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If he gets what he wants, I guess if you are rich you get no risk. What about all the people who lost what to them was a lot of money in 2008, did the Gov prot
by jmclnx 4y ago
If he gets what he wants, I guess if you are rich you get no risk.
What about all the people who lost what to them was a lot of money in 2008, did the Gov protect them ? I do not think so. All this shows is who runs the US, not the voters but the people who has a big stake in Wall Street.
What should be done, the execs of SVC pays up for not paying attention to to what the Fed was doing.
There was another story about SVC execs selling their stock before the issue became known. Will they get in trouble, I doubt it but you can be sure they will still get their large bonus.
EDIT: added https://news.ycombinator.com/item?id=35104396 https://news.ycombinator.com/item?id=35104396
- DennisP 4y agoThis is not about protecting investors in SVC. It's about protecting people who deposited money in an SVC bank account. If you have less than $250K in a bank account, then all of it is automatically protected by law. So yes, all the regular people got similar protection in 2008.
- treis 4y agoAnd more broadly, protecting the other banks in a similar situation from their own runs. I think there's a reasonable argument to be made that it'd be cheaper in the long run to stop the contagion at SVB instead of watching another dozen banks collapse.
- swatcoder 4y agoMaybe in the medium run. In the long run, you just establish that it's okay to make higher risk bets than you can afford to recover from because the government is too skittish to let any domino fall. That's the road to increasingly wild volatility, not a reliable economy.
- DennisP 4y agoBailing out depositors is not the same as bailing out the bank. The bank should go out of business, but that doesn't mean depositors have to lose their funds.
- fairity 4y agoBut bailing out depositors here is essentially also a bail out of the next risk-taking bank that will go under sans a bailout. So, to some extent it does encourage long term risk taking by bank execs.
- DennisP 4y agoNo, because bailing out the depositors will not keep the bank from going under. The bank will still go out of business and its investors will still lose all their money. Same for the next bank that goes under, even if its depositors are also bailed out.
- hairofadog 4y agoI feel like investors are taking a calculated risk, though, whereas depositors (not unreasonably, in my opinion) thought their money in the bank was “money in the bank”.
- luckylion 4y agoAnd it was, with the caveat of "up to $250k per entity per bank". I don't think we'll remove all caveats from everything, we're just asked to removed them from something that only affects rich people.
- mixdup 4y agoI feel like if you have millions of dollars you should be sophisticated enough to understand FDIC insurance limits. Piling literal billions of dollars into one small bank is a calculated risk, too
- fairity 4y ago
- jmclnx 4y agoWhat about "regular" people's 401k, it took almost 10 years for it to recover. No protection there. Also if you can have a bank account above 250000, you are not a "regular person".
- nova22033 4y agoIf you make 50K, the company that pays you probably has more than 250k in a bank account.. So this will still affect the regular person. They should definitely NOT do a 100 cents to the $ bailout...Someone needs to take a haircut
- tppiotrowski 4y agoCurious about the logic you used to determine a company's balance based on employee pay. Is this just your own number fidgeting or an actual best practice in finance? It seems weird that a company paying someone less than $5K a month would need $250K in the bank. we had $100K seed check at my startup and I got paid $6K per month as a counter example.
- icedchai 4y agoIt's a bit different. Banks are supposed to be a safe place for cash. "Safe" means essentially zero risk: interest checking, CDs, etc. Low interest, low risk. This is very different from an investment account (401k or not) where risk is expected. If I had >250K at a smaller bank, I'd be concerned.
- matthewdgreen 4y agoPersonally I think protecting bank depositors is a good idea. However: I would also note that many people (including Bill Ackman) have been screaming at the government & Fed to get inflation under control: specifically, they've blamed the government (and Fed) for their loose monetary and fiscal policy throughout the pandemic. And indeed the government tightened fiscal policy as they wanted, and the result was that SVB failed. Does Ackman now want the government/Fed to step in and pour its money in to shore up depositors? Won't that be more of the same inflationary policy that he's been railing against?
- p_j_w 4y agoUnless your questions are rhetorical, I think you're making a mistake in thinking any of these people are asking for certain policies out of any principals beyond their own self-interest.
- kentonv 4y agoExecs at public companies always have to schedule their stock sales many months in advance. They cannot sell on a whim. The SEC is very strict about this and they do punish transgressions. Most execs sell stock on a regular monthly or quarterly schedule. Since execs are commonly paid primarily in stock, of course they will always be selling stock. It's just financially prudent to diversify your holdings no matter how much you believe in the company. As a result, you will almost always find, if you look, that execs in any public company have recently sold stock. It may even appear that they have sold a large percentage of their overall holdings, but this is often just because either they sell as they vest (again, generally considered wise financial practice) or because their stock is mostly in a different share class which needs to be converted before sale (and the "percentage" is actually a percent of their holding of the converted share class). So I'd be extremely skeptical of any stories accusing executives of dumping stock, they are almost always benign.
- maxcan 4y agoI believe (and I could be wrong) that this was scheduled in January and by that point rates had already gone up quite a bit. It is pretty safe to assume that any executive at SVB knew the writing was on the wall at that point.
- joseftexas 4y agoMany of these rich are running businesses which employed poorer salaried people like us. Not saving us directly in 2008 is ok as back them we are minority. Not saving these businesses will trigger a Lehman Brothers contagion collapse which means a lot of people like us will be out of job...meaning a lot of us have to restart our careers like 2008. Furthermore, these time it will impact higher paying jobs in techs. The lost of 1 tech worker can easily destroy 5 to 10 walmart workers level jobs. They buy less gadgets, groceries and vacations which poorer people seldom do as much as these tech workers (I have yet seeing walmart "associate" buying tesla but seen more than 200+ tech workers own one at least in the last 10 years. Guess what will happen after the collapse? China will take over. These lost tech workers will work remotely for others divulging tons of IP knowledge (I know this full well because this is essentially what my 3 companies actively engage in).