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> At the same time, this is yet another example of changing the rules in the middle of the game. Yellen has just broadcast that FDIC insurance is essentially un

> At the same time, this is yet another example of changing the rules in the middle of the game. Yellen has just broadcast that FDIC insurance is essentially unlimited, as long as you can threaten wider disruption to the economy. The criteria isn't threatening a "wider disruption to the economy", it's threatening the quality of life of a certain class of people. When unions threaten a wider disruption to the economy for maintaining their quality of life, they'll do their damnedest to not give in. They'll pass laws outlawing strikes. Or send in "law-enforcement". As the saying goes, laws are for the poor.

Godel_unicode 4y ago
SVB was publicly traded, and it’s not being bailed out. Who do you think owns the now-worthless stock?
- muzz 4y ago
  The market cap of SVB on Friday was $6 B The amount of uninsured deposits was $150 B The value of all the stock is 4% of the amount of uninsured deposits
  - mattbillenstein 4y ago
    What is the shortfall once all the assets of the bank are sold though? It's not like anyone is putting $150B into this to make sure those deposits are made whole.
    - Phlarp 4y ago
      You can't say that right now, I'm not sure anyone can. The government is literally writing a blank check because they don't yet know how much it's going to cost to fix. Everyone seems to be operating under the idea that while their liquidity came into question the underlying assets were and are strong-- if that were true they would have found a private sector solution early in the weekend. Waiting until 6pm on Sunday and a second regional bank collapsing to announce "oops, all bailouts!" seems like an open admission we're in the early stages of another banking crises.
      - mjevans 4y ago
        As far as coverage has stated so far, the underlying assets ARE solid... Problem is they're just not even a good investment compared to brand new fed bonds / bills of short / long (might have that backwards) due to the now MUCH HIGHER interest rates. They locked in at historically low rates, and had a bank run on their free reserves.
        heisenbit 4y ago
        But then the coverage has mentioned also CMBS. An if you think about those, think about Covid and think about SV remote working…
        tetrahedr0n 4y ago
        I'm sorry, I don't follow the logic here. Do you mind elaborating? I see some correlation between SV remote working and COVID, but don't understand how mortgage backed securities play into this. Are you suggesting higher inflation on the way, lower property values, higher rates, and that it was intentional?
      - friendzis 4y ago
        > the underlying assets were and are strong-- if that were true they would have found a private sector solution early in the weekend One does not follow the other. The triggering problem here were unmatched maturities of assets and liabilities, i.e. liquidity crunch. They have created that liquidity by selling some assets at a loss and tried to recoup that loss from investors. But that was not the problem. The problem was now-imminent bank run, potentially requiring up to ${total-deposits } liquidity injections and unclear future then. Once VCs told their portfolio companies to pull out svb was effectively toast.
        loandbehold 4y ago
        Bigger bank with more cash could have bought them, fixing liquidity issue. This didn't happen, suggesting that there's problems with bank's assets, not just liquidity.
    - femto113 4y ago
      Nobody has to put in anything other than confidence. Given enough time the bank already has plenty of assets--the whole point of the feds saying "all deposits will be made whole" is to stop the panic withdrawals and thus obviate the need to sell those assets.
  - ericd 4y ago
    The amount of the potential losses on the uninsured deposits was a very small fraction of $150B.
    - vintermann 4y ago
      Was it? I think I read somewhere that this bank had an unusually large share of depositors over the deposit insurance limit, or in other words a high share of uninsured deposits.
      - lordnacho 4y ago
        Yes but that doesn't mean they would lose everything over the insured limit. If I owe you 1M but only have 950k to give you that's a lot better than having only 100k, in which case you'd end up with 250k.
        yawpitch 4y ago
        Ok, but assuming the numbers above are correct, 150B in uninsured deposits - 5B in market cap firesale = 145B that SVB apparently didn’t have the cash on hand to repay. If every depositor walks in first thing Monday morning and withdraws their bad bet in their (apparently single) chosen bank’s management, the customers of all other banks are now on the hook for 145B… which ultimately means everyone on the planet can expect to pay more for their haircuts.
