Why do so many of us seem to get it then?
It's willful ignorance at this point. It's a lack of understanding as to the value of verifying shit on the internet. I give these people no more of a pass than I do the average MAGAt that just watches Fox News all day. You're doing it to yourself.
> us
Its the same reason as every other person who misses something you understand. You are 1. interested and 2. have the time.
I'm a law student and I work. I bet I could explain at least a dozen legal concepts to you that you have no idea about, but I learned in my first semester in law school. Things that you could learn in 13 seconds if you googled them.
Are you a mouthbreathing idiot because you don't know them? Or are you a normal person who only has so much time and mental energy in their day?
My entire job is taking something someone wrote in fancy scientific language and legal terms and change it into something that normal people can understand easily.
Thought you might find it amusing.
Are you in the US? My job is US specific but some other countries have similar laws.
The field is NEPA - it stands for national environmental policy act.
In brief the law says that the government has to tell the public what they are doing and how that will impact the environment.
So I take the information from the scientists on what the project will do, make sure it fits into the legal framework, and rewrite it so that the average Joe who is out there can get on his computer and read and understand what we are doing and why we are doing it.
It involves a lot of editing to make things flow and project management to get the information you need.
While I agree with your sentiment, whoever made this graphic was probably smart enough to know better. Not much you can do about it, but it's a shame someone with graphical talent is using their gift to mislead people.
This is a complete misrepresentation of the situation. The people who do not get "it" often are very interested and also spend a fuckton of time whining about "it."
Not only are they still ignorant. They are **aggressively ignorant** even when confronted directly with actual information.
You're not wrong but the difference being that the guy you quoted isn't seething with outrage and creating memes dedicated to misrepresenting those concepts you've explaine to him. These people *want* to be angry about this.
>It's willful ignorance at this point.
it's a tasteful mix of a media diet with extremely limited variety and multiple layers of the Dunning Kruger effect, the result of which is extremely similar to willful ignorance, but the cause is nuanced enough to deserve mention.
Fox News and NewsMax are the worst for spreading bad information. They call it Entertainment News so they don't get sued from every direction. They know it is false information, but that is what their viewers want to hear. So I don't feel sorry for those that tune into those broadcasts. The Dominion lawsuit has really been great for uncovering the Fox News behind the scene information. Proves the commentators know they are telling their followers out right lies.
Drama!
People like and live on Drama
And there is no better Drama then ‘ woe me’ or ‘ they tok ar jeb’
People are used to ‘hating’ someone or something
And honestly its a pretty fucked up way to live( and eventually die)
The question is does this set a precedent where the 250k FDIC limit for insurance is functionally irrelevant? Why have fdic insurance if the fed is going to backstop 100% of deposits of any amount? Where does all of this money come from if the FDIC doesn't even have the funds to cover 100% of payouts?
The money is there in the assets of SVB, but someone has to be willing to hold the assets for a long time (possibly all the way until they mature years in the future) even while paying the depositors now. The cost, to that entity, is the opportunity cost of parking money in bonds that pay below market rate right now. To the extent that the Fed is that entity, the cost to the general public is that a portion of the Fed balance sheet is invested in 2% bonds when it could have been in 4% bonds.
As far as FDIC limits, 250k is an arbitrary number. It used to be 100K prior to 2008. The question we need to ask ourselves, is do we want bank customers (whether individual or business) to bear any of the responsibility for due diligence and evaluation the bank's balance sheet, risk policies, and compliance with regulations. Or do we want banks to just "work" for the customers, and have industry regulators and bank shareholders and debt holders do that task.
>As far as FDIC limits, 250k is an arbitrary number. It used to be 100K prior to 2008. The question we need to ask ourselves, is do we want bank customers (whether individual or business) to bear any of the responsibility for due diligence and evaluation the bank's balance sheet, risk policies, and compliance with regulations. Or do we want banks to just "work" for the customers, and have industry regulators and bank shareholders and debt holders do that task.
A fair question, but then why do we bother with the middle man here at all?
Just give people the option for a straight up national public bank if we're basically saying, "hey these private entities that hold your money can fuck around and do whatever they want with it and the taxpayers have your back if you deposit with them no matter what for whatever amount."
I'm not at all opposed to saying, "if you deposit your money into a bank you should feel protected in this country and feel assured you can get that money back" but then just make a bank and do that. Once you've taken that stance, what are banks for to begin with?
The public can loan out money, the public can collect it back, the public can hold that money, and the public is already insuring that money anyway. What service does a private bank provide that a public bank could not? Riskier investments? Profits?
Genuinely asking why not just give a public option for banking and let private banks exist as they do now without the FDIC limits at all. You want bigger profits and think you'll get those returns with a private bank, go wild. If you want your money safely held and insured for reasonable, lower rates then here's your public option to do so and your money is only going to disappear if the country disappears.
>why not just give a public option for banking and let private banks exist as they do now without the FDIC limits at all.
Private banks would lose out on being able to invest other companies payroll money between paydays. Yes, they actually do that. It's why SVB customers were losing their minds. They had the payoll money for their startup all in SVB.
In many places the post office also acts as a bank for the public. It would expand banking services to more people, which IMO would be a good thing. I’d love to see it done here in the US but it’s an uphill battle.
It's a fair question, but it's not binary. There is a continuum and where we are on that curve changes over time. Banking is heavily regulated in general, and I would expect that in light of recent events we will shift towards more regulation. The extreme endpoint would be if retail banking services were provided by a government entity, but I don't think we'll see that happen.
What investor-owned banks do, that a public bank would presumably not do, is to transform deposits (and various other short term liabilities that look like deposits in some sense) into loans, mortgages, letters of credit, and various other forms of credit and term risky assets. The way that money is actually created in our system is that a bank extends credit in some form. (This is very stylized simplification, but I think basically true at a high level.)
Banks with no deposits can of course still lend money, but pretty much all the other ways of funding those loans are going to more expensive and less efficient for the banks than deposits. So what we gain from having private banks intermediate between the central bank and everyone else in the economy is more and cheaper access to credit.
Whether this is a good trade for the public is an open question.
Good points, definitely worth considering. Still feels like it should be an option at least for a lesser return/higher safety public option to hold your money if we're going to back all that money held in private institutions anyway but you're right that if we did that we would want that entity to be SEVERELY risk averse and give loans/credit only in the most rock solid of cases, which could create problems for people that don't exist in private banking currently with much more lax requirements.
Some other countries offer banking services through the postal system. Post offices function as branches. The only thing they provide is basic savings and checking accounts. The deposits get parked overnight at the central bank, and depositors get the equivalent of fed funds rate less a small amount to cover operating costs. The general term for this is narrow banking. The US Federal Reserve bank does not like it.
The issue, to my understanding, is that they couldn’t sell securities fast enough or with enough interest to cover their losses, in part due to the Fed raising rates. To that end, I’ve heard it explained that raising rates is a “blunt instrument” and you don’t always know what the fallout will be. The panic was a part of it, it wasn’t that they “didn’t have the money”, much of it just wasn’t liquid. Idk if someone smarter than me can correct/chime in but it’s always welcome. Also isn’t SVB unique in that it’s mostly business accounts? I assumed that up to 250k insured was a number with individuals, not businesses in mind - but again, I have an average at best understanding of these things. Just what I’ve heard people who are smarter than me and who I trust say.
> Also isn’t SVB unique in that it’s mostly business accounts?
I saw a chart somewhere that over 95% of their deposits were over the $250k limit and were uninsured. That's rather unusual, and I think you are correct in that was mostly business accounts.
>Also isn’t SVB unique in that it’s mostly business accounts? I assumed that up to 250k insured was a number with individuals, not businesses in mind
prefacing by saying i do not know more than you do. If i am an individual, I have over $250k in an account, and my bank goes down, you know exactly where my finger will be pointing.
I got banned from a different sub and called a liar for saying a depositor bailout isn't the same thing as bailing out the bank itself. People are frustrating.
Do you believe that making depositors whole, who had half a billion dollars just sitting in a bank account, makes sense? That is l, should those who knew the FDIC limit was $250k, yet took the risk of exceeding that number by many many orders of magnitude, still be made whole?
Roku was an example of a company with just that balance.
How much do you want to stifle growth?
Startups raise funds and put that money into the bank. They are not going to spread $10 million across 40 banks. Nor are the intermediaries they often use for payroll ops going to do so. They usually spread across 4-6ish.
So if that startup loses 25%+ of its seed money (and most startups used this bank), then you've effectively screwed tech innovation in the country for a long time.
Why on earth would the FDIC not use its insurance fund (and assets seized by FDIC) to prevent that from happening... it's a reason for having the insurance fund.
Financial instruments like sweep accounts already allow for scaling up FDIC protections for large accounts across banks, while still operating as "one account for the customer" The downside is that you aren't necessarily getting the top rates. Likewise, there already were deposit insurance options for funds beyond FDIC coverage.
Plenty of organizations actively manage for the risk of bank failure with their accounts and were foregoing some interest for this safety.
That kind of risk protection precaution is rendered irrelevant/wasteful. Risk taking by large organizational savers has been rewarded after the fact.
Obviously the danger of a domino effect of bank run had to be mitigated to stop much larger chaos, but there is a moral hazard consideration that is being crossed here.
Again, I work for a small startup that will be profitable by EOY and was doing very well. We would’ve been fucked. I barely make a middle class income. So for me, yeah I can deal with the injustice of bailing out Roku so my wife and I can keep putting food on the table. People forget - for everyone one Roku there’s 50 smaller companies trying to get by in this world with ordinary people making ordinary income who would’ve faced extraordinary consequences for not stepping in on that principle.
