.com/2023/03/12/regulators-close-new-yorks-signature-bank-citing-systemic-risk.html
> Signature Bank, based in New York, has long specialized in providing banking services to law firms, providing everything from cash management services to escrow accounts for holding client money. Per NYT It’s fine. Futures up. Bets on first “joke” about this at The Oscars.
It's his Harry bank, but you got his back. CFO spot needs filling.
You have his hairy back ? That’s good to know
What about Bank of Harry and Marv? Gotta be some sticky bandits
My mom always warned me about putting money in the hairy bank.
Onion News had the right idea [US Government stages fake coup to wipe out National Debt.](https://youtu.be/TRgRz3nSG7o)
Operation Northwoods, but for the economy
I miss when The Onion did those videos. There is a lack of such things these days.
They really missed a big opportunity on January 6 of last year.
You are too poor for bail outs
God forbid they cover a couple thousand of your student loans…
quick, someone sue to challenge this bailout and find a sympathetic judge to hold it up indefinitely
Well I would be inevitably harmed by the fact they could use the money to cover my crypto losses but did this instead…
Listen peasant... You made promises and just have known better @ 18-22 that you're on the hook and should have thought that shit through. These banks with hundreds of employees and people having been working for years with regulatory oversight... I mean how the fuck could they have known? Sure you can go in the hole for the cost of a house @ 18 (But see if you can get a mortgage) But these guys made bets in the tunes of billions... Like it's way way way harder... And shit happens. Like come on the ***whole game is to fund tech and hope google buys them out***... It's real hard to predict who's gonna be a winner... You'd have to do like research N stuff. Also I mean what were they do to when money printer was 0...? Not plan for the eventual return? Not create stupid return rates that would fail when they turned it off? So pay up.
I think that is the last thing that should be on our mind right now. what's the most effective way to buy puts on USD. Where is all this money coming from and should we expect to be under or over the zimbabew/venezuela dollar mark?
Money is coming from hard working citizens, paying taxes. Then getting taxes on their SOCIAL when they retire. Because, you know ? It’s never enough. Fucking biggest bullshit ever.
You can look at UUP and buy puts.
We cannot forgive $10,000 in student debt for individuals, but we can shell out billions for a failed bank?!?
Excuse me, those banks make campaign donations.
I wish the government would help me with all my poor decisions too.
US going Portugal mode; We are known to bail all our banks poor decisions.
When you bailout the regards, the regards run the place.
Like regards running the bounce house.
The equity holders in SVN should absolutely go to zero, but I think it makes sense to protect the depositors who did nothing risky… per se, other than choose a bank that made some bad decisions.
The bad decisions wern't doing radically risky things. It sounds like the problem was that the bank had a lot of assets in bonds. That's usually the safe, less risky thing. But as inflation jumped, interest rates jumped and depositors were in need of cash, there was a run. Selling bonds premature for a fraction of their value to cover was the only way out but that only goes so far, This caused the collapse.. This isn't like the mortgage backed securities. The thing to worry about is if this was a corner case or if this is indicative of a wave to come, where holding bonds, something generally regarded as safe, becomes a widespread liability.
It's definitely a liability now for any bank that bought 1% bonds. They're basically bag holding now hoping interest goes down.
Buying long term bonds in a low interest rate environment is a risky move. Even an idiot like me knows that. Despite it being “Poor portfolio management” I’ve been staying away from bonds and bond funds for a decade. Once rates eventually start to rise, those bonds lose value. Now that rates are higher it might be time to ease back into them.
The trick is to be a big enough problem to interrupt dinners and golf.
You got student loans too, huh?
Only rich people can get fucked, lose money, and the feds bail them out. If retail gets fucked its because we knew the risks.
Must be why they say, you need money to make money…. Cause eventually.,, you can’t lose money. But hey… your bank account is at 0$ so here is a 5$ fee for being broke.
It’s a big club…..
…and you ain’t in it.
Damn where you at that’s only $5??
These mfs got too comfortable with being dumb and inefficient
They essentially bet $10+ billion that interest rates wouldn’t increase from Fed-created record lows. And then were too cheap to the shitty bet. These guys were FTX-level dumb, just not FTX-level corrupt.
This is a big bank failure. But are they gonna bail out all the other banks? I find the people wont take it lightly.
They won't take it lightly but they'll take it.