        lordnacho 4y ago
        Huh, are the assets only trading at 5B? I thought it was much closer to 150B?
        jsjohnst 4y ago
        No, GP is just foolishly conflating liabilities and assets and bank deposits and enterprise value among other issues if you read this and their other comments. tl;dr - GP doesn’t have a clue what they are saying.
  - deepsun 4y ago
    Better count "enterprise value" than market cap, as that's the price the company is worth.
    - BlueTemplar 4y ago
      What is the difference and where can you see it ?
      - deepsun 4y ago
        Here is full info: [1] As I see it, market cap/valuation _should_ resemble the price you'd need to pay to buy a company, but it often is not. E.g. a company has marketcap of 10B, but has 30B in liquid cash on hand. It's clear it cannot be bought for 10B. Or the other way around, the company has 30B in liabilities -- the company should pay you 20B to be bought. [1] https://www.investopedia.com/terms/e/enterprisevalue.asp https://www.investopedia.com/terms/e/enterprisevalue.asp
  - Godel_unicode 4y ago
    First, since we’re comparing numbers to each other, you should go back before Wednesday to get a real number for pre-run market cap, it’s about 2.5x that. Not that it really matters. Second, just so we’re clear is your point that the holders of that $6B-$15B of useless paper won’t care because it’s less than $150B? At the end of the day, you don’t care what percent of the bag you’re holding, just that you’re holding it.
    - RhodesianHunter 4y ago
      Their point is that the value of equity is insignificant to the upper class, as compared to the value of the uninsured deposits. IE the equity isn't enough to leverage political capital. The deposits are.
    - svnt 4y ago
      No, the point is that shareholders of the bank are investors in the bank, and investment comes with the risk of loss. Depositors in a bank are not investors in that bank.
      - yawpitch 4y ago
        > Depositors in a bank are not investors in that bank. No, they’re not. But until just now depositors in any other bank assumed the risk for any deposit in excess of $250K… and if these depositors weren’t morally different than the depositors that would absolutely have lost their wealth in excess of $250K when their chosen bank did a stupid thing, then they’d have paid the piper just like you and I would have. These special depositors are getting special treatment and aren’t suffering what countless non-special depositors have suffered… the rules are changing because of who took the risk, that’s the very definition of moral hazard at work.
  - vehementi 4y ago
    Why would you directly compare those two numbers? It owes all those deposits to other entities.
- miguelazo 4y ago
  The stock isn’t being bailed out, but a certain class of society/account-holder is (again), which seems to be just as bad in terms of perpetuating the moral hazard.
  - porknubbins 4y ago
    What moral hazard being created though? Most SVB customers, unless they are finance experts, are not in any position to do due diligence on how their bank invests its loans and are pretty blameless in my opinion. They weren’t capturing any real risk premium by banking with this bank.
    - vintermann 4y ago
      Wasn't the selling point of this bank its "libertarianism"? It's a fairly new bank, why did they switch to it if not for doing some research on it?
      - notfromhere 4y ago
        SVB is a 40 year old bank that's been doing business in the valley since the VC era started.
        yawpitch 4y ago
        > SVB is a 40 year old bank that's been doing business in the valley since the VC era started. So it’s a fairly new bank, by the standard or banks, and the point remains, why did they choose to risk keeping money in excess of the $250K insurance backstop in one bank with no real track record? Until this event the whole idea of the FDIC insurance fund was to ensure that people (not corporations) with relatively small nest eggs wouldn’t lose the whole thing and therefore starve if their bank made bad bets… once your nest egg grew beyond the backstop it was your right (and privilege) to assume the risk of losing it, if you wanted to. Now because VCs and CEOs were essentially asleep at the wheels of companies that, for the part that have gotten this absurdly quick action from the government, consider $250K to be a rounding error, the rules have changed. That’s the special class… the kind of people who somehow think 40 years is a substantial track record for a business that’s big enough to underpin an economy.
- inferiorhuman 4y ago