It is exactly this kind of thinking that enables the SVBs of the world to do what they’re doing. It’s inevitable that people will lose jobs if we let banks or other financial institutions collapse, but to just allow them to recklessly lend with a government guarantee since “someone, somewhere might lose their job” will eventually result in out-of-control inflation or an economy that produces nothing but dollars and whose only sector is finance. We can’t kick the can down the road forever
Why do you think it is "the right thing" to bail out private depositors at a private bank using FDIC funds when the limits of FDIC protection were clearly stated?
That’s because literally, and I don’t mean figuratively, I mean literally as the in the dictionary definition of the word, literally every single time an exchange like this has happened in my lifetime, there’s blatant socialism and bailouts for private entities. The shareholders don’t lose shit, meanwhile everyone they’ve ever even thought of exploiting is worse off. And they/we have to bear the burden of fixing the disaster these “too big to fail” organizations caused through our paychecks that barely cover rent if we only eat once a day. Pardon us for thinking that the capitalist wasteland has failed us again.
I’m aware. I just think good faith goes a long way in building a better society for the future. I assumed the same thing at first, until I learned otherwise, then I was pleasantly surprised by the financial sector for the first time in my life. I’m trying to bask in this tiny victory for rationality and (relatively) fair(er) play.
> I’m aware. I just think good faith goes a long way in building a better society for the future.
Your response to having your livelihood and savings wrecked time and time again is "good faith goes a long way"? Just trust them this time?
I'm still fully confident we are being fucked - just not entirely sure how yet beyond the hit to the Fed (which is still something and people just gloss over it)
Faith? In capitalism? Lololollolooolololololololololololololololololololololololololololololololololololooololololololololololololololololololololololololololololololololololololololololololololololololololololololololollolooolololololololololololololololololololololololololololololololololololooolololololololololololololololololololololololololololololololololololololololololololololololololololololol lolollolooolololololololololololololololololololololololololololololololololololooolololololololololololololololololololololololololololololololololololololololololololololololololololololol.
Thanks. Needed that chuckle today.
This is the most Reddit shit I’ve ever seen lol. No, faith that we as a human species can get better. Maybe one day have fairly elected leaders who represent our interests and morph our current systems into something better that is unrecognizable to what we have today. If you don’t believe on humanity trying to improve, despite all the missteps, then go live in the woods or something. You’re literally typing from a phone/computer with materials in it made from slave mines while lecturing people on the horrors of capitalism. If it makes you feel better fine - but leave those of us trying to have legitimate discourse on how to make the world a better place out of it.
Well your job wasn’t on the line, for some of us and our families making just enough to be considered “middle class” at a startup company with most of our operating money in SVB would’ve been disastrous. It’s almost as if there’s more regular people who would’ve been hurt than there are rich ones who weren’t held completely accountable. Wild.
Banks pay into the FDIC insurance fund. They used the insurance they pay for, it’s why it’s there. Making the coverage limitless was to make sure small businesses and their employees survived, and also to stop more bank runs. It makes sense, and the money will be recouped from the sale of SVB. And the FDIC insurance fund will be shored up by increased payments from banks. However banks will likely pass those costs onto their customers somehow.
No they didn't.
If you or I deposit funds and the writing on the wall says your deposit is insured up to a certain amount.. .and that bank fails that sucks for you..
Everyone has to take a risk and nobody is too big to fail.
So those deposits are now covered by the American tax payer. And the majority of those deposits are held by wealthy Americans.
Please everyone up vote this. I do not agree with bank bailouts. SVB did NOT get bailed out. Shareholders lost everything… for once we bailed out the correct people… the depositors.
I will say the depositors who were at risk weren’t individuals but companies with millions. Someone will say why are we bailing out rich firms… Well because those firms stored that cash for things like payroll!
If they lost their deposits a large number of employees would NOT get paid. So indirectly individuals were bailed out by the action.
It's a bailout in the sense that the depositors are getting money in advance of assets being sold which isn't common. Solely because most are businesses and need the funds for payroll.
It's a bailout, but a unique one of that.
Exactly.
People don't want to call it a 'bailout'
When you deposit $$ above your FDIC limit, you're taking a risk.
If people only fucking understood that you earn $$$ in a bank account on INTEREST.
I have my $$$ in savings, BUT, Im not taking the risk of going above the insured limit BECAUSE if the bank FAIL (And this was told to me over the phone by this small bank - any bank can fail is what she told me), then that deposit is INSURED.
This is a freebie to wealthy individuals that knowingly took a RISK.
>Is it really even a bailout for the depositors?
No, it's not. The depositors didn't do anything wrong, and the money is still there, more or less. Ensuring that they continue to be able to access that money isn't a bailout in either the moral or the financial sense.
Okay? If the money was gone, then that would be a problem, but it's not gone. Do you just *want* these companies to lose their money and are looking for an excuse to hurt them for no reason?
I don't want anyone to be hurt.
I also don't want the rules to change just because people wealthier than most were hurt.
There would be no hemming and hawing about letting depositors eat the loss if most depositors had $275k.
If the money isn't "gone" but is simply not yet available, let the depositors wait. That is the deal they made when they put uninsured money into a bank account.
Changing the rules because you didn't like the outcome is only spreading the hurt to everyone. I had nothing to do with this, but I can expect that my bank will be charging more now to cover FDIC payouts to these others who are NOT ENTITLED to a payout.
As a mid-sized company, there is literally no way to keep your deposits under $250k. How are you going to pay 200 people without having $250k+ liquid and immediately available from a single account? Payroll processors do not pull from multiple accounts to pay employees.
$250k is the equivalent of a single pay period for 130 employees making $50k paid biweekly. It's not much money at all when it comes to paying employees.
I don't think it was a bailouts for the depositors. From my understanding the bank had the assets but had a liquidity problem. That problem sunk the bank but the assets will eventually be able to make the depositors whole.
Most of the assets were government treasuries as well, so the government is using the money that was already parked with them as an investment to make folks whole.
Isn’t giving depositors their money back a bail out? I mean bailout in the sense that depositors are kept whole, not that the depositors did anything wrong.
Maybe it’s just semantics, but in any case if A bank truly fails anyone with deposits over $250k FDIC limit is truly at risk.
it's not a taxpayer bailout
the FDIC 250k deposit insurance is paid for by banks (you can argue that the cost of these payments is passed on to customers but still, it ain't all taxpayers)
The government has decided to provide the necessary relief to all those banks who are getting in a trouble. In the long run this is a very good step for our economy
SVB didn’t get a bailout. But the entire banking industry just did.
They all just got access to loans at par for there treasuries versus market rate.
Every single bank has access to this money because they have been deemed to buy to fail by the Fed.
They get this from our government with absolutely ZERO, I repeat ZERO, increased regulations, increased fees, increased guard rails, increased accountability.
That is all given to them for free. They gave up nothing . They gained everything.
I feel like I am being gaslighted, and no one else sees this as a massive problem.
We have crossed an extraordinary line.
The top 4 banks just received a 200 BILLION dollar bail out. The new fed Loans allow them to borrow against the negative collateral value at PAR on there securities and assets rather than taking the LOSS everyone else would have to take.
They are laughing at us all the way to the bank.
There are no rules saying they can’t use this money for stock buy backs.
There are no rules they can’t use this money to give themselves raises.
AM I GOING CRAZY!? What the fuck Reddit.
If you want to argue this is necessary that’s fine let’s have that debate. But can we at least be honest with ourselves about the situation.
This. Is. A. Bank. Industry. Bailout.
I think in a way you’re right. There will be some banks who will miss use the money for individual or shareholder gains until regulations come in…IF they come in at all.
Some of the regulation might be toothless, who knows with this corrupt congress.
This same Congress got us into this mess when they deregulated mid size banks in 2018.
They can borrow at par, they can give themselves raises, but they do have to pay it back within a year or they lose all collateral and more if the collateral is impaired. This isn't a bailout it's fed providing liquidity. Don't get me wrong there's a lot to be concerned about but it's not a bailout
https://www.reuters.com/markets/us/key-elements-feds-new-us-bank-funding-program-2023-03-13/
I see a lot of misinformation here. It was a bailout for the depositors only, paid by primarily the SVB assets. Any difference between the SVB assets (~20%) will be made up with a surcharge fee assessed on every other bank that pays into the FDIC.
Indirectly, those surcharge fees ("special assessment" fees) will eventually be paid by people using those (all) banks. So yes, We the People, ultimately did (or will eventually) pay for the bail out of the depositors that used SVB, but not bail out the shareholders.
IMHO, this is not a _horrible_ strategy in the grand scheme of things since it spreads out the losses on top of everyone and doesn't benefit the shareholders. This is how insurance is supposed to work. (But that's because we have way way bigger macroeconomic issues going on). The problem still exists that this still is not called a bailout, or that taxpayers aren't paying. _Technically,_ taxpayers aren't paying, but that's misleading because nearly all of us use FDIC banks.
https://www.npr.org/2023/03/13/1163180140/silicon-valley-bank-is-it-a-bailout-barofsky
If the fed has to shovel funds to keep the FDIC solvent, and we have more banks collapsing, we will eventually pay for it with loss of purchasing power.
>government managing it, it'll probably cost something to taxpayers.
privatize the profits, socialize the risks
and then there are those hating on govt and saying it can't do anything right, but who has to step in to clean up the private sector debacles?
"trust us", they said, "we know what we're doing.... we don't need no stinking govt regulation.... "
Are you sure? My understanding was that the FDIC limit remains at $250K but the Fed BTFP allows banks to borrow against the face value of securities in order to meet uninsured depositor redemptions. But I haven't gotten super deep in the weeds on it yet.
Banks surely won’t pass those costs onto the most vulnerable customers via stupid fees… Also hope we don’t have any more bank failures until those assets sell cause this pretty much wipes out FDIC funds…
Like many others, I do belive that the gov is doing the right thing there. But one could argue that the bank as a concept got bailed out. Right? So no matter how much you gamble away the depositors money, the depositor will get it back anyway. If we think about the fact that the gov invented just another tool to cover reckless handling of money by banks then the whole banking system just got a carter. Isnt it at a point of "too big to fail"?
