U.S. regulators say Silicon Valley Bank customers will be made whole

[rmsmith 1]

"In a joint statement Sunday, Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and Federal Deposit Insurance Corporation Chairman Martin J. Gruenberg said the FDIC will make SVB and Signature’s customers whole. By guaranteeing all deposits – even the uninsured money that customers kept with the failed banks – the government aimed to prevent more bank runs and to help companies that deposited large sums with the banks to continue to make payroll and fund their operations. The Fed will also make additional funding available for eligible financial institutions to prevent runs on similar banks in the future."

https://www.cnn.com/2023/03/12/investing/svb-customer-bailout/index.html

Edited March 13, 2023 by rmsmith

[wmw999 2,545]

Im not sure I agree with this. If you have money you know is uninsured, then it’s uninsured. Kind of like the second or third time ou rebuild your house after it floods. 

Wendy P. 

[kallend 2,108]

So it's OK to bail out multi-millionaire investors from bad decisions, but forgiving a student loan is socialism that will destroy the country.

 

"Where you stand depends upon where you sit"; Miles' Law.

[Phil1111 1,149]

President Biden's statement on this matter today is right on the money.

The only thing he missed is that the banking executives leave without pensions, bonuses paid within the last 12 months. Or any other type of golden parachute

[brenthutch 444]

1 minute ago, Phil1111 said:

President Biden's statement on this matter today is right on the money.

The only thing he missed is that the banking executives leave without pensions, bonuses paid within the last 12 months. Or any other type of golden parachute

What about the three million dollars of stock the CEO unloaded the day before the collapse?

[Phil1111 1,149]

9 minutes ago, brenthutch said:

What about the three million dollars of stock the CEO unloaded the day before the collapse?

That would be three years in the slammer and a 43 million fine plus interest. I know that the GOP would want leniency and compassion for him. But what can I say. I'm a bit of a hard nose.

AFAIK from CNBC reporting CVB just got caught by rising Fed rates. There is no reporting of improper conduct. I haven't heard any reporting on the Signature bank failure.

[ryoder 1,590]

Heather Cox Richardson has a good explanation of why the SVB failed:

https://heathercoxrichardson.substack.com/p/march-12-2023

So, rather than balancing deposits with loans that fluctuate with interest rates and thus keep a bank on an even keel, SVB’s directors took a gamble that the Federal Reserve would not raise interest rates. They invested in long-term Treasury bonds that paid better interest rates than short-term securities. But when, in fact, interest rates went up, the value of those long-term bonds sank.  

Edited March 13, 2023 by ryoder

[brenthutch 444]

49 minutes ago, Phil1111 said:

That would be three years in the slammer and a 43 million fine plus interest. I know that the GOP would want leniency and compassion for him. But what can I say. I'm a bit of a hard nose.

AFAIK from CNBC reporting CVB just got caught by rising Fed rates. There is no reporting of improper conduct. I haven't heard any reporting on the Signature bank failure.

“the head of risk management at SVB spent considerable time spearheading multiple “woke” LGBTQ+ programs, including a “safe space” for coming out stories, as the firm catapulted toward collapse.

“These banks are badly run because everybody is focused on diversity and all of the woke issues and not concentrating on the one thing they should, which is, shareholder returns,”

Get Woke Go Broke! (And get bailed out by Biden and the Democrats)

This dovetails nicely with my EGS thread 

Edited March 13, 2023 by brenthutch

[SethInMI 174]

1 hour ago, wmw999 said:

Im not sure I agree with this. If you have money you know is uninsured, then it’s uninsured. Kind of like the second or third time ou rebuild your house after it floods. 

Wendy P. 

They basically pushed the $250k of automatic depositor insurance up to "unlimited", because the risk of many smaller banks going under in this difficult situation, and they are going to use the same bank-funded insurance fund to cover the shortfall.

I can see their point, with the rise in interest rates banks are having a lot of trouble so this is a problem not entirely of their own making.

[airdvr 210]

1 hour ago, kallend said:

So it's OK to bail out multi-millionaire investors from bad decisions, but forgiving a student loan is socialism that will destroy the country.

Christ's sakes.  Are we really doing this again?  

[ryoder 1,590]

HSBC to acquire UK branch of SVB for £1 (~$1.20 USD).

https://www.londonstockexchange.com/news-article/HSBA/hsbc-acquires-silicon-valley-bank-uk/15871682

[SkyDekker 1,465]

1 hour ago, Phil1111 said:

AFAIK from CNBC reporting CVB just got caught by rising Fed rates. There is no reporting of improper conduct. I haven't heard any reporting on the Signature bank failure.

Not having rate hedges in place when doing the business they are in is almost criminal.

[SkyDekker 1,465]

48 minutes ago, SethInMI said:

They basically pushed the $250k of automatic depositor insurance up to "unlimited", because the risk of many smaller banks going under in this difficult situation, and they are going to use the same bank-funded insurance fund to cover the shortfall.

I can see their point, with the rise in interest rates banks are having a lot of trouble so this is a problem not entirely of their own making.

My guess is that part of the motivation behind the decision is to instill some calm and try prevent further bank runs.

[Phil1111 1,149]

1 hour ago, brenthutch said:

“the head of risk management at SVB spent considerable time spearheading multiple “woke” LGBTQ+ programs, including a “safe space” for coming out stories, as the firm catapulted toward collapse.

“These banks are badly run because everybody is focused on diversity and all of the woke issues and not concentrating on the one thing they should, which is, shareholder returns,”

Get Woke Go Broke! (And get bailed out by Biden and the Democrats)

This dovetails nicely with my EGS thread 

When you get your MBA from trump U and FOX U. You come up with ideas like that. Conveniently forgetting that it was trump that just gutted Dodd-Frank.