  SVB was publicly traded, and it’s not being bailed out. SVB deposits are being paid for with an assessment on FDIC members. Who do you think is going to pay for that? Sincerely, A PG&E ratepayer
  - ahepp 4y ago
    My understanding is it's not yet known whether a special assessment will need to be levied. The FDIC is making all deposits available before they find out, and if it turns out they cannot sell SVB assets to cover deposits, they will levy a special assessment to make up the difference. Certainly open to being corrected if that's wrong. But as far as I know it's a bit premature to talk about this being a "tax on depositors at other banks". It seems like these actions ensuring stability in the banking system may be beneficial to everyone. If it turned out that all SVB assets were worthless and a HUGE special assessment would need to be levied to cover deposits, I would agree that this could be a moral hazard. But right now I think it just looks like prudent management.
    - inferiorhuman 4y ago
      You're absolutely right. It's entirely possible for SVB to sell their assets and cover the entirety of the deposits above FDIC limits. Get real. The issue has never been that SVB's assets were completely worthless, it's that they're not going to cover all of the deposits over the FDIC limits. Ten year bonds were a bad idea and nobody wants them given the current interest rate trajectory. If SVB's assets could've been sold for their full cost they would've been. An assessment will happen, it's just a question of how large it will be.
      - ahepp 4y ago
        It's possible the bank is only a "little bit" insolvent. Is it not possible that the difference can be made up by wiping out shareholders and giving unsecured bondholders a haircut? Per Robert Armstrong of FT: https://www.ft.com/content/9ee5edda-a038-4992-863f-242bd69c8b79 https://www.ft.com/content/9ee5edda-a038-4992-863f-242bd69c8... https://archive.is/OQdR7/43e461dad99a58217efdfde3878ee6b56ccd826e.avif https://archive.is/OQdR7/43e461dad99a58217efdfde3878ee6b56cc... It looks as though SVB may be "only $5 billion" short on its uninsured deposits, with $22 billion in other creditors
throwaway1851 4y ago
Cynicism isn't interchangeable with critical thinking.
- forgetfreeman 4y ago
  True but it is all too often the product of critical thinking.
  - wolverine876 4y ago
    IMHO and IME, it's never the product of critical thinking. It's an emotional reaction, not thinking and especially not thinking critically.
    - forgetfreeman 4y ago
      Whereas IMHO pollyannaism is a product of some combination of denial, naivete, and privilege, and mumbling about cynicism instead of engaging with the point made is nothing more than an expression of cognitive dissonance or worse simple childishness.
      - wolverine876 4y ago
        Right, but who advocates pollyannaism? The alternative to pollyannaism is not cynicism but actual critical thought. The alternative to cynicism is not pollyannaism but actual critical thought.
      - throwaway1851 4y ago
        > mumbling about cynicism instead of engaging with the point made I was leaving it in the subtext, but in case it wasn’t clear: I don’t think the “point” made reflected anything resembling analysis, and therefore deserved no engagement.
mike_d 4y ago
> it's threatening the quality of life of a certain class of people. Like the jerks who chose to work for a company that picked a specific SaaS payroll provider. Or those entitled Etsy sellers that expected to get paid. The absolute nerve.
- dmichulke 4y ago
  What OP might mean: Technically, your "jerks" don't lose capital (wealth) while the people with deposits in those banks do. Yes, losing a job is a bad thing but a job is a mere right to a transaction (we exchange labor for money in the future) and not lost capital.
  - codeddesign 4y ago
    It’s the fed protecting a bank with a large financial interest. This isn’t the last bank this year…but one of few that will be protected.
    - feraloink 4y ago
      How fair is that? You aren't suggesting that it is fair, I realize. And you are correct! Silicon Valley Bank was the first bank this year for whom the Fed is paying for uninsured deposits. The second bank is Signature Bank of New York, which regulators shut down one day later, on Friday March 10th. They are being protected as well. https://www.nytimes.com/2023/03/12/business/signature-bank-collapse.html https://www.nytimes.com/2023/03/12/business/signature-bank-c...
- fumeux_fume 4y ago
  The money isnt going directly to the workers. It goes to the companies who employ them to make sure the employers are ok. I think the point being made is that when workers ask for protections or concessions it's this massive struggle but when Etsy needs help the money somehow appears literally overnight.
  - brazzy 4y ago
bioemerl 4y ago