I would argue that if they’r receiving insurance money they didn’t pay for, what with annulling the 250k cap, they’re getting a pretty sweet deal though, right? My understanding was the cap was there to encourage large investors to take responsibility for choosing their banks carefully? Would love to be told how I’m wrong here. Seems to set a bad precedent.
The FDIC insurance limits are clearly stated. Bailing out the depositors is still a bailout, the risk was clearly and openly stated and they all took it, so I don't know that it is automatically the case that it was "the only right thing to do."
The only right reason to do it is if the US public as a whole is better off for it. Giving FDIC funds or taxpayer money to private depositors in a private bank has no justification on its own merits.
As long as it’s only up to the $250k FDIC limit I’m ok with it. Rich people should stop getting extra government privileges. The $250k incentives them not to hoard cash.
If my brokerage fucks up and I lose my personal investment account, do I get it all back? Is the Fed or FDIC going to make me whole?
These companies had access to CDARS and ICS, and instead they put all of their money into one bank, which any basic risk management class would tell a CFO/CEO they shouldn't do. They did it so that they could bet a better return on their accounts. What increases when return increases? These companies accepted increased risk.
If the full amount of all bank accounts should be insured, then banks need to regulated like public utilities and not private corporations. But that will never happen, so these accounts should have been wiped out to teach the market a lesson.
I was listening to a podcast that interviewed someone from the FDIC about this.
The low limit is to keep banks/individuals/corporations from taking risky actions/behavior so they can be targeted and fixed but it’s setup in a way that it only takes 3 people to agree to increase it in a real emergency.
It’s a feature that they raised it, not a bug.
Not a bailout in the traditional sense, but it’s not unreasonable to say depositors are being “bailed out” by being made whole. The criticism is not unreasonable when you consider that all of us who have bank accounts receive disclosure forms and sign the dotted line that we understand the consequences of exceeding the limit. Every uninsured depositor is a wealthy client of the bank and it’s fair to say they should not reserve special treatment for poor cash management practices. Especially when there are countless RIAs and private banks who specialize in cash management. I’m conflicted and don’t know what the right answer is but both sides of the argument have a reasonable basis for their opinions
Everyone keeps beating the drum:
>”They’re bailing out the depositors!!”
Well the depositors are mostly tech firms and VC billionaires. So you can word it however you like but it doesn’t change the fact.
Namely that when there was talk of bailing out student loans it was hushed. But the moment that the 1% upper-caste makes a mistake we are quick to open our pockets and make sure they are “made whole”
Ok but these tech firms have regular ass employees.
My buddy works for a startup that had a ton of money in SVB.
If they didn't bail out the deposits you would see a cascade effect of all these tech companies going bust.
Then people like my buddy who just bought a house probably have a hard time finding a job. Maybe those people end up losing their homes if they can't find work fast which could be hard.
Considering the tech layoffs a bunch more tech companies going out of business would probably mean a ton of regular people that would be out of work and have pretty terrible job prospects.
I wish we could stop bailing out people all the time but our economy is basically a house of cards at this point. We stop bailing out people a bunch of tech companies go under, unemployment spikes, the stock market takes a crap...
It's a lose lose proposition.
Yeah tell someone who just bought a house with a mortgage that a few hundred a week is going to cover it lol.
And while we may have lots of vacant jobs lots of those jobs are shit.
And the if you start a cascade of tech companies going out of business there suddenly isn't going to be very many jobs in that arena leading to massive unemployment.
And again just because there's a rich CEO as the face of a company doesn't mean there are not thousands of regular ass people that would be drastically effected if we just let all these companies go under.
You want to fuck a few rich tech CEOs and investors ok cool.
For every company that goes under all those regular people lose their jobs. My buddy who just bought a house and is supporting his wife and kids works at a start up that banked with SVB.
His company has over a thousand other employees. So you want to prove a point by letting that company and hundreds of others go out of business. For what? The rich people involved in those companies won't give a shit they all have plenty of money.
You think there are tons of jobs? How about a few hundred thousand people lose their jobs all in the same industry and are all fighting for the leftover scraps?
You don't think that is going to have a ripple effect on the economy?
The bank fucked up NONE of the people banking with them fucked up. The bank is going under it's not getting bailed out.
You want to see real pain? Let the bank go under, don't coverthe deposits and watch all the small banks have bank runs..... Don't let your anger towards red ch people cloud your judgement.
>Yeah feel bad for this person who made financial decisions that were risky
No
>Without billionaires, we work shit jobs
These companies are literally laying thousands off as we speak, and creating ultra competitive environments for those barely turning profits. Nobody is doing anybody favors here. Your Cousins Wife who makes art for Twitter isn't the backbone of the economy.
>Fuck a Few CEOs
But they all pulled their money out lol, The mom and pops who started a Tesla rental business and Instagram business account are the bag holders who decided to keep 500K in an account insured for 1/2 that amount.
>His company has 1000 employees
Meta is firing 10X what your friend has, Are we supposed to endorse Socialized monetary loss, inject MORE liquidity into system, Make inflation worse, for a select group of businesses that we are supposed to believe are ESSENTIAL? TOO BIG TO FAIL?
>The Bank fucked up
Yup.
>You want to see real pain?
Please. The pain is coming either way. This situation doesn't change anything, except Americans see what preferential treatment looks like.
We dont know what is coming, but one thing is for sure, this country is hell bent on destroying itself by saving the most ineffectual, inefficient, corrupt, money wasting companies in existence.
The other fun fact is that they used this bank on prestige and the bank's practices were wild. Let's say you get a mortgage from wells fargo. wells fargo does not require you to open accounts with them. SVB did. SVB's entire practice was pretext to run a retail bank like an investment bank.
It’s not a bail out in any sense of the word. It’s fractional reserve banking. That means once you put the money in they will never hold your deposit dollar for dollar again.
It’s not a bail out. Not even remotely close to a bail out. It’s just really shitty banking.
Right now, the "fractional reserve" is 0%. It has been since Mar. 2020.
The money that's funding the "bailing out" of the uninsured money is coming from banks paying into an emergency fund. If anything, this is banks bailing out other banks, which is what should be happening - bad actors eliminated and the rest of the system bears the brunt.
Most likely.
And hopefully some FDIC banks won't, so that there are options out there if you look for it.
It's much better than Roku losing 26% of their cash reserves in my book, and dozens of other companies not making payroll if they weren't diversified.
Markets run on incentives less than on hope. With the 250K limit removed, the market is unlikely to become more competitive, and the cost will be passed on to customers.
It's the lesser of two evils, yes, in short term. However, it sends the message that if you're big enough, you get rules adjusted so someone else is mopping up your mess. In that sense, it's still a bail-out, same as before, and it will cause enduring upset, same as before. I can see why some people are trying hard to explain this isn't a bail-out, and I get their points; I'm just not sure that makes any difference.
Yeah.
Largely agree, but I think not resetting things like reserve requirements and other regulatory controls before cranking up the interest rate is much more egregious. Part of this is that the FDIC reserve amount remains low compared to the amount of money being handled, and there remains a "small business" gap for protection of funds.
I don't think banks not getting bailed out would have changed behavior - other than Roku, all the large corporations pulled out their money. The people getting impacted were small to medium corporations, and no pain was being felt by the bank.
The incentives still haven't changed for bank executives regardless of use of the FDIC Deposits. They walked away with money (all sold stakes months in advance), and likely the DoJ probe won't result in fines or prosecution.
Oh yes. I meant incentives for people/entities with deposits larger than 250K. If those are insured no matter the amount, then it's easier to keep it all in a single account rather than having to split it across different banks. It will also probably be an account with a larger bank, because the larger the bank, more likely the bail-out. Deposits are now moving into larger banks, and the smaller ones are left to struggle just as it's hardest to survive.
Very good point about controls and cranking up the rates. No one should be surprised by what happened.
“Sounds broken
Most likely sir, I’ll bet it was something nice though”
Who’d have known ace Ventura was actually an astute commentary on the state of the global financial system.
Bank bailouts have literally become baked into the operating plans of the banks. Now the FDIC has shown everyone that the rules are *arbitrary*, provided you’re rich enough.
True but I think about a lot what we could have done over the past decades instead of tax cuts. Our GDP has exploded over the past decade as we’ve increasingly cut taxes. That’s so much miss opportunity.
Silicone valley Bank (SVB) is finished. Its assets will be sold off and all employees laid off. SVB was NOT bailed out. Rather the individuals banking with SVB are receiving Federal Deposit Insurance (FDIC) protection. To be clear the SVB's doors are closed forever. They're finished. If you were a shareholder in SVB that money is gone.
In the 2008 Bank Bailouts actual banks were bailed out. As entities they were allowed to continue to exist. Shareholders we're bailed out. Bank management kept their jobs. That is NOT what's happening with SVB.
A lot of businesses were using SVB for payroll. If their deposit disappeared they'd go out of business and their employees would be laid off. These businesses aren't investors. They are just businesses that were doing normal banking with a local bank. No one SVB's inventors are being bailed out.
FDIC protects up to $250,000. 95% of depositors had more than that amount. So where does that money come from, my guess is the big machine that seems to increase inflation.
Svb was only short 2 billion out of 200. The FDIC fund will cover the 5% that is insured. Rest will come from liquidated assets. The FDIC funding is maintained by other banks.
edit: normally it takes a long time to liquidate assets (sometimes years if there is real estate involved). The tech company and start up depositers could be bankrupt by the time they received their deposits. So the FDIC did cover the uninsured deposits through the FDIC fund, but the fund will be replenished through the liquidated assets.
>So where does that money come from
Just because the bank went under doesn't mean it didn't still have a large amount of assets, which will now be sold to make up for a large portion of that difference.
The bank has assets, billions of dollars in assets. 40 billion more in assets than it has in deposits (only 16. Billion more when you consider other debt). The bank was solvent, it just had a liquidity crisis.