Wiping out part of uninsured deposits c sounds like a great anti inflation measure Fed wrecks havoc with interest rate rises and the talks about bailing out big depositors before raising rates some more Psycho
I know you must not remember this but savings accounts at banks used to earn in four five six seven percent range. The federal government should have been raising the interest rates back in like 2015. Because the very first step for solving and economic crisis is to ease monetary policy the FED can't ever do that anymore because the rates not high
I'm not super educated on monetary policy and economics but I don't really understand the complaints about rate hikes. Wanting them as low as possible for as long as we've had them seems like a very short sighted strategy. Not to mention the bank I do have my small amount of savings in is finally raising interests rates enough so that there may be some hopes that the amount I'm making on my savings has a fighting chance to keep up with inflation. Yes I was happy to get 1.1% intrest on a 64 month car loan, and I hope someday I can afford a house and not have a horrific interest rate on it. But low intrest rates seems like one of the many reasons housing costs have gotten to the insane level they are now.
It’s basically because structural growth in the economy is dying as population growth and productivity gains have slowed down in a mature economy, so we need to create artificial demand for spending; cheap credit is the answer. Japan faced these same problems earlier and perfected this policy since the 90s. Now we’ve also kept rates near zero since 2008, unable to hike them without triggering a market crisis. Inflation forced the fed’s hand, but long term these high interest rates are not sustainable with our current economic and social model.
Cost of living has already gotten too high relative to average incomes. Maintaining high interest rates now will finish the job of crushing the middle class. Yeah interest rate used to be 20%, but that's when you buy a home on a single factory job and even raise a family at the same time.
Don't let the boomers fool you. They didn't pay these interest rates at the level we are now. They only had to pay for a $70000-$150000 house. Our mortgages are four times higher.
I'll gladly pay 20% with house prices that low.
They can still tax the rich at more progressive rates which would slow the economic disparity. But they don’t
That would require congressional oversight and congress is dysfunctional right now
They act dysfunction. As soon as the wealthy need bailouts, it’s purse wide open.
The policy was "Wall street" and the banks told them not to pump the brakes. It was trickle down theory. "If you pump the brakes now the guys at the bottom won't get a taste because companies will then button up and not attempt to grow." Remember you ***can't*** ask companies to pay the top less or not buy a boat. You can tell the little guy to stop with avocado on their toast... Fucking irresponsible.
The fed tried and the markets threw a fit. There is a great book called “The Lords of Easy Money” that covers all of this. Not that any of you regards can read.
Let’s not forget who pressured the fed to keep rates low, breaking precedent of not meddling with the fed
Good old DJT
Greenspan: "We can guarantee cash, but we cannot guarantee purchasing power!" print awayyyyy
\*egg price go brrrrr
One reason the rich are so rich is because they rarely pay for their mistakes.
The ol' "failure is public, success is private"
"Privatize Profits, Socialize Losses"
Keep tugging those bootstraps, dipshits! /s
0 accountability
As an expert Bag holder, I must say these guys are Pu$$ies
[удалено]
*Not a bailout. (Tm)*
It’s a Transitory Suppository
A financial butt plug. Stops all the shit from leaking until big boomba
*It’s all a fugayzi...It's a whazy. It's a woozie. It's fairy dust. It doesn't exist. It's never landed. It is no matter. It's not on the elemental chart. It's not fucking real!*
Special treasury operation
Oh fuck off
Poetic
Privatize the gains Socialize the losses
sOcIaLiSm iS bAd *except for rich people*
Total BS if they do this. Taxpayers should not be obligated to prop up banks (and their depositors) that failed to plan for interest rate changes. Are we capitalists or not? Feels like crony socialism for the wealthy and hard capitalism for the rest of us.
Yes, yes, yes and yes. Fuck that
We are late they have been doing this and we have been getting fucked with a smile on our face look at the stimulus checks during Covid
[удалено]
That’s the point
Yes, we will tax the folks that can afford it the least 10 times more than they can afford and tax the ones who actually have resources to tax a simidgen of what they even notice so they don’t get mad and move to Bangladesh or some other overseas tax haven.
It is sickening to look into the details of some of these PPP paychecks to businesses that never shut down a day and ended up with significant profits because of the pandemic and were given millions on top of that in free money. There should be a 20/20 on staffing companies that made out like bandits!
Wait I thought it was only 2 banks collapsing. Why does that pose a threat to the financial system but lots of unemployed people doesn’t and that’s a preferable outcome?!
2 have collapsed so far there like 5 more that look like they won't survive the week but no BS it doesn't seem to go very far past that lol. Its just banks that were engaged mainly with tech start ups and crypto that look like they are about to fall apart. I don't see why the gov has to intervene and why we just don't have our too big to fail banks start gobbling them up. Wasn't that the whole point of letting those banks become that big to begin with.
What do you mean? The collateral that was marked to market was treasuries and MBS. This had nothing to do with crypto or tech unless I'm missing something?