> the quality of life of a certain class of people By that you're talking about the average citizen right? Suff like railroad strikes would dramatically affect the average citizen.
shjake 4y ago
I think the main goal is to prevent a wider banking crisis and this spiraling out of control. That would surely affect everyone..
- philosopher1234 4y ago
  Why should we take for granted that that is likely? Because that is what the VCs say? Perhaps this is a convenient belief
  - edanm 4y ago
    Or perhaps the experts at Treasury, FDIC, etc, actually made this decision because they think it's true in their expert opinion, not just because VCs said so? They're the officials appointed to be the experts at these things by the people elected to run the government, what better mechanism is there for making this kind of decision?
    - berniedurfee 4y ago
      I wish this were true. This is how I thought things worked when I was a kid. Or did I miss your sarcasm?
      - edanm 4y ago
        I think it is true. Not sarcastic at all. Curios why you think it's not?
        berniedurfee 4y ago
        Jaded, I suppose. I don’t think the majority of legislators truly align the best interests of individual citizens to their decisions and actions.
    - RandomLensman 4y ago
      I think the issue is that 15 years after the GFC, again the government seems to be needed to prevent a systemic banking crisis. What ever rules where enacted etc. had maybe very little effect if a small bank (and the 16th largest bank isn't a mega-bank) can bring down the system without a government backstop. If lending to banks is too risky for most, then perhaps most should not be allowed to lend to banks. Are bank deposits really the right way to fund banks if they come with these systemic risks or should it all be bonds etc. (and then also have very narrow limits for regulated investors)? Maybe a lot more should be direct lending and not bank lending?
eru 4y ago
Huh, how are strikes still widely legal, then?
- SkeuomorphicBee 4y ago
  I guess you haven't been following the news. The previous commenters clearly makes a reference to the rail worker's strike from a few months ago, which was the first strike in decades powerful enough to threaten a "wider disruption to the economy", and the fact that government quickly passed special laws to declare that strike illegal. So, to spell it out for other living under a rock: - Labor fighting for better work conditions threaten a wider disruption to the economy, government fights and bends rules against labor. - Capital losing bets threaten a wider disruption to the economy, government fights and bends rules in favor of capital.
  - eru 4y ago
    Why don't they outlaw strikes in general?
cornholio 4y ago
> The criteria isn't threatening a "wider disruption to the economy", it's threatening the quality of life of a certain class of people. In support of this view, they could have easily extended FDIC on a dynamic metric, for example 20k for each employee. If you are 5 employee VC fund sitting on 0.5 billion in cash, no bailout for you from taxpayer money (because let's be real, FDIC is all taxpayer money, it's irrelevant if that tax is collected by the govt directly or indirectly via mandatory banking fees). An alternative path was to provide zero interest loans against your SVB holdings, with the expectation that you are on the hook for the shortfall that would be yielded by the liquidation. If SVB is well capitalized as the Fed claims it is and there is "no cost for the taxpayers", then this shortfall should be relatively small if any. Another, even more radical option would be to quickly set-up a secondary market for the debt issued by these banks and let the market provide liquity and discover the value of the assets. This is one of the few innovations form the crypto world I wish we could see in traditional finance, we can't keep bailing out rich mofos like it's 2008 when we have all these wonderful new technologies which can stop contagion and bank runs, protect depositors and zero in on those responsible.
- boole1854 4y ago
  > In support of this view, they could have easily extended FDIC on a dynamic metric, for example 20k for each employee. Implementing any such "dynamic metric" would have taken time, which would mean they would not have been able to restore all deposits by Monday, which means a significant risk of contagion.
  - Swenrekcah 4y ago
    Also that would really have been an example of arbitrary changes to the rules on the fly.
    - cornholio 4y ago
      They can make those rules and preparations beforehand, for the next SVB, Signature etc. Banks would definitely want to optin under such a protective regime and have their systems ready since it alleviates customer panic in an event of a liquidity crisis.