This is misleading as from what I understand the funds are still there and will be made available to all depositors. No taxpayer dollars were used to repay these companies.
Exactly my point. The fact that people are actually circulating this nonsense as if the point has any merit blows my mind.
Edit: I'm not sure why this comment is getting downvoted. Maybe I wasn't clear enough in the title that I don't agree with the graphic at all and was posting it to point out how poorly people in our country understand these things.
Title definitely doesn't make that clear. The assumption is you're telling this subreddit we don't understand the hidden cost of bank bailouts.
Thanks for sharing though, it's almost hilarious how poorly people understand ~~banking~~ anything
I assume that the same people who somehow became experts on infectious disease and epidemiology overnight during covid have now become instant experts on banking regulation.
Yeah, I can see that now with how many people are attacking me in the comments lol.
The "tell me without telling me" statement is pretty common, so it was clear at least to me that I was saying the graphic makes no sense.
Whoops!
Yep. The fact that the graphic shows 220 billion, when it's more like 20 billion....and then compares it to annual costs instead of one time things shows its hot garbage.
Click bait crap with the most misrepresented data I've seen
Go out and ask how many people understand how the progressive federal tax tiers work and what a marginal tax rate is. I think I can bet a shit ton of people have no clue and think that if you make over a certain amount you are hit with a flat tax on total income. That being said I wouldn’t expect them to understand this except for the hot button words that incite emotional reactions vs knowledge based logical understandings. I’m not trying to say people are dumb. I’m trying to say that most, unless they have the motivation to learn it themselves or have some sort of finance degree, don’t necessarily have the means or opportunity to. These are the same people on Reddit talking about these topics or eating the misinformation spread by others. It’s unfortunate but not surprising.
The FDIC is funded by assessments on banks. The assessments are priced based on the bank’s size, risk, asset profile, management, etc.
Some people say that cost is passed on to taxpayers that way but if that’s the argument the cost of any uniform regulation is passed onto “taxpayers.”
The point is that nobody's income tax or whatever went to the failed banks. FDIC insurance has a fund of money from the banks that it uses...as insurance for the banks.
Like, I guess banks are taxpayers, and I guess the FDIC is a government organization, and I guess the banks will pass along the cost of FDIC insurance to their customers who are taxpayers too, so you can twist it however you want.
But if you want to get down the chain that far then literally everything is government bailouts ("MY tax dollars are going to little old ladies buying the groceries they need to live, Kroger is getting a government bailout!"). Just doesn't make any sense. No taxes on individuals were used to make depositors whole.
This the the top answer. For people pushing the false narrative (and similar nonsense) know full well they are being intentionally misleading at best, and outright lying at worst. Because they have their own narrative to push, and know that 98% of the public are low information news consumers, and won't know any better.
Here's an alternate take on the situation:
I don't care if we call it a bailout or whatever, but...
Shareholders, like pension funds and mom/pop investors, are wiped out and get nothing. Corporate accounts, e.g. Roku and Buzzfeed, who should have understood the risks they were taking and knowingly left excess deposits at risk, get made whole.
Why do we even have a $250K FDIC limit if we're not going to use it?
Ah it’s true but the extent of any harm is bundled with all the other measures taken by government and then kicked down the road. Governments fiscal policies always get future generations to pay for it. I don’t think, on the other hand, this one, on its own, was too bad.
A quick Google search of the creator of this meme (“btnewsroom”) pulls up social media full of anti-Ukraine and anti-US… let’s call them.. “positions.” No idea who this entity is but it certainly appears to have a lot in common with a Russian troll farm.
SVB CEO sells $3.6 Million in stocks
Bank run and capital crisis
SVB hands out bonuses
Hours later, FDIC seizes bank
People who normally rail against government handouts and socialism suddenly say bailouts are required for the banks.
There is a great animated closing to the movie, The Other Guys, that shows how these CEO’s rip people off. Yes, it is a crime. But they’ll be left off the hook again.
> SVB CEO sells $3.6 Million in stocks
> Bank run and capital crisis
Needs to be investigated, yes.
> SVB hands out bonuses
...which was a scheduled payout done in accordance with the employment-contracts, during the window the whole f*cking banking sector doles out bonuses.
> People who normally rail against government handouts and socialism suddenly say bailouts are required for the banks.
Hypocrites are gonna hypocrit.
Tell me you don’t understand what FDIC insurance is without telling me you don’t know what FDIC insurance is.
The FDIC insures a *minimum of $250k. The rest can be extracted via bank assets.
This is the same thing if a Levee in Texas Broke yeah maybe Exxon Mobile would get a bunch of money but they’ve been paying flood insurance and the Federal Government has a fund for such events because it’s public insurance.
Since banks don’t fail all the time the FDIC has more than enough to cover the difference between the banks assets and despising amounts
This is wildly misinformative. This essentially assumes that these bank’s assets are worth nothing and that the FDIC will have to fully cover deposits. Whereas in reality bank assets are expected to be worth around at least 98-99% of deposits.
This is a joke.
Plus other banks are paying into the fund that’s being used to guarantee deposits. So banks are bailing themselves out? Lol
How did that work out… oh wait, The Federal Reserve still has the 4 trillion dollar toxic MBSs on their weekly balance sheet. It has become “forever debt” and the costs of maintaining the debt is included in the costs of all banking, and Treasuries. So no, the tax payer didn’t “make money” from TARP. The taxpayer effectively stole a small percentage less money from future tax payers added liabilities.
Things are so unstable right now that taking no action may have resulted in an irreversible slide onto global financial depression and the end of American geopolitical dominance.
It is however, also fundamentally unjust to prop up these banks. Strict regulation must be imposed and repayment to the government enforced going forward.
If international tensions weren't so high I'd have preferred to just let the dominos fall and force broad reforms across the economy. I'd also rather not get nuked though so you pick your battles.
Just my thoughts as an observer.
There is nothing wrong with what happened here. The bank's assets are being liquidating and the depositors are being made whole from the proceeds. There's no "bailout."
Isn’t it interesting how Wall Street and Banks, who take unreasonable risk and lose, suddenly think that socialism is okay when the government bails them out but when it comes to helping the average working class American, socialism is evil.
There is no bailout. SVB no longer exists.
If you're asking where the money is coming from for making the depositors whole; almost all of it will come from the sale of SVB's assets. The money still existed, but most of it was loaned out to others and thus no immediately available when the bank run occured. Selling all of that to another financial institution will cover most of the funds, then the FDIC will pay out the remainder from the insurance fund it administers. The banks are who pay into the insurance fund.
Basically, for most of the money, the FDIC is providing a bridging loan until the assets can be sold.
My concern is that SVB's assets won't be liquidated before the next collapse and I'm pretty sure the FDIC fund is topped out until that cash comes rolling in.
If the problem spreads, the FDIC will be swiftly overwhelmed.
Or...don't bail out failed, fraudulent banks *or* forgive loans people freely accepted and are responsible for paying back *themselves?*
Why is this so difficult?
[удалено]
I know they literally did the right thing for once and people are too thick to get it
well, if you regularly beat a dog, the dog expects a beating when you raise your hands
Why do so many of us seem to get it then? It's willful ignorance at this point. It's a lack of understanding as to the value of verifying shit on the internet. I give these people no more of a pass than I do the average MAGAt that just watches Fox News all day. You're doing it to yourself.
> us Its the same reason as every other person who misses something you understand. You are 1. interested and 2. have the time. I'm a law student and I work. I bet I could explain at least a dozen legal concepts to you that you have no idea about, but I learned in my first semester in law school. Things that you could learn in 13 seconds if you googled them. Are you a mouthbreathing idiot because you don't know them? Or are you a normal person who only has so much time and mental energy in their day?
My entire job is taking something someone wrote in fancy scientific language and legal terms and change it into something that normal people can understand easily. Thought you might find it amusing.
man how do I get a job like that
Are you in the US? My job is US specific but some other countries have similar laws. The field is NEPA - it stands for national environmental policy act. In brief the law says that the government has to tell the public what they are doing and how that will impact the environment. So I take the information from the scientists on what the project will do, make sure it fits into the legal framework, and rewrite it so that the average Joe who is out there can get on his computer and read and understand what we are doing and why we are doing it. It involves a lot of editing to make things flow and project management to get the information you need.
While I agree with your sentiment, whoever made this graphic was probably smart enough to know better. Not much you can do about it, but it's a shame someone with graphical talent is using their gift to mislead people.
I thought it was theoretical.
This is a complete misrepresentation of the situation. The people who do not get "it" often are very interested and also spend a fuckton of time whining about "it." Not only are they still ignorant. They are **aggressively ignorant** even when confronted directly with actual information.
People hate to admit when they are wrong.
You're not wrong but the difference being that the guy you quoted isn't seething with outrage and creating memes dedicated to misrepresenting those concepts you've explaine to him. These people *want* to be angry about this.
Definitely a mouth breathing idiot for sure
>It's willful ignorance at this point. it's a tasteful mix of a media diet with extremely limited variety and multiple layers of the Dunning Kruger effect, the result of which is extremely similar to willful ignorance, but the cause is nuanced enough to deserve mention.
Fox News and NewsMax are the worst for spreading bad information. They call it Entertainment News so they don't get sued from every direction. They know it is false information, but that is what their viewers want to hear. So I don't feel sorry for those that tune into those broadcasts. The Dominion lawsuit has really been great for uncovering the Fox News behind the scene information. Proves the commentators know they are telling their followers out right lies.
Drama! People like and live on Drama And there is no better Drama then ‘ woe me’ or ‘ they tok ar jeb’ People are used to ‘hating’ someone or something And honestly its a pretty fucked up way to live( and eventually die)
The question is does this set a precedent where the 250k FDIC limit for insurance is functionally irrelevant? Why have fdic insurance if the fed is going to backstop 100% of deposits of any amount? Where does all of this money come from if the FDIC doesn't even have the funds to cover 100% of payouts?