"Mr. Trump’s actions on Friday constitute an extensive effort to loosen regulations on banks and other major financial companies, even though the president campaigned as a champion of working Americans and as a critic of Wall Street elites....“We expect to be cutting a lot out of Dodd-Frank, because frankly, I have so many people, friends of mine that had nice businesses, they can’t borrow money,” Mr. Trump said “They just can’t get any money because the banks just won’t let them borrow it because of the rules and regulations in Dodd-Frank.”

Trump blamed over Silicon Valley Bank collapse for watering down financial regulations

8 minutes ago, SkyDekker said:

Not having rate hedges in place when doing the business they are in is almost criminal.

From NYT "Trump Moves to Roll Back Obama-Era Financial Regulations" in the US GOP president, lawmakers, etc. protect big business. So ideas that "criminal" liabilities to the rich on Wall street doesn't apply, by law. "Mr. Trump signed a directive aimed at the Dodd-Frank Act, crafted by the Obama administration and passed by Congress in response to the 2008 meltdown. He also signed a memorandum that paves the way for reversing a policy, known as the fiduciary rule, that requires brokers to act in a client’s best interest, rather than seek the highest profits for themselves,"

[airdvr 210]

Ummm...this was a bi-partisan bill.

[rmsmith 1]

3 hours ago, ryoder said:

Heather Cox Richardson has a good explanation of why the SVB failed:

https://heathercoxrichardson.substack.com/p/march-12-2023

So, rather than balancing deposits with loans that fluctuate with interest rates and thus keep a bank on an even keel, SVB’s directors took a gamble that the Federal Reserve would not raise interest rates. They invested in long-term Treasury bonds that paid better interest rates than short-term securities. But when, in fact, interest rates went up, the value of those long-term bonds sank.  

Good thing that the fed has been performing those Dodd-Frank bank stress tests!

[Phil1111 1,149]

1 hour ago, airdvr said:

Ummm...this was a bi-partisan bill.

Somewhat true. I'll give you credit for that.

"Seventeen Senate Democrats voted with Republicans to ease regulations on some banks.

• Most of those Democrats face re-election this year, and seven are running in states Trump won.?

A more complete story about the rollback of regulations. Which was passed by the GOP in a House vote 258-159.

All of which would be more reasons why the Fed has to be independent. If politicians can't have the discipline to control spending. The Fed will.

Edited March 13, 2023 by Phil1111

[kallend 2,108]

2 hours ago, airdvr said:

Ummm...this was a bi-partisan bill.

Lame excuses for Trumpism don't become you.

 

Bail out the wealthy, but not people struggling to pay off student loans.  In fact, make it almost impossible even to go bankrupt due to student loan problems, while people like your hero can bankrupt a casino.

[airdvr 210]

1 hour ago, kallend said:

Lame excuses for Trumpism don't become you.

 

Bail out the wealthy, but not people struggling to pay off student loans.  In fact, make it almost impossible even to go bankrupt due to student loan problems, while people like your hero can bankrupt a casino.

C'mon John.  I'm not making excuses for Trump any more than I did for Bush in 2008.  There's a bunch of players in on this one and they all couldn't give a flying fuck about you and me.

[jakee 1,564]

On 3/13/2023 at 2:29 PM, brenthutch said:

“the head of risk management at SVB spent considerable time spearheading multiple “woke” LGBTQ+ programs, including a “safe space” for coming out stories, as the firm catapulted toward collapse.

“These banks are badly run because everybody is focused on diversity and all of the woke issues and not concentrating on the one thing they should, which is, shareholder returns,”

Get Woke Go Broke! (And get bailed out by Biden and the Democrats)

This dovetails nicely with my EGS thread 

Not really. The head of risk management you’re referencing was not actually the ‘head of risk management at SVB’. She was the head of risk management at the UK arm of the company - a relatively small offshoot. SVB had no head of risk management at all. For over a year.

Is that the danger of being woke, or the danger of being reckless, short termist, anti-regulation, free market capitalists?

Silicon Valley Bank said it was too small to need regulation. Now it’s ‘too big to fail’

[brenthutch 444]

On 3/13/2023 at 11:32 AM, SkyDekker said:

My guess is that part of the motivation behind the decision is to instill some calm and try prevent further bank runs.

Or to save the hide of big Democrat donors.  The rules were clear deposit over $250k were not covered.  The high dollar depositors should have taken the same haircut the stockholders did.

[SkyDekker 1,465]

On 3/18/2023 at 7:40 AM, brenthutch said:

Or to save the hide of big Democrat donors.  The rules were clear deposit over $250k were not covered.  The high dollar depositors should have taken the same haircut the stockholders did.

Big Democrat donors like Pieter Thiel?

[brenthutch 444]

5 minutes ago, SkyDekker said:

Big Democrat donors like Pieter Thiel?

“Becker and the SVB PAC have donated money to a slew of candidates – mostly Democrats – over the years, including President Joe Biden in his 2020 bid for president and Silicon Valley-based Rep. Ro Khanna.”

[SkyDekker 1,465]

4 minutes ago, brenthutch said:

“Becker and the SVB PAC have donated money to a slew of candidates – mostly Democrats – over the years, including President Joe Biden in his 2020 bid for president and Silicon Valley-based Rep. Ro Khanna.”

PAC donated $106,151 in the last 10 years, with about 35% of that going to Republicans. Pieter Thiel had $50 million of his own money and millions more of his Founder's Fund money in the bank. The conclusions you draw from these numbers are so slanted, because your bias only allows you think see or think one way.

[billvon 3,078]

17 minutes ago, SkyDekker said:

Big Democrat donors like Pieter Thiel?

Don't start with the facts.  You will confuse and depress him.