Silicon Valley Bank has failed

[JamieDimonsBalls]

Tomorrow will be a bloodbath.

Regulators close New York's Signature Bank, citing systemic risk

U.S. regulators said Sunday it shut down New York-based Signature Bank, a second financial institution they shuttered after Silicon Valley Bank's collapse.

www.cnbc.com

Big Democrat Barney Frank was a board member of Signature! What a scumbag loser.

 

[NPT]

Big Democrat Barney Frank was a board member of Signature! What a scumbag loser.

A previous member of congress would be the last person I'd want on my board except for the fact that they might have connections in congress that would help my company. As far as business knowledge goes you have to realize that they came from an environment where you spend, spend, spend with no regards for a budget or any other restriction.

 

[Spartans9312]

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www.washingtonpost.com

Capitalism and free markets are messy

 

[Lucy01]

This is all about the Biden Administration power grab to takeover the Banking Industry.

 

[snarlcakes]

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www.washingtonpost.com

Capitalism and free markets are messy

We don't have a free markets when the FED can step in and backstop everything.

 

[Spartans9312]

We don't have a free markets when the FED can step in and backstop everything.

Capitalism and free markets work best when non-idiots are at the helm but manage to plug along no matter what.

 

[TomEric4756]

FDIC is about consumer protection… commercial accounts won’t be fully reimbursed above the deposit limit. Silicon Valley corporate treasuriers who now need to borrow working capital have no one to look at but themselves. Dividends in the news are liquidation proceeds.

It’s interesting that SVB was apparently so underwater that no buyer was found to take it over.

Happy to be wrong and see all deposits fully guaranteed… This needs to work out.
Heard an FDIC depositor hasn’t taken a haircut in decades, this AM.

 

[twenty02]

We don't have a free markets when the FED can step in and backstop everything.

Both stockholders and bondholders of SVP are getting zeroed out. You saying depositors should be wiped out?

I think you have a different definition of "bailout" in mind.

 

[dbmhoosier]

Big Democrat Barney Frank was a board member of Signature! What a scumbag loser.

This was a classic.

 

[JamieDimonsBalls]

Both stockholders and bondholders of SVP are getting zeroed out. You saying depositors should be wiped out?

I think you have a different definition of "bailout" in mind.

In fairness, he's partially correct in that other creditors to companies that don't get backstopped suffer losses. The distinction is that the FDIC, Fed and Treasury are hellbent to ensure that depositors don't feel like there is credit risk as a lender, otherwise it dramatically changes the banking system functionality.

If there was no backstop, depositors (lenders in this case) would (and should) demand much higher rates on their deposits, which drives up bank lending rates to the rest of the economy, etc.

 

[Spartans9312]

If the nation decides that the government must insure every penny deposited in a bank then next…
1) Stockholders and creditors will be protected because it wouldn’t be “fair” otherwise.
2) The federal government will take a much more active role in managing banks bringing with it all that implies

 

[JamieDimonsBalls]

If the nation decides that the government must insure every penny deposited in a bank then next…
1) Stockholders and creditors will be protected because it wouldn’t be “fair” otherwise.
2) The federal government will take a much more active role in managing banks bringing with it all that implies

Depends on which creditors you are implying. Depositors will be protected, but not necessarily creditors in other forms (not insurance or implied insurance).

 

[Spartans9312]

Depends on which creditors you are implying. Depositors will be protected, but not necessarily creditors in other forms (not insurance or implied insurance).

Some investors are going to be hurt. It is what it is

 

[JamieDimonsBalls]

View embedded media

Some investors are going to be hurt. It is what it is

Investors or depositors? That's what we are talking about.

 

[snarlcakes]

Both stockholders and bondholders of SVP are getting zeroed out. You saying depositors should be wiped out?

Yes.

I think you have a different definition of "bailout" in mind.

I think they changed the rules to prevent a finical crisis. Call it what you want, but it’s not a free market. The larger banks are only going to get larger now and have more power. They will always get bailed out, because it's the only way to keep the ponzi scheme going.

 

[Spartans9312]

Investors or depositors? That's what we are talking about.

In this example?
It’s very possible I’m out over my skis here but…
Some companies are going to bust and put people out of work.
Is the cost of protecting these people worth increasing government meddling in financial markets? I would say no.

 

[JamieDimonsBalls]

In this example?
It’s very possible I’m out over my skis here but…
Some companies are going to bust and put people out of work.
Is the cost of protecting these people worth increasing government meddling in financial markets? I would say no.

I'm not worried about investors in banks in the traditional sense of the word. But again, in banking, if you as an individual or business deposit money into a regulated financial institution, you are a de facto creditor because the bank treats that as a liability. It is, in theory, supposed to hold capital above and beyond deposits to ensure that it can provide your money to you should you need it, want to move it, etc.