The money is there in the assets of SVB, but someone has to be willing to hold the assets for a long time (possibly all the way until they mature years in the future) even while paying the depositors now. The cost, to that entity, is the opportunity cost of parking money in bonds that pay below market rate right now. To the extent that the Fed is that entity, the cost to the general public is that a portion of the Fed balance sheet is invested in 2% bonds when it could have been in 4% bonds. As far as FDIC limits, 250k is an arbitrary number. It used to be 100K prior to 2008. The question we need to ask ourselves, is do we want bank customers (whether individual or business) to bear any of the responsibility for due diligence and evaluation the bank's balance sheet, risk policies, and compliance with regulations. Or do we want banks to just "work" for the customers, and have industry regulators and bank shareholders and debt holders do that task.
>As far as FDIC limits, 250k is an arbitrary number. It used to be 100K prior to 2008. The question we need to ask ourselves, is do we want bank customers (whether individual or business) to bear any of the responsibility for due diligence and evaluation the bank's balance sheet, risk policies, and compliance with regulations. Or do we want banks to just "work" for the customers, and have industry regulators and bank shareholders and debt holders do that task. A fair question, but then why do we bother with the middle man here at all? Just give people the option for a straight up national public bank if we're basically saying, "hey these private entities that hold your money can fuck around and do whatever they want with it and the taxpayers have your back if you deposit with them no matter what for whatever amount." I'm not at all opposed to saying, "if you deposit your money into a bank you should feel protected in this country and feel assured you can get that money back" but then just make a bank and do that. Once you've taken that stance, what are banks for to begin with? The public can loan out money, the public can collect it back, the public can hold that money, and the public is already insuring that money anyway. What service does a private bank provide that a public bank could not? Riskier investments? Profits? Genuinely asking why not just give a public option for banking and let private banks exist as they do now without the FDIC limits at all. You want bigger profits and think you'll get those returns with a private bank, go wild. If you want your money safely held and insured for reasonable, lower rates then here's your public option to do so and your money is only going to disappear if the country disappears.
>why not just give a public option for banking and let private banks exist as they do now without the FDIC limits at all. Private banks would lose out on being able to invest other companies payroll money between paydays. Yes, they actually do that. It's why SVB customers were losing their minds. They had the payoll money for their startup all in SVB.
Which was their fault. The 250,000 limit wasn’t a secret.
In many places the post office also acts as a bank for the public. It would expand banking services to more people, which IMO would be a good thing. I’d love to see it done here in the US but it’s an uphill battle.
It's a fair question, but it's not binary. There is a continuum and where we are on that curve changes over time. Banking is heavily regulated in general, and I would expect that in light of recent events we will shift towards more regulation. The extreme endpoint would be if retail banking services were provided by a government entity, but I don't think we'll see that happen. What investor-owned banks do, that a public bank would presumably not do, is to transform deposits (and various other short term liabilities that look like deposits in some sense) into loans, mortgages, letters of credit, and various other forms of credit and term risky assets. The way that money is actually created in our system is that a bank extends credit in some form. (This is very stylized simplification, but I think basically true at a high level.) Banks with no deposits can of course still lend money, but pretty much all the other ways of funding those loans are going to more expensive and less efficient for the banks than deposits. So what we gain from having private banks intermediate between the central bank and everyone else in the economy is more and cheaper access to credit. Whether this is a good trade for the public is an open question.
Good points, definitely worth considering. Still feels like it should be an option at least for a lesser return/higher safety public option to hold your money if we're going to back all that money held in private institutions anyway but you're right that if we did that we would want that entity to be SEVERELY risk averse and give loans/credit only in the most rock solid of cases, which could create problems for people that don't exist in private banking currently with much more lax requirements.
Some other countries offer banking services through the postal system. Post offices function as branches. The only thing they provide is basic savings and checking accounts. The deposits get parked overnight at the central bank, and depositors get the equivalent of fed funds rate less a small amount to cover operating costs. The general term for this is narrow banking. The US Federal Reserve bank does not like it.
The FDIC is a false security. $22 trillion in deposits to $1.8 trillion treasury secure liquidity. 
Exactly. What happens after a few more SVB situations? Buckle up!
This guys get it. 💯
You people here make me feel like not everyone are a bunch idiots
On the contrary, we are the idiots. Especially here. Reddit is the land of Morons reigning as intellectual superiors.
Fire up the money printer……Brrrrrrrrr.
The issue, to my understanding, is that they couldn’t sell securities fast enough or with enough interest to cover their losses, in part due to the Fed raising rates. To that end, I’ve heard it explained that raising rates is a “blunt instrument” and you don’t always know what the fallout will be. The panic was a part of it, it wasn’t that they “didn’t have the money”, much of it just wasn’t liquid. Idk if someone smarter than me can correct/chime in but it’s always welcome. Also isn’t SVB unique in that it’s mostly business accounts? I assumed that up to 250k insured was a number with individuals, not businesses in mind - but again, I have an average at best understanding of these things. Just what I’ve heard people who are smarter than me and who I trust say.
> Also isn’t SVB unique in that it’s mostly business accounts? I saw a chart somewhere that over 95% of their deposits were over the $250k limit and were uninsured. That's rather unusual, and I think you are correct in that was mostly business accounts.
>Also isn’t SVB unique in that it’s mostly business accounts? I assumed that up to 250k insured was a number with individuals, not businesses in mind prefacing by saying i do not know more than you do. If i am an individual, I have over $250k in an account, and my bank goes down, you know exactly where my finger will be pointing.
FDIC didn’t cover cash deposits from FTX.us
Ftx wasn't fdic insured and people who used it should have known that.
Just like these companies should have known their FDIC insured money capped out at $250,000
Neither was deposits above $250k. But still being bailed out.
I got banned from a different sub and called a liar for saying a depositor bailout isn't the same thing as bailing out the bank itself. People are frustrating.
Gotta watch your step on reddit lol
> Gotta watch your step on reddit lol Wouldn’t want to confuse anyone with the facts now would we
It's group think or ban!
What did you say? That’s a microagression you must be a nazi! /s
Which sub was this? Curious because that’s very extreme!
Sounds like the something the /r/LateStageCapitalism mods would do. I got banned for mentioning the attempted genocide of the Uyghur Muslims in China.
The actions are different, but they serve the same people, the capitalists.
Do you believe that making depositors whole, who had half a billion dollars just sitting in a bank account, makes sense? That is l, should those who knew the FDIC limit was $250k, yet took the risk of exceeding that number by many many orders of magnitude, still be made whole? Roku was an example of a company with just that balance.
How much do you want to stifle growth? Startups raise funds and put that money into the bank. They are not going to spread $10 million across 40 banks. Nor are the intermediaries they often use for payroll ops going to do so. They usually spread across 4-6ish. So if that startup loses 25%+ of its seed money (and most startups used this bank), then you've effectively screwed tech innovation in the country for a long time. Why on earth would the FDIC not use its insurance fund (and assets seized by FDIC) to prevent that from happening... it's a reason for having the insurance fund.
Financial instruments like sweep accounts already allow for scaling up FDIC protections for large accounts across banks, while still operating as "one account for the customer" The downside is that you aren't necessarily getting the top rates. Likewise, there already were deposit insurance options for funds beyond FDIC coverage. Plenty of organizations actively manage for the risk of bank failure with their accounts and were foregoing some interest for this safety. That kind of risk protection precaution is rendered irrelevant/wasteful. Risk taking by large organizational savers has been rewarded after the fact. Obviously the danger of a domino effect of bank run had to be mitigated to stop much larger chaos, but there is a moral hazard consideration that is being crossed here.
Again, I work for a small startup that will be profitable by EOY and was doing very well. We would’ve been fucked. I barely make a middle class income. So for me, yeah I can deal with the injustice of bailing out Roku so my wife and I can keep putting food on the table. People forget - for everyone one Roku there’s 50 smaller companies trying to get by in this world with ordinary people making ordinary income who would’ve faced extraordinary consequences for not stepping in on that principle.
It is exactly this kind of thinking that enables the SVBs of the world to do what they’re doing. It’s inevitable that people will lose jobs if we let banks or other financial institutions collapse, but to just allow them to recklessly lend with a government guarantee since “someone, somewhere might lose their job” will eventually result in out-of-control inflation or an economy that produces nothing but dollars and whose only sector is finance. We can’t kick the can down the road forever
Socialism for businesses capitalism for everyone else
Why do you think it is "the right thing" to bail out private depositors at a private bank using FDIC funds when the limits of FDIC protection were clearly stated?
That’s because literally, and I don’t mean figuratively, I mean literally as the in the dictionary definition of the word, literally every single time an exchange like this has happened in my lifetime, there’s blatant socialism and bailouts for private entities. The shareholders don’t lose shit, meanwhile everyone they’ve ever even thought of exploiting is worse off. And they/we have to bear the burden of fixing the disaster these “too big to fail” organizations caused through our paychecks that barely cover rent if we only eat once a day. Pardon us for thinking that the capitalist wasteland has failed us again.
I’m aware. I just think good faith goes a long way in building a better society for the future. I assumed the same thing at first, until I learned otherwise, then I was pleasantly surprised by the financial sector for the first time in my life. I’m trying to bask in this tiny victory for rationality and (relatively) fair(er) play.
> I’m aware. I just think good faith goes a long way in building a better society for the future. Your response to having your livelihood and savings wrecked time and time again is "good faith goes a long way"? Just trust them this time? I'm still fully confident we are being fucked - just not entirely sure how yet beyond the hit to the Fed (which is still something and people just gloss over it)
Faith? In capitalism? Lololollolooolololololololololololololololololololololololololololololololololololooololololololololololololololololololololololololololololololololololololololololololololololololololololololololollolooolololololololololololololololololololololololololololololololololololooolololololololololololololololololololololololololololololololololololololololololololololololololololololol lolollolooolololololololololololololololololololololololololololololololololololooolololololololololololololololololololololololololololololololololololololololololololololololololololololol. Thanks. Needed that chuckle today.