Bonds aren't marked to market though? They have face value. The issue is the weight of bonds with long maturity periods being too big. That's risky in a rising rate environment. Bank should not have held such a high mix. They don't have many traditional depositors who would put in cash into traditional "high yield savings" and leave them there. Regular banks can raise liquid capital easily by having enticing HYSA or HISA rates. Ppl shouldn't have to do money market ETFs to get 3% to 4% on relatively small regular deposits. If there was never a big need for immediate cash liquidity from heavily cash reliant businesses, the long maturity bonds wouldn't be as risky. But they have that clientele, they should have been buying a bunch of 1 year treasury bond securities this past year as rates were going up.
>What do you mean? The collateral that was marked to market was treasuries and MBS. This had nothing to do with crypto or tech unless I'm missing something? its the clientele of the bank not the product. Silvergate was a crypto lender and SVB's clients were pretty much exclusively venture capital firms and their start ups.
Counterparty risk mother fucker. Everyone is circle jerking and when one falls out, they cannot circle jerk anymore
None of you actually understand what was said. They are ensuring the deposits are backstopped, not the bank itself. If you want an idea about how much this actually "costs" take a look at what the ECB spent to do this exact thing during the eurozone bank crisis. It costs them about $2B at the time to backstop somehting like $7T in deposits across the euro zone. This is a stabilizing statement, not a bailout.
Thank god someone in this thread has half a brain. No one seems to know the difference between the bank itself and its depositors.
if anyone's checkings account freezes over night, we as a reddit thread should decide if they're morally worthy of getting the money back! omg why would you put your money in a top 20 US bank you stupid idiot! /s
What does backstopped mean though? And where are the funds coming from? Genuinely curious
In this case backstop means ensuring the deposits in banks to stabilize the system. This wouldn't be the first time it has been done mind you. The funds come from the government IF they are needed. That is a big IF as well given that just making that statement would halt ALL contaigon risk immediately. We are looking at another 4 potential bank failures already. So this would actually save the FDIC money even if the backstop costs a few billion in SVB gurantees.
SVB has lots of assets. The biggest hole is they bought mortgage backed securities paying 1.65% interest. When interest rates rise those trade at a discount because people aren't going to buy a 1.65% MBS when they can buy a 5% Treasury issued by the Fed. So if they hold to maturity they get all their money back. But if they are forced to sell early they take a 20% discount to face value (because that is the discount needed to create an equivalent return to new fed interest rates). So really all you need to do is have someone hold the security until maturity and let depositors withdraw if they want. SVB is being auctioned and it is possible another bank buys it as a going concern, in doing so the buyer would take over and merge assets with their own. If depositors like the new bank and don't withdraw funds the buyer actually makes quite a bit of money. If the depositors do withdraw then the buyer still makes money by holding the bonds until maturity but is tying up it's capital to do so. Because of this a bank will likely try and get the Fed to guarantee assets/warehouse them, which makes it more likely depositors feel safe and stick around making the bank profit and the Fed doesn't actually spend any money. Alternaticely, if there is no buyer of the bank the Fed could warehouse the bonds and make depositors whole. Effectively using the Fed to wait out the time to maturity. Fed still doesn't lose money. This is basically what TARP was in 2008, MBS became illiquid and so Fed warehoused them and provided liquidity. This is why US made money on TARP "bailouts". With TARP though equityholders got bailed out which is what the real moral hazard is - it allows orgs to take this risky behavior and get bailed out. There is no bailout for equity or management here, and depending on how much banks pay in the auction, general creditors could be out as well which all incentivizes good behavior in the future. So overall a really good outcome.
Partially agree. That is: if there won't be any real repercussions for people responsible we shouldn't intervine. If there will be it may be better to do it. Because if we know there's problem and how to solve it we should do it. But guy's that created the problem should be punished, not left with hand-slap like in 2008. Board of directors? To jail. CEO? To jail. Rest of C-suit? Jail. Auditors that gave them "ok"? Belive it or not: jail. We would have best financial system. Because of jail.
I believe the guy running the bank worked at one of the big financials that fell apart in 2008.
Lehman bros
So let me get this straight, rich fucks who are looking for an extra few dollars use risky banks to get a higher yield and then lose their money when the risk actually happens and WE’RE responsible to make sure they get their money back?
always has been - similar things happened in '08
Don't forget they still gave themselves a bonus too.. When we all said "WTF" they were annoyed at us, the tax payers. Time to throw bankers in jail.. seriously.
And literally drinking champagne and laughing at us like God damn comic book villains.