Godel_unicode 4y ago

SVB was publicly traded, and it’s not being bailed out. Who do you think owns the now-worthless stock?

muzz 4y ago
The market cap of SVB on Friday was $6 B The amount of uninsured deposits was $150 B The value of all the stock is 4% of the amount of uninsured deposits
- mattbillenstein 4y ago
  What is the shortfall once all the assets of the bank are sold though? It's not like anyone is putting $150B into this to make sure those deposits are made whole.
  - Phlarp 4y ago
    You can't say that right now, I'm not sure anyone can. The government is literally writing a blank check because they don't yet know how much it's going to cost to fix. Everyone seems to be operating under the idea that while their liquidity came into question the underlying assets were and are strong-- if that were true they would have found a private sector solution early in the weekend. Waiting until 6pm on Sunday and a second regional bank collapsing to announce "oops, all bailouts!" seems like an open admission we're in the early stages of another banking crises.
    - mjevans 4y ago
      As far as coverage has stated so far, the underlying assets ARE solid... Problem is they're just not even a good investment compared to brand new fed bonds / bills of short / long (might have that backwards) due to the now MUCH HIGHER interest rates. They locked in at historically low rates, and had a bank run on their free reserves.
      - heisenbit 4y ago
        But then the coverage has mentioned also CMBS. An if you think about those, think about Covid and think about SV remote working…
        tetrahedr0n 4y ago
        I'm sorry, I don't follow the logic here. Do you mind elaborating? I see some correlation between SV remote working and COVID, but don't understand how mortgage backed securities play into this. Are you suggesting higher inflation on the way, lower property values, higher rates, and that it was intentional?
    - friendzis 4y ago
      > the underlying assets were and are strong-- if that were true they would have found a private sector solution early in the weekend One does not follow the other. The triggering problem here were unmatched maturities of assets and liabilities, i.e. liquidity crunch. They have created that liquidity by selling some assets at a loss and tried to recoup that loss from investors. But that was not the problem. The problem was now-imminent bank run, potentially requiring up to ${total-deposits } liquidity injections and unclear future then. Once VCs told their portfolio companies to pull out svb was effectively toast.
      - loandbehold 4y ago
        Bigger bank with more cash could have bought them, fixing liquidity issue. This didn't happen, suggesting that there's problems with bank's assets, not just liquidity.
  - femto113 4y ago
    Nobody has to put in anything other than confidence. Given enough time the bank already has plenty of assets--the whole point of the feds saying "all deposits will be made whole" is to stop the panic withdrawals and thus obviate the need to sell those assets.
- ericd 4y ago
  The amount of the potential losses on the uninsured deposits was a very small fraction of $150B.
  - vintermann 4y ago
    Was it? I think I read somewhere that this bank had an unusually large share of depositors over the deposit insurance limit, or in other words a high share of uninsured deposits.
    - lordnacho 4y ago
      Yes but that doesn't mean they would lose everything over the insured limit. If I owe you 1M but only have 950k to give you that's a lot better than having only 100k, in which case you'd end up with 250k.
      - yawpitch 4y ago
        Ok, but assuming the numbers above are correct, 150B in uninsured deposits - 5B in market cap firesale = 145B that SVB apparently didn’t have the cash on hand to repay. If every depositor walks in first thing Monday morning and withdraws their bad bet in their (apparently single) chosen bank’s management, the customers of all other banks are now on the hook for 145B… which ultimately means everyone on the planet can expect to pay more for their haircuts.
        lordnacho 4y ago
        Huh, are the assets only trading at 5B? I thought it was much closer to 150B?
        jsjohnst 4y ago
        No, GP is just foolishly conflating liabilities and assets and bank deposits and enterprise value among other issues if you read this and their other comments. tl;dr - GP doesn’t have a clue what they are saying.
- deepsun 4y ago
  Better count "enterprise value" than market cap, as that's the price the company is worth.
  - BlueTemplar 4y ago
    What is the difference and where can you see it ?
    - deepsun 4y ago
      Here is full info: [1] As I see it, market cap/valuation _should_ resemble the price you'd need to pay to buy a company, but it often is not. E.g. a company has marketcap of 10B, but has 30B in liquid cash on hand. It's clear it cannot be bought for 10B. Or the other way around, the company has 30B in liabilities -- the company should pay you 20B to be bought. [1] https://www.investopedia.com/terms/e/enterprisevalue.asp https://www.investopedia.com/terms/e/enterprisevalue.asp
- Godel_unicode 4y ago
  First, since we’re comparing numbers to each other, you should go back before Wednesday to get a real number for pre-run market cap, it’s about 2.5x that. Not that it really matters. Second, just so we’re clear is your point that the holders of that $6B-$15B of useless paper won’t care because it’s less than $150B? At the end of the day, you don’t care what percent of the bag you’re holding, just that you’re holding it.
