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This is short sighted. If the government doesn’t make depositors whole then people and companies all over the world lose trust in US banks and eventually US dol
by a13n 4y ago
This is short sighted. If the government doesn’t make depositors whole then people and companies all over the world lose trust in US banks and eventually US dollars. This is a federal problem.
It makes sense to make depositors whole, they’re innocent here. It doesn’t make sense to make SVB whole for managing their risk poorly.
- rafael09ed 4y agoMaybe we should have a public banking option if the government's going to give everyone their money anyway
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- a13n 4y agoYeah I think the capitalist version of that is more regulation to the point where large banks aren’t able to take on so much risk to depositors.
- Denvercoder9 4y ago> If the government doesn’t make depositors whole then people and companies all over the world lose trust in US banks and eventually US dollars. This is a federal problem. I fail to see how the government doing exactly what the law says and what they've always said they will do makes people lose trust in the US.
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- koolba 4y agoNo, they’ll have high trust that amounts up to $250K are covered. Because that’s what’s covered. Any treasurer or CFO with half a brain knows that.
- nonethewiser 4y agoWell it’s not even about innocence. They have the strongest legal claim.
- lotsofpulp 4y agoIt does not make sense to let bank shareholders profit from having an implicit guarantee of federal taxpayer funded bailouts. The bank’s owners have to pay $x for buying FDIC insurance of up to $250k per account per person. If it actually costs $y > $x to insure for more than $250k, then that is quite a windfall for the bank owners at the expense of federal taxpayers.
- a13n 4y agoI’m with you that we shouldn’t make a habit of spending taxpayer dollars to make depositors whole. We should have better regulation so this couldn’t have happened in the first place. Banks should be required to manage their risk better. But in this particular instance taxpayers should want to invest in trust in US banks and dollars until regulation is corrected.
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- lotsofpulp 4y agoThis particular instance happens all the time.
- a13n 4y agotop 20 banks do not fail all the time
- lotsofpulp 4y agoWhat is the significance of top 20? And SVB was far closer to the 50th bank than a top 10 bank.
- JumpCrisscross 4y ago> We should have better regulation so this couldn’t have happened in the first place We do. SVB lobbied successfully to exempt itself from the Fed’s stress tests and Basel III, both of which test assets for interest rate risk and would have caught this problem.
- deepsquirrelnet 4y agoYes, surely using the government to let private businesses run roughshod on the uninvolved public will prove that we are sufficiently exploitative to guarantee your money’s safety. Don’t worry world, when push comes to shove, those who had nothing to do with it will bear the responsibility! I don’t think that’s a better message for anyone.
- Ekaros 4y agoAnd if it does. And sets new standards it leads to massive moral hazard and potential of even bigger and even worse failures in future. Why not run a ponzi scheme as bank if in the end tax payers or fed ends up making everyone whole. After you have spend years making money from fraud. With your depositors happily participating in as they have zero risk.
- rayiner 4y agoThey’re not “innocent” having chosen to put more than the insured amount in “Silicon Valley Bank.”
- metalspot 4y agono. absolutely not. these are smart greedy people playing the game for their own benefit. they knew the rules. if they lose they eat the losses just like anyone else. it is all the bailouts and insider dealing that kill confidence in the dollar and the banking system. enforcing the rules increases confidence.
- matheusmoreira 4y ago> If the government doesn’t make depositors whole then people and companies all over the world lose trust in US banks and eventually US dollars. Good. That's exactly what should happen. It should happen every single time, repeatedly. People should have to learn the hard way that banks and the government cannot be trusted. These are the consequences of their irresponsibility. They should not get to avoid those consequences just because "banks and USD are important" or whatever excuse they come up with. If the US really is all about the free market as it claims, it should allow these banks to fail and everyone who trusted those banks to lose. Customers lent their monet to this bank and they lost. Allow them to face the consequences of their actions.
- PeterisP 4y agoWhy would doing the exact same thing as many, many previous times - here's a list https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/ https://www.fdic.gov/resources/resolutions/bank-failures/fai... - suddenly make people and companies all over the world lose trust in US banks and eventually US dollar, if that didn't happen in all the many previous times when depositors weren't made whole (beyond the limits insured by FDIC) after a bank failed?
- a13n 4y agoThis time is different in so many ways. Top 20 bank. 2nd biggest bank failure in US history. $200B+ assets. You don't want wealthy people and companies thinking their money isn't 100% safe in a top 20 US bank.