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No the customers of the bank will also have to deal with the clown-world implications of continued bailouts for poor allocation of resources. Banks will contin

No the customers of the bank will also have to deal with the clown-world implications of continued bailouts for poor allocation of resources. Banks will continue to be able to make horrendous decisions and not have any fractional reserve requirements. Executives will continue to get absurd performance benefits until losses are realized. Depositors won’t have to care that the institution where they dump millions of dollars is run by someone doing their best financial John Wayne Gacy impersonation. And we’ll all suffer because institutionally these horrendous investments are backstopped. Please just let one of these banks fail. A few more will. Lots more should. And then maybe we’ll see them act with any sort of prudence.

astrange 4y ago
Three banks failed in the last week. But it's not good for depositors to take a haircut because of that. We can work it out without anyone having to pay for it except the banks' executives and shareholders.
maxerickson 4y ago
The bank did fail? What the hell else are they supposed to do with the assets that are left in the bank? Giving them to the people the bank owed money makes a lot more sense than lighting them on fire or whatever. Do people think that the FDIC/government funds end up being a significant portion of the money that goes to the depositors or something?
cmurf 4y ago
I'm not sure what you imagine FDIC does with the bank's seized assets. But let's say you think they should be vanished some reason, and good for nothing. Hundreds of thousands of employees from tens of thousands of small businesses aren't getting paid salaries for the last 1-3 weeks. And aren't getting paid this week. And very likely are out of a job. Same for those businesses vendors and subcontractors. Hundreds of thousands left without a health care plan with two weeks notice because premiums will go unpaid and afterall the employer is the true contractor of the plan, if they go out of business because most of their cash deposits were just destroyed. That seems bad. What sort of influence levers do these depositors have over their bank's investment policies either before of after the fact? It seems pointless.
- anon291 4y ago
  How about we expect FDIC to sell the assets at market value and then expect companies to take the 30 % cut in assets over 250k. No one is suggesting anyone burn svbs assets. Only that we do not print more money to make up the difference between the face value and the market value
  - cmurf 4y ago
    >How about we expect FDIC to sell the assets at market value and then expect companies to take the 30 % cut in assets over 250k. Why should a bank's depositors take haircuts before its bondholders and shareholders? >Only that we do not print more money to make up the difference between the face value and the market value The difference is made up by FDIC special assessment on banks.

astrange 4y ago

Three banks failed in the last week. But it's not good for depositors to take a haircut because of that. We can work it out without anyone having to pay for it except the banks' executives and shareholders.

maxerickson 4y ago

The bank did fail? What the hell else are they supposed to do with the assets that are left in the bank? Giving them to the people the bank owed money makes a lot more sense than lighting them on fire or whatever. Do people think that the FDIC/government funds end up being a significant portion of the money that goes to the depositors or something?

cmurf 4y ago

I'm not sure what you imagine FDIC does with the bank's seized assets. But let's say you think they should be vanished some reason, and good for nothing. Hundreds of thousands of employees from tens of thousands of small businesses aren't getting paid salaries for the last 1-3 weeks. And aren't getting paid this week. And very likely are out of a job. Same for those businesses vendors and subcontractors. Hundreds of thousands left without a health care plan with two weeks notice because premiums will go unpaid and afterall the employer is the true contractor of the plan, if they go out of business because most of their cash deposits were just destroyed. That seems bad. What sort of influence levers do these depositors have over their bank's investment policies either before of after the fact? It seems pointless.

anon291 4y ago
How about we expect FDIC to sell the assets at market value and then expect companies to take the 30 % cut in assets over 250k. No one is suggesting anyone burn svbs assets. Only that we do not print more money to make up the difference between the face value and the market value
- cmurf 4y ago
  >How about we expect FDIC to sell the assets at market value and then expect companies to take the 30 % cut in assets over 250k. Why should a bank's depositors take haircuts before its bondholders and shareholders? >Only that we do not print more money to make up the difference between the face value and the market value The difference is made up by FDIC special assessment on banks.