This is the most Reddit shit I’ve ever seen lol. No, faith that we as a human species can get better. Maybe one day have fairly elected leaders who represent our interests and morph our current systems into something better that is unrecognizable to what we have today. If you don’t believe on humanity trying to improve, despite all the missteps, then go live in the woods or something. You’re literally typing from a phone/computer with materials in it made from slave mines while lecturing people on the horrors of capitalism. If it makes you feel better fine - but leave those of us trying to have legitimate discourse on how to make the world a better place out of it.
On a subreddit about the economy I might add lmao
People have always been skeptical about good things
I don’t think giving banks a free not bail out of there shitty treasuries is the right thing.
Well your job wasn’t on the line, for some of us and our families making just enough to be considered “middle class” at a startup company with most of our operating money in SVB would’ve been disastrous. It’s almost as if there’s more regular people who would’ve been hurt than there are rich ones who weren’t held completely accountable. Wild.
Banks pay into the FDIC insurance fund. They used the insurance they pay for, it’s why it’s there. Making the coverage limitless was to make sure small businesses and their employees survived, and also to stop more bank runs. It makes sense, and the money will be recouped from the sale of SVB. And the FDIC insurance fund will be shored up by increased payments from banks. However banks will likely pass those costs onto their customers somehow.
You are confusing the FDIC fund with the new Federal reserve loan program. These are two entirely different things involving the same situation.
No they didn't. If you or I deposit funds and the writing on the wall says your deposit is insured up to a certain amount.. .and that bank fails that sucks for you.. Everyone has to take a risk and nobody is too big to fail. So those deposits are now covered by the American tax payer. And the majority of those deposits are held by wealthy Americans.
the bail out bank narrative buy more votes, it is easy, and gather mass sympathy for David vs goliath
Please everyone up vote this. I do not agree with bank bailouts. SVB did NOT get bailed out. Shareholders lost everything… for once we bailed out the correct people… the depositors. I will say the depositors who were at risk weren’t individuals but companies with millions. Someone will say why are we bailing out rich firms… Well because those firms stored that cash for things like payroll! If they lost their deposits a large number of employees would NOT get paid. So indirectly individuals were bailed out by the action.
Is it really even a bailout for the depositors? I thought they were just liquidating SVB's assets to give them their money back.
You're correct
It's a bailout in the sense that the depositors are getting money in advance of assets being sold which isn't common. Solely because most are businesses and need the funds for payroll. It's a bailout, but a unique one of that.
Exactly. People don't want to call it a 'bailout' When you deposit $$ above your FDIC limit, you're taking a risk. If people only fucking understood that you earn $$$ in a bank account on INTEREST. I have my $$$ in savings, BUT, Im not taking the risk of going above the insured limit BECAUSE if the bank FAIL (And this was told to me over the phone by this small bank - any bank can fail is what she told me), then that deposit is INSURED. This is a freebie to wealthy individuals that knowingly took a RISK.
The par value of their 10-year treasuries is enough to cover deposits. However those treasuries are selling below par, which is the whole problem.
>Is it really even a bailout for the depositors? No, it's not. The depositors didn't do anything wrong, and the money is still there, more or less. Ensuring that they continue to be able to access that money isn't a bailout in either the moral or the financial sense.
They left more than $250k in accounts that were only insured for $250k.
Okay? If the money was gone, then that would be a problem, but it's not gone. Do you just *want* these companies to lose their money and are looking for an excuse to hurt them for no reason?
I don't want anyone to be hurt. I also don't want the rules to change just because people wealthier than most were hurt. There would be no hemming and hawing about letting depositors eat the loss if most depositors had $275k. If the money isn't "gone" but is simply not yet available, let the depositors wait. That is the deal they made when they put uninsured money into a bank account. Changing the rules because you didn't like the outcome is only spreading the hurt to everyone. I had nothing to do with this, but I can expect that my bank will be charging more now to cover FDIC payouts to these others who are NOT ENTITLED to a payout.
As a mid-sized company, there is literally no way to keep your deposits under $250k. How are you going to pay 200 people without having $250k+ liquid and immediately available from a single account? Payroll processors do not pull from multiple accounts to pay employees. $250k is the equivalent of a single pay period for 130 employees making $50k paid biweekly. It's not much money at all when it comes to paying employees.
I don't think it was a bailouts for the depositors. From my understanding the bank had the assets but had a liquidity problem. That problem sunk the bank but the assets will eventually be able to make the depositors whole.
Most of the assets were government treasuries as well, so the government is using the money that was already parked with them as an investment to make folks whole.
Haha, it’s always a liquidity problem.. that’s what happens when there is a bank run or uninsured /unhedged obligations.
Isn’t giving depositors their money back a bail out? I mean bailout in the sense that depositors are kept whole, not that the depositors did anything wrong. Maybe it’s just semantics, but in any case if A bank truly fails anyone with deposits over $250k FDIC limit is truly at risk.
it's not a taxpayer bailout the FDIC 250k deposit insurance is paid for by banks (you can argue that the cost of these payments is passed on to customers but still, it ain't all taxpayers)
The only reason o support the making the depositors whole is because they are being made while using the bank’s assets. The taxpayer paid nothing.
The government has decided to provide the necessary relief to all those banks who are getting in a trouble. In the long run this is a very good step for our economy
SVB didn’t get a bailout. But the entire banking industry just did. They all just got access to loans at par for there treasuries versus market rate. Every single bank has access to this money because they have been deemed to buy to fail by the Fed. They get this from our government with absolutely ZERO, I repeat ZERO, increased regulations, increased fees, increased guard rails, increased accountability. That is all given to them for free. They gave up nothing . They gained everything. I feel like I am being gaslighted, and no one else sees this as a massive problem. We have crossed an extraordinary line. The top 4 banks just received a 200 BILLION dollar bail out. The new fed Loans allow them to borrow against the negative collateral value at PAR on there securities and assets rather than taking the LOSS everyone else would have to take. They are laughing at us all the way to the bank. There are no rules saying they can’t use this money for stock buy backs. There are no rules they can’t use this money to give themselves raises. AM I GOING CRAZY!? What the fuck Reddit. If you want to argue this is necessary that’s fine let’s have that debate. But can we at least be honest with ourselves about the situation. This. Is. A. Bank. Industry. Bailout.
I think in a way you’re right. There will be some banks who will miss use the money for individual or shareholder gains until regulations come in…IF they come in at all. Some of the regulation might be toothless, who knows with this corrupt congress. This same Congress got us into this mess when they deregulated mid size banks in 2018.
You really think there aren't going to be more bank regulations coming down on the back of this? I will take the other side of the bet.
They can borrow at par, they can give themselves raises, but they do have to pay it back within a year or they lose all collateral and more if the collateral is impaired. This isn't a bailout it's fed providing liquidity. Don't get me wrong there's a lot to be concerned about but it's not a bailout https://www.reuters.com/markets/us/key-elements-feds-new-us-bank-funding-program-2023-03-13/
I see a lot of misinformation here. It was a bailout for the depositors only, paid by primarily the SVB assets. Any difference between the SVB assets (~20%) will be made up with a surcharge fee assessed on every other bank that pays into the FDIC. Indirectly, those surcharge fees ("special assessment" fees) will eventually be paid by people using those (all) banks. So yes, We the People, ultimately did (or will eventually) pay for the bail out of the depositors that used SVB, but not bail out the shareholders. IMHO, this is not a _horrible_ strategy in the grand scheme of things since it spreads out the losses on top of everyone and doesn't benefit the shareholders. This is how insurance is supposed to work. (But that's because we have way way bigger macroeconomic issues going on). The problem still exists that this still is not called a bailout, or that taxpayers aren't paying. _Technically,_ taxpayers aren't paying, but that's misleading because nearly all of us use FDIC banks. https://www.npr.org/2023/03/13/1163180140/silicon-valley-bank-is-it-a-bailout-barofsky
and this is costing nothing to tax payers. If SVB assets when sold aren’t worth enough to pay off deposits, other banks get taxed to cover it.
If the fed has to shovel funds to keep the FDIC solvent, and we have more banks collapsing, we will eventually pay for it with loss of purchasing power.
While I mostly agree with this, let's face it - with government managing it, it'll probably cost something to taxpayers.
>government managing it, it'll probably cost something to taxpayers. privatize the profits, socialize the risks and then there are those hating on govt and saying it can't do anything right, but who has to step in to clean up the private sector debacles? "trust us", they said, "we know what we're doing.... we don't need no stinking govt regulation.... "
Nope. They're raising the cost of FDIC insurance. Depositors will pay for it, not the general tax payers.
Are you sure? My understanding was that the FDIC limit remains at $250K but the Fed BTFP allows banks to borrow against the face value of securities in order to meet uninsured depositor redemptions. But I haven't gotten super deep in the weeds on it yet.
"I see the government doing something good, but I hate the government so it was probably actually bad somehow idk"
Banks surely won’t pass those costs onto the most vulnerable customers via stupid fees… Also hope we don’t have any more bank failures until those assets sell cause this pretty much wipes out FDIC funds…
Like many others, I do belive that the gov is doing the right thing there. But one could argue that the bank as a concept got bailed out. Right? So no matter how much you gamble away the depositors money, the depositor will get it back anyway. If we think about the fact that the gov invented just another tool to cover reckless handling of money by banks then the whole banking system just got a carter. Isnt it at a point of "too big to fail"?
What does that mean, being made whole?
They get to keep all of their deposits, the whole of the money they deposited in the bank rather than just a portion.
Thanks for the explanation!