  - RhodesianHunter 4y ago
    Their point is that the value of equity is insignificant to the upper class, as compared to the value of the uninsured deposits. IE the equity isn't enough to leverage political capital. The deposits are.
  - svnt 4y ago
    No, the point is that shareholders of the bank are investors in the bank, and investment comes with the risk of loss. Depositors in a bank are not investors in that bank.
    - yawpitch 4y ago
      > Depositors in a bank are not investors in that bank. No, they’re not. But until just now depositors in any other bank assumed the risk for any deposit in excess of $250K… and if these depositors weren’t morally different than the depositors that would absolutely have lost their wealth in excess of $250K when their chosen bank did a stupid thing, then they’d have paid the piper just like you and I would have. These special depositors are getting special treatment and aren’t suffering what countless non-special depositors have suffered… the rules are changing because of who took the risk, that’s the very definition of moral hazard at work.
- vehementi 4y ago
  Why would you directly compare those two numbers? It owes all those deposits to other entities.
miguelazo 4y ago
The stock isn’t being bailed out, but a certain class of society/account-holder is (again), which seems to be just as bad in terms of perpetuating the moral hazard.
- porknubbins 4y ago
  What moral hazard being created though? Most SVB customers, unless they are finance experts, are not in any position to do due diligence on how their bank invests its loans and are pretty blameless in my opinion. They weren’t capturing any real risk premium by banking with this bank.
  - vintermann 4y ago
    Wasn't the selling point of this bank its "libertarianism"? It's a fairly new bank, why did they switch to it if not for doing some research on it?
    - notfromhere 4y ago
      SVB is a 40 year old bank that's been doing business in the valley since the VC era started.
      - yawpitch 4y ago
        > SVB is a 40 year old bank that's been doing business in the valley since the VC era started. So it’s a fairly new bank, by the standard or banks, and the point remains, why did they choose to risk keeping money in excess of the $250K insurance backstop in one bank with no real track record? Until this event the whole idea of the FDIC insurance fund was to ensure that people (not corporations) with relatively small nest eggs wouldn’t lose the whole thing and therefore starve if their bank made bad bets… once your nest egg grew beyond the backstop it was your right (and privilege) to assume the risk of losing it, if you wanted to. Now because VCs and CEOs were essentially asleep at the wheels of companies that, for the part that have gotten this absurdly quick action from the government, consider $250K to be a rounding error, the rules have changed. That’s the special class… the kind of people who somehow think 40 years is a substantial track record for a business that’s big enough to underpin an economy.
inferiorhuman 4y ago
SVB was publicly traded, and it’s not being bailed out. SVB deposits are being paid for with an assessment on FDIC members. Who do you think is going to pay for that? Sincerely, A PG&E ratepayer
- ahepp 4y ago
  My understanding is it's not yet known whether a special assessment will need to be levied. The FDIC is making all deposits available before they find out, and if it turns out they cannot sell SVB assets to cover deposits, they will levy a special assessment to make up the difference. Certainly open to being corrected if that's wrong. But as far as I know it's a bit premature to talk about this being a "tax on depositors at other banks". It seems like these actions ensuring stability in the banking system may be beneficial to everyone. If it turned out that all SVB assets were worthless and a HUGE special assessment would need to be levied to cover deposits, I would agree that this could be a moral hazard. But right now I think it just looks like prudent management.
  - inferiorhuman 4y ago
    You're absolutely right. It's entirely possible for SVB to sell their assets and cover the entirety of the deposits above FDIC limits. Get real. The issue has never been that SVB's assets were completely worthless, it's that they're not going to cover all of the deposits over the FDIC limits. Ten year bonds were a bad idea and nobody wants them given the current interest rate trajectory. If SVB's assets could've been sold for their full cost they would've been. An assessment will happen, it's just a question of how large it will be.
    - ahepp 4y ago
      It's possible the bank is only a "little bit" insolvent. Is it not possible that the difference can be made up by wiping out shareholders and giving unsecured bondholders a haircut? Per Robert Armstrong of FT: https://www.ft.com/content/9ee5edda-a038-4992-863f-242bd69c8b79 https://www.ft.com/content/9ee5edda-a038-4992-863f-242bd69c8... https://archive.is/OQdR7/43e461dad99a58217efdfde3878ee6b56ccd826e.avif https://archive.is/OQdR7/43e461dad99a58217efdfde3878ee6b56cc... It looks as though SVB may be "only $5 billion" short on its uninsured deposits, with $22 billion in other creditors