My point was simply, there is a difference between creditors in my view (those businesses that are intending to simply use deposit banking vs. those lending money to the institution in search of yield).

 

[snarlcakes]

In this example?
It’s very possible I’m out over my skis here but…
Some companies are going to bust and put people out of work.
Is the cost of protecting these people worth increasing government meddling in financial markets? I would say no.

They aren't doing it to protect those people or companies. They'll sell it that way, but it's bullsh#t. It's to protect the system. They don't want a bank run or a financial contagion.

 

[anon_6hv78pr714xta]

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www.washingtonpost.com

Capitalism and free markets are messy

Why do we have so many events where the federal government needs to "stabilize the banking system?" Isn't this proof that something is wrong with that system if it requires such intervention?

So we are going to backstop all these deposits by tech companies and start ups, who love the creative destruction of capitalism idea, but we aren't going to let the market hold them accountable for their poor decisions here? I don't get it. How is this a free market?

Once again, we bend the rules for the rich and powerful. This is NOT going to sit well among those Trumpers everyone is worried about. The Dems used to understand this.

 

[twenty02]

Why do we have so many events where the federal government needs to "stabilize the banking system?" Isn't this proof that something is wrong with that system if it requires such intervention?

So we are going to backstop all these deposits by tech companies and start ups, who love the creative destruction of capitalism idea, but we aren't going to let the market hold them accountable for their poor decisions here? I don't get it. How is this a free market?

Once again, we bend the rules for the rich and powerful. This is NOT going to sit well among those Trumpers everyone is worried about. The Dems used to understand this.

What poor decisions did they make? Opening a bank account to operate their business? Wtf.

Sounds like you want to go back to pre-depression era (1920s) banking days...

 

[twenty02]

Not a single depositor has ever lost funds in a US bank since the creation of the FDIC in 1933. I think Indymac in 2008 was one exception, after which the FDIC has had a defacto policy of "never- again".

Apparently some of us here think that's a bad thing, I guess.

 

[twenty02]

They aren't doing it to protect those people or companies. They'll sell it that way, but it's bullsh#t. It's to protect the system. They don't want a bank run or a financial contagion.

You say that like it's a bad thing...

 

[Marvin the Martian]

Not a single depositor has ever lost funds in a US bank since the creation of the FDIC in 1933. I think Indymac in 2008 was one exception, after which the FDIC has had a defacto policy of "never- again".

Apparently some of us here think that's a bad thing, I guess.

I asked the question yesterday, what are corporations supposed to do with payroll? It seems crazy to think it would go out from dozens (hundreds?) of banks to stay within FDIC guidelines.

In one of his books, Talib spoke about the myth that banks are safe. To poorly paraphrase his general belief, we can only be safe against known unknowns.

 

[twenty02]

I asked the question yesterday, what are corporations supposed to do with payroll? It seems crazy to think it would go out from dozens (hundreds?) of banks to stay within FDIC guidelines.

In one of his books, Talib spoke about the myth that banks are safe. To poorly paraphrase his general belief, we can only be safe against known unknowns.

Banks have never been "safe" on their own.... the system only works with a govt backstop for exactly these situations. Bank failures are common. There have been something like 600 of them in the last twenty years.

 

[anon_6hv78pr714xta]

What poor decisions did they make? Opening a bank account to operate their business? Wtf.

Sounds like you want to go back to pre-depression era (1920s) banking days...

Depositing over 250K with a bank that failed.

No, I don't want to go back to pre-depression era banking. I want the current rules to be followed: insuring deposits up to 250k.

 

[anon_6hv78pr714xta]

Not a single depositor has ever lost funds in a US bank since the creation of the FDIC in 1933. I think Indymac in 2008 was one exception, after which the FDIC has had a defacto policy of "never- again".

Apparently some of us here think that's a bad thing, I guess.

Why does the FDIC have insurance limits?

 

[CO. Hoosier]

Why does the FDIC have insurance limits?

Exactly my question. Large bank depositors have risks beyond the FDIC limits. If we want to have totally risk free deposits of any amount, we can do that, but the FDIC insurance rates need to increase. Or, a better idea, if a large depositor wants to eliminate risk, set up an insurance arrangement where that depositor can pay for its own insurance. This idea of waiving the law to meet political ends is BS.

Besides, I don’t believe what we are told about no taxpayer funds. If the FDIC runs short, congress will backfill. At the very least, FDIC rates will increase and we all pay those.

 

[anon_6hv78pr714xta]

Or, a better idea, if a large depositor wants to eliminate risk, set up an insurance arrangement where that depositor can pay for its own insurance.