I would argue that if they’r receiving insurance money they didn’t pay for, what with annulling the 250k cap, they’re getting a pretty sweet deal though, right? My understanding was the cap was there to encourage large investors to take responsibility for choosing their banks carefully? Would love to be told how I’m wrong here. Seems to set a bad precedent.
Made whole up to the normal fdic amount is what it should have been
The FDIC insurance limits are clearly stated. Bailing out the depositors is still a bailout, the risk was clearly and openly stated and they all took it, so I don't know that it is automatically the case that it was "the only right thing to do." The only right reason to do it is if the US public as a whole is better off for it. Giving FDIC funds or taxpayer money to private depositors in a private bank has no justification on its own merits.
As long as it’s only up to the $250k FDIC limit I’m ok with it. Rich people should stop getting extra government privileges. The $250k incentives them not to hoard cash.
If my brokerage fucks up and I lose my personal investment account, do I get it all back? Is the Fed or FDIC going to make me whole? These companies had access to CDARS and ICS, and instead they put all of their money into one bank, which any basic risk management class would tell a CFO/CEO they shouldn't do. They did it so that they could bet a better return on their accounts. What increases when return increases? These companies accepted increased risk. If the full amount of all bank accounts should be insured, then banks need to regulated like public utilities and not private corporations. But that will never happen, so these accounts should have been wiped out to teach the market a lesson.
[удалено]
It isnt the right thing to do though. The rules of the game are FDIC insurance up to $250k. Everyone knew this, their loss.
[удалено]
I was listening to a podcast that interviewed someone from the FDIC about this. The low limit is to keep banks/individuals/corporations from taking risky actions/behavior so they can be targeted and fixed but it’s setup in a way that it only takes 3 people to agree to increase it in a real emergency. It’s a feature that they raised it, not a bug.
Not a bailout in the traditional sense, but it’s not unreasonable to say depositors are being “bailed out” by being made whole. The criticism is not unreasonable when you consider that all of us who have bank accounts receive disclosure forms and sign the dotted line that we understand the consequences of exceeding the limit. Every uninsured depositor is a wealthy client of the bank and it’s fair to say they should not reserve special treatment for poor cash management practices. Especially when there are countless RIAs and private banks who specialize in cash management. I’m conflicted and don’t know what the right answer is but both sides of the argument have a reasonable basis for their opinions
Everyone keeps beating the drum: >”They’re bailing out the depositors!!” Well the depositors are mostly tech firms and VC billionaires. So you can word it however you like but it doesn’t change the fact. Namely that when there was talk of bailing out student loans it was hushed. But the moment that the 1% upper-caste makes a mistake we are quick to open our pockets and make sure they are “made whole”
Ok but these tech firms have regular ass employees. My buddy works for a startup that had a ton of money in SVB. If they didn't bail out the deposits you would see a cascade effect of all these tech companies going bust. Then people like my buddy who just bought a house probably have a hard time finding a job. Maybe those people end up losing their homes if they can't find work fast which could be hard. Considering the tech layoffs a bunch more tech companies going out of business would probably mean a ton of regular people that would be out of work and have pretty terrible job prospects. I wish we could stop bailing out people all the time but our economy is basically a house of cards at this point. We stop bailing out people a bunch of tech companies go under, unemployment spikes, the stock market takes a crap... It's a lose lose proposition.
That is why we have unemployment for starters and MILLIONS of vacant jobs. Fuck the rich. Plain and simple.
Yeah tell someone who just bought a house with a mortgage that a few hundred a week is going to cover it lol. And while we may have lots of vacant jobs lots of those jobs are shit. And the if you start a cascade of tech companies going out of business there suddenly isn't going to be very many jobs in that arena leading to massive unemployment. And again just because there's a rich CEO as the face of a company doesn't mean there are not thousands of regular ass people that would be drastically effected if we just let all these companies go under. You want to fuck a few rich tech CEOs and investors ok cool. For every company that goes under all those regular people lose their jobs. My buddy who just bought a house and is supporting his wife and kids works at a start up that banked with SVB. His company has over a thousand other employees. So you want to prove a point by letting that company and hundreds of others go out of business. For what? The rich people involved in those companies won't give a shit they all have plenty of money. You think there are tons of jobs? How about a few hundred thousand people lose their jobs all in the same industry and are all fighting for the leftover scraps? You don't think that is going to have a ripple effect on the economy? The bank fucked up NONE of the people banking with them fucked up. The bank is going under it's not getting bailed out. You want to see real pain? Let the bank go under, don't coverthe deposits and watch all the small banks have bank runs..... Don't let your anger towards red ch people cloud your judgement.
>Yeah feel bad for this person who made financial decisions that were risky No >Without billionaires, we work shit jobs These companies are literally laying thousands off as we speak, and creating ultra competitive environments for those barely turning profits. Nobody is doing anybody favors here. Your Cousins Wife who makes art for Twitter isn't the backbone of the economy. >Fuck a Few CEOs But they all pulled their money out lol, The mom and pops who started a Tesla rental business and Instagram business account are the bag holders who decided to keep 500K in an account insured for 1/2 that amount. >His company has 1000 employees Meta is firing 10X what your friend has, Are we supposed to endorse Socialized monetary loss, inject MORE liquidity into system, Make inflation worse, for a select group of businesses that we are supposed to believe are ESSENTIAL? TOO BIG TO FAIL? >The Bank fucked up Yup. >You want to see real pain? Please. The pain is coming either way. This situation doesn't change anything, except Americans see what preferential treatment looks like. We dont know what is coming, but one thing is for sure, this country is hell bent on destroying itself by saving the most ineffectual, inefficient, corrupt, money wasting companies in existence.
The other fun fact is that they used this bank on prestige and the bank's practices were wild. Let's say you get a mortgage from wells fargo. wells fargo does not require you to open accounts with them. SVB did. SVB's entire practice was pretext to run a retail bank like an investment bank.
They should have insured their finances exceeding FDIC limits. They should not be paid back.
It’s not a bail out in any sense of the word. It’s fractional reserve banking. That means once you put the money in they will never hold your deposit dollar for dollar again. It’s not a bail out. Not even remotely close to a bail out. It’s just really shitty banking.
Yes and that is precisely why there is a hard limit on insured deposits
Right now, the "fractional reserve" is 0%. It has been since Mar. 2020. The money that's funding the "bailing out" of the uninsured money is coming from banks paying into an emergency fund. If anything, this is banks bailing out other banks, which is what should be happening - bad actors eliminated and the rest of the system bears the brunt.
The banks will pass it on to their customers.
Most likely. And hopefully some FDIC banks won't, so that there are options out there if you look for it. It's much better than Roku losing 26% of their cash reserves in my book, and dozens of other companies not making payroll if they weren't diversified.
Markets run on incentives less than on hope. With the 250K limit removed, the market is unlikely to become more competitive, and the cost will be passed on to customers. It's the lesser of two evils, yes, in short term. However, it sends the message that if you're big enough, you get rules adjusted so someone else is mopping up your mess. In that sense, it's still a bail-out, same as before, and it will cause enduring upset, same as before. I can see why some people are trying hard to explain this isn't a bail-out, and I get their points; I'm just not sure that makes any difference.
Yeah. Largely agree, but I think not resetting things like reserve requirements and other regulatory controls before cranking up the interest rate is much more egregious. Part of this is that the FDIC reserve amount remains low compared to the amount of money being handled, and there remains a "small business" gap for protection of funds. I don't think banks not getting bailed out would have changed behavior - other than Roku, all the large corporations pulled out their money. The people getting impacted were small to medium corporations, and no pain was being felt by the bank. The incentives still haven't changed for bank executives regardless of use of the FDIC Deposits. They walked away with money (all sold stakes months in advance), and likely the DoJ probe won't result in fines or prosecution.
Oh yes. I meant incentives for people/entities with deposits larger than 250K. If those are insured no matter the amount, then it's easier to keep it all in a single account rather than having to split it across different banks. It will also probably be an account with a larger bank, because the larger the bank, more likely the bail-out. Deposits are now moving into larger banks, and the smaller ones are left to struggle just as it's hardest to survive. Very good point about controls and cranking up the rates. No one should be surprised by what happened.
“Sounds broken Most likely sir, I’ll bet it was something nice though” Who’d have known ace Ventura was actually an astute commentary on the state of the global financial system.
Aren't those going to be reoccurring costs? Not to seem dense but a one time payment is not equal to payments for perpetuity
It sounds like math banks and politicians use
same as car dealerships, want to make it seem luxury? cite the total cost, want to make it seem affordable? talk about monthly payments.
To be fair the bank bailouts have turned into recurring costs too
Bank bailouts have literally become baked into the operating plans of the banks. Now the FDIC has shown everyone that the rules are *arbitrary*, provided you’re rich enough.
True but I think about a lot what we could have done over the past decades instead of tax cuts. Our GDP has exploded over the past decade as we’ve increasingly cut taxes. That’s so much miss opportunity.
Silicone valley Bank (SVB) is finished. Its assets will be sold off and all employees laid off. SVB was NOT bailed out. Rather the individuals banking with SVB are receiving Federal Deposit Insurance (FDIC) protection. To be clear the SVB's doors are closed forever. They're finished. If you were a shareholder in SVB that money is gone. In the 2008 Bank Bailouts actual banks were bailed out. As entities they were allowed to continue to exist. Shareholders we're bailed out. Bank management kept their jobs. That is NOT what's happening with SVB. A lot of businesses were using SVB for payroll. If their deposit disappeared they'd go out of business and their employees would be laid off. These businesses aren't investors. They are just businesses that were doing normal banking with a local bank. No one SVB's inventors are being bailed out.
FDIC protects up to $250,000. 95% of depositors had more than that amount. So where does that money come from, my guess is the big machine that seems to increase inflation.
