3 ms·
> The cold, hard fact is that the bank doesn't have sufficient assets to pay back depositors This is not obvious at this time. This is not a cold hard fact. Th
by 015a 4y ago
> The cold, hard fact is that the bank doesn't have sufficient assets to pay back depositors
This is not obvious at this time. This is not a cold hard fact. They absolutely, undeniably had assets in excess of depositor liabilities at the end of Dec 2022. They incurred losses since then. The accountants are still accounting.
> and no regulatory sleight of hand changes that fact.
There literally is regulatory "sleight of hand" to do this, and the FDIC has a demonstrated history of doing it, many times. When banks like this fail, they shop the assets and existing customers around to other banks, and critically: will pay the acquiring bank to close the gap between assets and liabilities + provide liquidity while assets mature.
> There's a reason why large deposits aren't insured, and that's because the rich have the knowledge and resources to take care of themselves, and shouldn't force ordinary people to subsidize them when their bets go bad.
The FDIC is entirely funded by insurance premiums paid for by the banks themselves. They are not tax payer funded.
Your fear is causing you to spread misinformation and scare people more than necessary.
- panarky 4y ago> ... absolutely, undeniably ... Were these assets marked to market, or were there billions in unrealized losses even then? > regulatory "sleight of hand" When claims on the FDIC exceed premiums paid, they are absolutely backed up by taxpayers. There's a cap on what deposits are insured, it's not a secret. Large depositors knew their funds were not insured. It's not "sleight of hand" to shop the assets in the market, maximize recovery, and make all depositors whole if possible. By all means do this! But using FDIC funds to bail out uninsured depositors, or monkey business with quasi-government agencies backed by taxpayers paying above-market prices for securities, or agreeing to accept below-market interest rates on loans is definitely "sleight of hand" to obscure a direct subsidy to extraordinarily wealthy people. By no means should insurance premiums paid on insured deposits be misappropriated to bail out uninsured depositors.
- roguecoder 4y agoBeing able to trust in the stability of banks is subsidizing the economy, not just wealthy individuals. It isn't CEOs who got tossed out of work in 2008, it was't wealthy individuals who had a 27% unemployment rate. Wealthy individuals constantly try to game the system. Not letting the games they play hurt the rest of us is an entirely proper role for the government to take on.
- kelnos 4y agoI think the problem is when those games don't hurt the individuals playing them. After 2008, most of those banking executives who screwed things up saw few consequences. I agree that it's a good move for the government to use taxpayer money to prevent an economic collapse. But that's still the lesser of two evils: the government should be working harder to disincentivize the kind of behaviors that make wealthy individuals think that playing these sorts of games is worth the risk. I'm not sure what "working harder" should entail (I'm no expert on this sort of thing; others are), but I think it's pretty clear they're falling short.