5 Ways To Insure Excess Deposits

The Federal Deposit Insurance Corporation (FDIC) insures deposits at FDIC-insured banks. This includes deposits placed in savings accounts, money market accounts, checking accounts and CDs. FDIC coverage ensures that your money is protected in the event of a bank failure. But there is a cap on th

www.forbes.com

 

[twenty02]

Exactly my question. Large bank depositors have risks beyond the FDIC limits. If we want to have totally risk free deposits of any amount, we can do that, but the FDIC insurance rates need to increase. Or, a better idea, if a large depositor wants to eliminate risk, set up an insurance arrangement where that depositor can pay for its own insurance. This idea of waiving the law to meet political ends is BS.

Besides, I don’t believe what we are told about no taxpayer funds. If the FDIC runs short, congress will backfill. At the very least, FDIC rates will increase and we all pay those.

Then you don't understand the Fed Reserve lending window mechanism being used. There will likely be next to no FDIC funds even needed for this.

 

[Sope Creek]

Why does the FDIC have insurance limits?

The insurance limit was last raised in 2010.

Are you saying that the insurance limits should be raised again? That the financial system should suffer a melt-down rather than pay depositors the full amount of their deposits?

 

[twenty02]

Depositing over 250K with a bank that failed.

No, I don't want to go back to pre-depression era banking. I want the current rules to be followed: insuring deposits up to 250k.

Yes, that's really practical for operating a business. Let's open up a couple hundred bank accounts at different institutions.

 

[Sope Creek]

Exactly my question. Large bank depositors have risks beyond the FDIC limits. If we want to have totally risk free deposits of any amount, we can do that, but the FDIC insurance rates need to increase. Or, a better idea, if a large depositor wants to eliminate risk, set up an insurance arrangement where that depositor can pay for its own insurance. This idea of waiving the law to meet political ends is BS.

Besides, I don’t believe what we are told about no taxpayer funds. If the FDIC runs short, congress will backfill. At the very least, FDIC rates will increase and we all pay those.

I dunno about Congress backfilling the shortfall, what with the debt ceiling argument being had currently.

 

[Marvin the Martian]

Depositing over 250K with a bank that failed.

No, I don't want to go back to pre-depression era banking. I want the current rules to be followed: insuring deposits up to 250k.

How many bank accounts would P&G need to have open to pay all US employees at a $250,000 limit per bank? It seems horribly unwieldy toe, as in they might as well move all banking to Switzerland unwieldy. That number is just payroll, how many more for accounts payable.

But the corps aren't my concern. A corp goes under, fine. But now we have thousands of workers with no job and without at least one final check. That is bound to have positive repercussions on the overall economy.

 

[anon_6hv78pr714xta]

How many bank accounts would P&G need to have open to pay all US employees at a $250,000 limit per bank? It seems horribly unwieldy toe, as in they might as well move all banking to Switzerland unwieldy. That number is just payroll, how many more for accounts payable.

But the corps aren't my concern. A corp goes under, fine. But now we have thousands of workers with no job and without at least one final check. That is bound to have positive repercussions on the overall economy.

Where Do Companies Keep Their Cash?

Cash and cash equivalents are the first items on a company's balance sheet, but they are not same.

www.investopedia.com

Or

Negotiable bearer bonds

 

[CO. Hoosier]

Then you don't understand the Fed Reserve lending window mechanism being used. There will likely be next to no FDIC funds even needed for this.

If the FED covers all the deposits from reserve funds, isn’t that inflationary, then the FED must answer with more rate hikes?

 

[snarlcakes]

You say that like it's a bad thing...

Of course it's a bad thing.

 

[twenty02]

Of course it's a bad thing.

You'd prefer more bank runs and contagion?

You a masochist?

 

[snarlcakes]

You'd prefer more bank runs and contagion?

I prefer a system that doesn't need bailed out every few years.

You a masochist?

No, you cannot touch me.

 

[twenty02]

If the FED covers all the deposits from reserve funds, isn’t that inflationary, then the FED must answer with more rate hikes?

They are swapping long term bonds held by SVB, etc for short term funds at par value. I guess if you want to be technical about it to the extreme, it's a form of easing, but the amounts in question aren't enough to move the needle with inflation.

The Fed more or less created this mess by holding rates overly low for much too long. Similar to what we saw in with Bank of England last fall, though that was a govt pension fund that got whacked by holding govt bonds. Tightening cycles always have some pain points.

 

[JamieDimonsBalls]

They aren't doing it to protect those people or companies. They'll sell it that way, but it's bullsh#t. It's to protect the system. They don't want a bank run or a financial contagion.

Those that are holding assets generally do NOT want a bank run or financial collapse like we had in 2008-2009. Shit, you Bitcoin guys should be thrilled about this as your currency is positively correlated with risky assets (stocks, bonds, etc.).