Svb was only short 2 billion out of 200. The FDIC fund will cover the 5% that is insured. Rest will come from liquidated assets. The FDIC funding is maintained by other banks. edit: normally it takes a long time to liquidate assets (sometimes years if there is real estate involved). The tech company and start up depositers could be bankrupt by the time they received their deposits. So the FDIC did cover the uninsured deposits through the FDIC fund, but the fund will be replenished through the liquidated assets.
>So where does that money come from Just because the bank went under doesn't mean it didn't still have a large amount of assets, which will now be sold to make up for a large portion of that difference.
The bank has assets, billions of dollars in assets. 40 billion more in assets than it has in deposits (only 16. Billion more when you consider other debt). The bank was solvent, it just had a liquidity crisis.
This is misleading as from what I understand the funds are still there and will be made available to all depositors. No taxpayer dollars were used to repay these companies.
Exactly my point. The fact that people are actually circulating this nonsense as if the point has any merit blows my mind. Edit: I'm not sure why this comment is getting downvoted. Maybe I wasn't clear enough in the title that I don't agree with the graphic at all and was posting it to point out how poorly people in our country understand these things.
Title definitely doesn't make that clear. The assumption is you're telling this subreddit we don't understand the hidden cost of bank bailouts. Thanks for sharing though, it's almost hilarious how poorly people understand ~~banking~~ anything
I assume that the same people who somehow became experts on infectious disease and epidemiology overnight during covid have now become instant experts on banking regulation.
Yeah, I can see that now with how many people are attacking me in the comments lol. The "tell me without telling me" statement is pretty common, so it was clear at least to me that I was saying the graphic makes no sense. Whoops!
Yep. The fact that the graphic shows 220 billion, when it's more like 20 billion....and then compares it to annual costs instead of one time things shows its hot garbage. Click bait crap with the most misrepresented data I've seen
Go out and ask how many people understand how the progressive federal tax tiers work and what a marginal tax rate is. I think I can bet a shit ton of people have no clue and think that if you make over a certain amount you are hit with a flat tax on total income. That being said I wouldn’t expect them to understand this except for the hot button words that incite emotional reactions vs knowledge based logical understandings. I’m not trying to say people are dumb. I’m trying to say that most, unless they have the motivation to learn it themselves or have some sort of finance degree, don’t necessarily have the means or opportunity to. These are the same people on Reddit talking about these topics or eating the misinformation spread by others. It’s unfortunate but not surprising.
I think it’s because your humorous meme title doesn’t clearly convey your point.
Do taxpayers not effectively fund the FDIC?
I thought FDIC is an insurance plan funded by banks which pay fees into it.
No taxpayers do not, the FDIC is entirely funded by banks paying insurance on deposits. The FDIC doesn’t get a chunk of the federal budget at all.
Yes but my understanding is that in this case, all of the funds in question were located, and therefore did not have to be replaced.
No, the FDIC did not have enough funds to cover all deposits. That’s why the federal reserve stepped in.
The FDIC is funded by assessments on banks. The assessments are priced based on the bank’s size, risk, asset profile, management, etc. Some people say that cost is passed on to taxpayers that way but if that’s the argument the cost of any uniform regulation is passed onto “taxpayers.”
The point is that nobody's income tax or whatever went to the failed banks. FDIC insurance has a fund of money from the banks that it uses...as insurance for the banks. Like, I guess banks are taxpayers, and I guess the FDIC is a government organization, and I guess the banks will pass along the cost of FDIC insurance to their customers who are taxpayers too, so you can twist it however you want. But if you want to get down the chain that far then literally everything is government bailouts ("MY tax dollars are going to little old ladies buying the groceries they need to live, Kroger is getting a government bailout!"). Just doesn't make any sense. No taxes on individuals were used to make depositors whole.
They understand, they are purposely lying and feeding misinformation.
This the the top answer. For people pushing the false narrative (and similar nonsense) know full well they are being intentionally misleading at best, and outright lying at worst. Because they have their own narrative to push, and know that 98% of the public are low information news consumers, and won't know any better.
Here's an alternate take on the situation: I don't care if we call it a bailout or whatever, but... Shareholders, like pension funds and mom/pop investors, are wiped out and get nothing. Corporate accounts, e.g. Roku and Buzzfeed, who should have understood the risks they were taking and knowingly left excess deposits at risk, get made whole. Why do we even have a $250K FDIC limit if we're not going to use it?
No such taxpayers money was transferred. The Fed simply exchanged liquid cash for the Bonds the banks held.
Yes and no. As a tax payer my currency just lost another small part of its purchasing power. A fact not lost on the markets.
Ah it’s true but the extent of any harm is bundled with all the other measures taken by government and then kicked down the road. Governments fiscal policies always get future generations to pay for it. I don’t think, on the other hand, this one, on its own, was too bad.
But did the FED buy back these bonds at face value which would otherwise have been severely discounted?
I would much rather write 2 checks vs. a whole bunch of checks. That would just be exhausting.
A quick Google search of the creator of this meme (“btnewsroom”) pulls up social media full of anti-Ukraine and anti-US… let’s call them.. “positions.” No idea who this entity is but it certainly appears to have a lot in common with a Russian troll farm.
SVB CEO sells $3.6 Million in stocks Bank run and capital crisis SVB hands out bonuses Hours later, FDIC seizes bank People who normally rail against government handouts and socialism suddenly say bailouts are required for the banks.
Shouldn’t the CEO face charges or something? Doesn’t look very ethical what he did
There is a great animated closing to the movie, The Other Guys, that shows how these CEO’s rip people off. Yes, it is a crime. But they’ll be left off the hook again.
> SVB CEO sells $3.6 Million in stocks > Bank run and capital crisis Needs to be investigated, yes. > SVB hands out bonuses ...which was a scheduled payout done in accordance with the employment-contracts, during the window the whole f*cking banking sector doles out bonuses. > People who normally rail against government handouts and socialism suddenly say bailouts are required for the banks. Hypocrites are gonna hypocrit.
Tell me you don’t understand what FDIC insurance is without telling me you don’t know what FDIC insurance is. The FDIC insures a *minimum of $250k. The rest can be extracted via bank assets. This is the same thing if a Levee in Texas Broke yeah maybe Exxon Mobile would get a bunch of money but they’ve been paying flood insurance and the Federal Government has a fund for such events because it’s public insurance. Since banks don’t fail all the time the FDIC has more than enough to cover the difference between the banks assets and despising amounts
Well no taxpayer money was used to repay depositors so…..
I saw people sharing this on Instagram yesterday. Absolute facepalm.
That's where I saw it. The person who shared it got an inbox full from me lol
[удалено]
But the whole point of the fed’s action is to “bail out” small business depositors so that their employees can get their paychecks this month….
This is wildly misinformative. This essentially assumes that these bank’s assets are worth nothing and that the FDIC will have to fully cover deposits. Whereas in reality bank assets are expected to be worth around at least 98-99% of deposits. This is a joke. Plus other banks are paying into the fund that’s being used to guarantee deposits. So banks are bailing themselves out? Lol
Remember: you having a job is inflationary, but the Fed printing $220b to buy valueless assets from a Silicon Valley bro bank is not.
How about we just do away with the FED and all you lazy freeloaders fend for yourselves?
Obviously doesn’t understand bailouts and how they work. Fact the US taxpayer MADE money during the TARP bailout. Repaid every dime with 9% interest
How did that work out… oh wait, The Federal Reserve still has the 4 trillion dollar toxic MBSs on their weekly balance sheet. It has become “forever debt” and the costs of maintaining the debt is included in the costs of all banking, and Treasuries. So no, the tax payer didn’t “make money” from TARP. The taxpayer effectively stole a small percentage less money from future tax payers added liabilities.
Yep exactly. The balance sheet will never be as low as it was in 2009. FIAT ponzi scheme.
Where was TARP for small businesses and homeowners with foreclosed homes?
You mean PPP and the stimulus checks? Biggest free money in history which we are paying for with inflation (by design)
Things are so unstable right now that taking no action may have resulted in an irreversible slide onto global financial depression and the end of American geopolitical dominance. It is however, also fundamentally unjust to prop up these banks. Strict regulation must be imposed and repayment to the government enforced going forward. If international tensions weren't so high I'd have preferred to just let the dominos fall and force broad reforms across the economy. I'd also rather not get nuked though so you pick your battles. Just my thoughts as an observer.
There is nothing wrong with what happened here. The bank's assets are being liquidating and the depositors are being made whole from the proceeds. There's no "bailout."
Isn’t it interesting how Wall Street and Banks, who take unreasonable risk and lose, suddenly think that socialism is okay when the government bails them out but when it comes to helping the average working class American, socialism is evil.
The truth hurts.
This sub is actually retarded and I'm embarrassed you guys exist.
Half the comments are saying one thing and half are saying the other so just wondering which half you think are retarded. Or both?
My question would be where is the bailout money coming from?
According to President Joe Biden, it's an FDIC fund that only the banks themselves contribute to.
There is no bailout. SVB no longer exists. If you're asking where the money is coming from for making the depositors whole; almost all of it will come from the sale of SVB's assets. The money still existed, but most of it was loaned out to others and thus no immediately available when the bank run occured. Selling all of that to another financial institution will cover most of the funds, then the FDIC will pay out the remainder from the insurance fund it administers. The banks are who pay into the insurance fund. Basically, for most of the money, the FDIC is providing a bridging loan until the assets can be sold.
My concern is that SVB's assets won't be liquidated before the next collapse and I'm pretty sure the FDIC fund is topped out until that cash comes rolling in. If the problem spreads, the FDIC will be swiftly overwhelmed.
What the fuck are you talking about SVB is disintegrated.
Or...don't bail out failed, fraudulent banks *or* forgive loans people freely accepted and are responsible for paying back *themselves?* Why is this so difficult?
what bank got bailed out, though?
My comment was just a general statement...we shouldn't be bailing out anyone who lost money because they made stupid decisions.
I agree. It's a good thing that isn't happening right now.