4 ms·

This special fee will most likely be passed onto bank account holders either through lower interest rates or higher fees, so most taxpayers with bank accounts w

by kqr2 4y ago

This special fee will most likely be passed onto bank account holders either through lower interest rates or higher fees, so most taxpayers with bank accounts will likely be affected indirectly.

jachee 4y ago
Wonder how it applies, if at all, to credit unions.
- mixdup 4y ago
  it does not, credit unions are not members of the FDIC. They are members of the NCUA, which serves the same purpose as the FDIC for credit unions
  - bombcar 4y ago
    If anything they’ll benefit slightly by being able to offer slightly higher rates. Though hopefully the total cost after everything is worked out is vanishingly small - otherwise we have a much larger problem.
- chernevik 4y ago
  It does not, as they are far too small to be "systematically important". If they fail and their assets cannot support their deposits, their depositors will get a haircut. This will not go unnoticed by depositors. It's one of the clearer unfairnesses of this bad decision.
ummonk 4y ago
They'll be less affected than they would have been if contagion had been allowed to spread unchecked. All banks have a vested interest in the stability of the financial system in general.
- humanistbot 4y ago
  "Too big to fail" is such a bullshit argument, and doesn't make it any less of a bailout at taxpayer expense. Finance is structured so that every time this happens, it just so happens to be a forced choice between a bailout and "nice economy you have there, it'd be a shame if something happened to it..."
  - macintux 4y ago
    It seems to me that, just like just-in-time inventory control, we've chosen an economic model that maximizes growth but also incurs significant risks to stability. And with a global economy, and global Internet, and social media giving everyone around the world an opportunity to escalate internal dissension, those risks are escalating. I have no idea what the right answer is.
    - tome 4y ago
      That's a complete misunderstanding of JIT. If SVB were running according to JIT principles it would have matched the duration of liabilities (deposits) to the duration of assets (the bonds it held). In fact it held long-dated bonds, which is analogous to keeping a lot of inventory on hand for a high-throughput manufacturing process: the complete opposite of JIT.
    - kazen44 4y ago
      > we've chosen an economic model that maximizes growth but also incurs significant risks to stability. You mean the same economic system that has been in place since the industrial revolution? Sure, the US tried softening it a bit during the aftermath of the great depression, but in the end, this is just a free market economic behaving as expected? The one thing that keeps surprising me is the belief that the US seems to have in self regulation, which has failed time and time again?
  - astrange 4y ago
    The bank doesn't exist anymore and its shareholders got nothing. The customers' reward is they can make payroll. What bailout?

by kqr2 4y ago

This special fee will most likely be passed onto bank account holders either through lower interest rates or higher fees, so most taxpayers with bank accounts will likely be affected indirectly.

jachee 4y ago

Wonder how it applies, if at all, to credit unions.

mixdup 4y ago
it does not, credit unions are not members of the FDIC. They are members of the NCUA, which serves the same purpose as the FDIC for credit unions
- bombcar 4y ago
  If anything they’ll benefit slightly by being able to offer slightly higher rates. Though hopefully the total cost after everything is worked out is vanishingly small - otherwise we have a much larger problem.
chernevik 4y ago
It does not, as they are far too small to be "systematically important". If they fail and their assets cannot support their deposits, their depositors will get a haircut. This will not go unnoticed by depositors. It's one of the clearer unfairnesses of this bad decision.

ummonk 4y ago

They'll be less affected than they would have been if contagion had been allowed to spread unchecked. All banks have a vested interest in the stability of the financial system in general.

humanistbot 4y ago
"Too big to fail" is such a bullshit argument, and doesn't make it any less of a bailout at taxpayer expense. Finance is structured so that every time this happens, it just so happens to be a forced choice between a bailout and "nice economy you have there, it'd be a shame if something happened to it..."
- macintux 4y ago
  It seems to me that, just like just-in-time inventory control, we've chosen an economic model that maximizes growth but also incurs significant risks to stability. And with a global economy, and global Internet, and social media giving everyone around the world an opportunity to escalate internal dissension, those risks are escalating. I have no idea what the right answer is.
  - tome 4y ago
    That's a complete misunderstanding of JIT. If SVB were running according to JIT principles it would have matched the duration of liabilities (deposits) to the duration of assets (the bonds it held). In fact it held long-dated bonds, which is analogous to keeping a lot of inventory on hand for a high-throughput manufacturing process: the complete opposite of JIT.
  - kazen44 4y ago
    > we've chosen an economic model that maximizes growth but also incurs significant risks to stability. You mean the same economic system that has been in place since the industrial revolution? Sure, the US tried softening it a bit during the aftermath of the great depression, but in the end, this is just a free market economic behaving as expected? The one thing that keeps surprising me is the belief that the US seems to have in self regulation, which has failed time and time again?
- astrange 4y ago
  The bank doesn't exist anymore and its shareholders got nothing. The customers' reward is they can make payroll. What bailout?