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I think the concern is: this time they covered every cent of deposits to prevent systemic risk from spreading. Now, what if, I, as a senior banker, start to ab
by markus_zhang 4y ago
I think the concern is: this time they covered every cent of deposits to prevent systemic risk from spreading.
Now, what if, I, as a senior banker, start to abuse this policy. I'm not sure how senior bankers can abuse this policy but this is the concern here. So basically, if the FED can guarantee 100% of deposits, it encourages riskier moves. Worst case my equity gets wiped out, i.e. most of my unsold compensation vaporizes but that's it.
- drc500free 4y agoI personally don't think the thing holding banker-bros back from risky investment strategy is fear that their depositors won't get back 100% of their deposits.
- yunwal 4y agoThe depositors reward banker-bros for risky behavior when they bank with them. SVB paid an unusually high interest rate and part of the reason is because they were more aggressive about investing.
- IgorPartola 4y agoWell also you lose your job and presumably never work in banking again, no?
- markus_zhang 4y agoI'm not sure if I'd never work in banking again. It's a brotherhood, we take care of our...friends.
- coldpie 4y agoLook up the SVB execs in 2 years' time and let us know how they're doing.
- hackernewds 4y agothat worst case sounds pretty worse? there's already inherent risks, why would anyone want that