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The team making these poor choices at SVB should be criminally charged ... The tax payer shouldn't have to bail out banks.

paulddraper 4y ago
> should be criminally charged For what crime? If someone unintentionally but ineptly writes code that crashes Amazon on Black Friday, did they commit a crime?
- chippiewill 4y ago
  It's possible to be criminally negligent. If you took unnecessary risks then it can carry a criminal element.
  - zenlikethat 4y ago
    MBS are literally one of the safest looking bets imaginable, most likely Silvergate blasted a huge hole in their books and set off a cascade of trouble
    - HDThoreaun 4y ago
      Long term fixed income at near 0 percent interest when you might have to give the money you used to buy it back is very risky, as we see here.
      - paulddraper 4y ago
        What's a safer investment?
berkle4455 4y ago
Another bank will acquire the company and make depositors whole. Government won't actually do the bailout, just facilitate/force it.
- Eumenes 4y ago
  So where does the lost money come from? Another bank just gives it up?
  - bryfb 4y ago
    FDIC is funded by premiums from participating banks. Beyond the insured limit, there isn't really a guarantee that the "lost money will come back."
  - berkle4455 4y ago
    Another bank will commit to meeting 100% of investor deposits, take ownership of all SVB's assets, and provide liquidity to shore up any depositor concerns. Why would they do this? They get to acquire SVB insanely cheap (basically just the cost of covering the losses), get loads of new now-happy customers, and be hailed as a hero.
    - Asparagirl 4y ago
      Unless, of course, this predicted white knight never appears because lots of other banks are secretly in similarly shaky positions where they are also holding lots of long-term Treasuries or MBS that are in some respects extremely safe but which also pay only 0-1% over 5-10 years, and those “assets” would need to be fire-sold at 65% of face value if the bank ever needed cash quickly… And even if that white knight or even off-white-ecru knight did come along and want to buy the bank next week, what if they don’t decide to make every depositor whole, for those holding cash above FDIC limits? They certainly don’t have to do that. They could just buy the loan book. Or the warrants or early debt for a number of Silicon Valley startups. They can be vultures, not Santa Claus… I think people don’t quite grasp what could be coming next.
      - quesera 4y ago
        > I think people don’t quite grasp what could be coming next. Agreed on that. The FDIC will make the best deal possible for depositors, but they'll spend a very busy weekend figuring out what that maps to in reality. We don't know yet.
zenlikethat 4y ago
They bought assets and loaned to customers … pretty standard stuff

paulddraper 4y ago

> should be criminally charged For what crime? If someone unintentionally but ineptly writes code that crashes Amazon on Black Friday, did they commit a crime?

chippiewill 4y ago
It's possible to be criminally negligent. If you took unnecessary risks then it can carry a criminal element.
- zenlikethat 4y ago
  MBS are literally one of the safest looking bets imaginable, most likely Silvergate blasted a huge hole in their books and set off a cascade of trouble
  - HDThoreaun 4y ago
    Long term fixed income at near 0 percent interest when you might have to give the money you used to buy it back is very risky, as we see here.
    - paulddraper 4y ago
      What's a safer investment?

berkle4455 4y ago

Another bank will acquire the company and make depositors whole. Government won't actually do the bailout, just facilitate/force it.

Eumenes 4y ago
So where does the lost money come from? Another bank just gives it up?
- bryfb 4y ago
  FDIC is funded by premiums from participating banks. Beyond the insured limit, there isn't really a guarantee that the "lost money will come back."
- berkle4455 4y ago
  Another bank will commit to meeting 100% of investor deposits, take ownership of all SVB's assets, and provide liquidity to shore up any depositor concerns. Why would they do this? They get to acquire SVB insanely cheap (basically just the cost of covering the losses), get loads of new now-happy customers, and be hailed as a hero.
  - Asparagirl 4y ago
    Unless, of course, this predicted white knight never appears because lots of other banks are secretly in similarly shaky positions where they are also holding lots of long-term Treasuries or MBS that are in some respects extremely safe but which also pay only 0-1% over 5-10 years, and those “assets” would need to be fire-sold at 65% of face value if the bank ever needed cash quickly… And even if that white knight or even off-white-ecru knight did come along and want to buy the bank next week, what if they don’t decide to make every depositor whole, for those holding cash above FDIC limits? They certainly don’t have to do that. They could just buy the loan book. Or the warrants or early debt for a number of Silicon Valley startups. They can be vultures, not Santa Claus… I think people don’t quite grasp what could be coming next.
    - quesera 4y ago
      > I think people don’t quite grasp what could be coming next. Agreed on that. The FDIC will make the best deal possible for depositors, but they'll spend a very busy weekend figuring out what that maps to in reality. We don't know yet.

zenlikethat 4y ago

They bought assets and loaned to customers … pretty standard stuff