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OK, what exactly does this mean? I read the announcement as well and it seemed to be so cloaked in gov-speak that I couldn't make heads or tails of it. My curre
by uejfiweun 4y ago
OK, what exactly does this mean? I read the announcement as well and it seemed to be so cloaked in gov-speak that I couldn't make heads or tails of it. My current understanding is that the fed is now bailing out SVB? Is that what's happening here? I really hope not, because it seems completely counterproductive to their goal of achieving 2% inflation.
- eyphka 4y agoNo bailout. Investors and executive wiped out. Depositors will be made 100% whole. Fed did its job today and prevented a mass bank run.
- travisjungroth 4y agoThey are not bailing out the bank. They are giving the depositors their account balances. The bank is wiped out, the bank’s bond holders will take a big (maybe total) loss. They’ll sell off the banks assets over time to cover most of the shortfall.
- cft 4y agoWall St Journal editorial board begs to disagree: https://archive.ph/9zBUq https://archive.ph/9zBUq
- travisjungroth 4y agoThat link isn’t loading. What statement did I make that’s in disagreement?
- r00fus 4y agoIt’s opinion. It’s also wrong. This isn’t a bailout. Bankers and shareholders are getting their just rewards; customers are made whole.
- belter 4y agoIf it is not a bailout...What was the 250K FDIC limit for?
- travisjungroth 4y agoThe minimum guarantee, not the maximum capabilities.
- colinmorelli 4y agoAs mentioned in another thread, $250k is a minimum. The FDIC guarantees $250k which is covered by fees paid by the banks. Above and beyond that they will pay out depositors first by selling the bank’s assets, which they took over on Friday. In this case, FDIC is saying they will make depositors whole. They’ll do so by covering it with FDIC funds which they’ll recoup by selling assets and charging other banks if there’s a shortfall.
- sanp 4y agoThe WSJ editorial board disagrees with everything the Biden admin does. I am yet to see an a WSJ opinion say ANYTHING positive about the Biden admin. If someone here has seen such an article I would love to see the link. When someone is this one-sided, it is hard to take them seriously.
- area51org 4y ago> it is hard to take them seriously Especially when their "opinion" directly contradicts the stated facts of the situation. The feds are not going to bail out the bank—Yellin specifically said, "We're not doing that again." But they are giving the depositors, meaning people and companies, their money. That is huge. That, far as I am aware, will prevent this situation from becoming a deadly falling-domino game.
- uejfiweun 4y agoI don't really think the editorial is criticizing Biden. It's criticizing the Fed's easy money policies.
- unyttigfjelltol 4y agoThey will make money immediately available to depositors (emphasis on timing), and the government is standing up a funding mechanism from SVB assets backed by a bank insurance fund. FDIC et al. just fast-forwarded to the end, although notably I don't see a discussion of where any potential profits will go.....
- belltaco 4y agoProbably in the order of a regular bankruptcy, secured debtors first, unsecured debtors second etc. and then shareholders at the very end.
- simple-thoughts 4y agoDepositor get a bail out, additionally every other small bank depositors with over $250k are now backstopped with promise of bailouts. Funding for bailouts is coming from an additional tax on banks.
- andrewinardeer 4y agoAn additional tax on banks that will be passed onto consumers, surely? Banks do not have a reputation of absorbing costs.