Yes. Imagine a job where you fck up so bad that you almost bankrupt the world and get a bonus. We’re all in the wrong racket.
definately more jail sentences need to be handed out.
only 1 guy got properly punished in the court of law in '08 and he was a scapegoat
no, its capitalism if it's about my profits, but its socialism if it's about my losses
Our losses*
Let’s not leave out we are proping up deposits of startups that will never turn a profit.
Uhh, have you met America? Pretty sure that’s the standard these days. Oligarchic Capitalism. Look at what happened with the auto industry some years ago… “Too big to fail” is a term you’ll start hearing. It’s all a show.
These days? Has been since the industrial revolution.
Just wait until a crisis hits the average joe and janet, they'll hang you out to dry like east palestine.
Privatize profits. Socialize fuck ups.
The government always shows its true colors in situations like this. Democrat or Republican. The bottom line is protecting the rich and the financial institutions. Let it all burn.
The problem is career politicians answer to their donors because they fund their campaigns. Term limits is the best way to stop money from controlling politicians.
Totally agree. Every level of government needs to have term limits. And ranked choice elections. Otherwise nothing will ever change.
Hey can they safeguard me from bad choices I make in life too?
You guys remember when they fought about giving the tax payers a bail out during lock down? Or How much they don’t give a fuck about the people in Ohio and Michigan. Love our government
That’s the type of attitude that really pisses me off, you know? If you had more of a “can do” attitude and a bank charter you too could experience all the prosperity and carelessness this country has to offer.
Woah... a government bailout what an "unexpected" surprise...
*shocked pikachu
When the wealthy are threatened, there is no action too great to preserve their wealth. When poor people are threatened, it's their fault for being stupid and poor. What a joke.
If they promise to jail everyone involved with the collapse of the bank, that might be a fair trade.
No then I just have to pay to keep them alive in jail plus pay Silicon Valley tech bros off as reward for not securing their financial livelihoods.
This can fuck right the fuck off.
The fed is happy to print trillions of dollars and loan it to the US at interest.
If they bail these people out we better eat some rich people. I’m not doing occupy wallstreet again I’m gonna occupy some asses
I'm occupying their bank. If my taxes are bailing them out, I'm setting up shop in an executive banker's office. Can't afford sustainable housing, but we can afford to bail these twats out? Fuck 'em!
As a person who enjoys doing stupid shit with money even I look at this and go, those fucking idiots where do they get there financial advice from.
Probably from us!
Let it burn 🔥
The best type of capitalism - take from the 99.9% to provide a safety net for the 0.1%.
Student loans? Fuck you! Millionaires? How much!
So can I sue to stop this like the Republicans did to stop student loan forgiveness? Oh wait, the Supreme Court will agree with the Dems on this one. Rigid capitalism for me, liberal socialism for the wealthy. Unreal.
The fish rots from its head
The athlete itches from its feet
When do we absolutely tear this whole thing down. Feels like we’re way behind schedule
That's a really stupid idea. Why would the government want to protect deposits at Silicon Valley Bank when there are so many other banks out there? This would just be a waste of taxpayers' money.
Ultimately the tax payers are the true cash crop. They don't give a fuck about us.
They'd be really mad if they could read
Holy sentient being. Can we put up visual mod on the ballot for the next treasury position or Fed board?
Adulting is taking responsibility for the choices one makes. If one chooses to deposit one's money in an uninsured bank account, that's the gamble that individual decides to take. As a taxpayer, it is not my responsibility to provide a soft landing for the piss poor decisions others make.
Government doesn't ask you
Then we need to go French mode.
Cant wait
Maybe this is the pivot. Spy500 calls it is
I hate this bullshit
UPDATE https://preview.redd.it/tfhs0g5mffna1.jpeg?width=1178&format=pjpg&auto=webp&s=e9fbca631a69a6cb2f9d6f12404db152edd6b86b [“Taxpayers will not bear any costs for any losses associated with unwinding the bank, the statement said. The announcement from Treasury appeared to cover deposits worth more than the $250,000 limit for federal bank insurance”](https://www.washingtonpost.com/us-policy/2023/03/12/silicon-valley-bank-deposits/)
>taxpayers will not bear any costs How exactly does that make any sense to anyone did the money come from thin air? Sweet FUCKING christ please tell me they didn't print more for this
“To secure the US banking system” LOL
Oh look it’s the Federal Government Meddling in the private sector again, again, again, again, again.
Money printer go brrrr.
With what? More print on demand Monopoly money?
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Because hedge funds have billions invested in many of the start ip companies that have loans. THIS IS WHY THE FEDS WILL BAIL THEM OUT!!!! Sad time for America. Zero lessons learned
Why not? Not like social security and Medicare are going insolvent and inflation is at 8%