throwaway1851 4y ago

Cynicism isn't interchangeable with critical thinking.

forgetfreeman 4y ago
True but it is all too often the product of critical thinking.
- wolverine876 4y ago
  IMHO and IME, it's never the product of critical thinking. It's an emotional reaction, not thinking and especially not thinking critically.
  - forgetfreeman 4y ago
    Whereas IMHO pollyannaism is a product of some combination of denial, naivete, and privilege, and mumbling about cynicism instead of engaging with the point made is nothing more than an expression of cognitive dissonance or worse simple childishness.
    - wolverine876 4y ago
      Right, but who advocates pollyannaism? The alternative to pollyannaism is not cynicism but actual critical thought. The alternative to cynicism is not pollyannaism but actual critical thought.
    - throwaway1851 4y ago
      > mumbling about cynicism instead of engaging with the point made I was leaving it in the subtext, but in case it wasn’t clear: I don’t think the “point” made reflected anything resembling analysis, and therefore deserved no engagement.

mike_d 4y ago

> it's threatening the quality of life of a certain class of people. Like the jerks who chose to work for a company that picked a specific SaaS payroll provider. Or those entitled Etsy sellers that expected to get paid. The absolute nerve.

dmichulke 4y ago
What OP might mean: Technically, your "jerks" don't lose capital (wealth) while the people with deposits in those banks do. Yes, losing a job is a bad thing but a job is a mere right to a transaction (we exchange labor for money in the future) and not lost capital.
- codeddesign 4y ago
  It’s the fed protecting a bank with a large financial interest. This isn’t the last bank this year…but one of few that will be protected.
  - feraloink 4y ago
    How fair is that? You aren't suggesting that it is fair, I realize. And you are correct! Silicon Valley Bank was the first bank this year for whom the Fed is paying for uninsured deposits. The second bank is Signature Bank of New York, which regulators shut down one day later, on Friday March 10th. They are being protected as well. https://www.nytimes.com/2023/03/12/business/signature-bank-collapse.html https://www.nytimes.com/2023/03/12/business/signature-bank-c...
fumeux_fume 4y ago
The money isnt going directly to the workers. It goes to the companies who employ them to make sure the employers are ok. I think the point being made is that when workers ask for protections or concessions it's this massive struggle but when Etsy needs help the money somehow appears literally overnight.
- brazzy 4y ago

bioemerl 4y ago

> the quality of life of a certain class of people By that you're talking about the average citizen right? Suff like railroad strikes would dramatically affect the average citizen.

shjake 4y ago

I think the main goal is to prevent a wider banking crisis and this spiraling out of control. That would surely affect everyone..

philosopher1234 4y ago
Why should we take for granted that that is likely? Because that is what the VCs say? Perhaps this is a convenient belief
- edanm 4y ago
  Or perhaps the experts at Treasury, FDIC, etc, actually made this decision because they think it's true in their expert opinion, not just because VCs said so? They're the officials appointed to be the experts at these things by the people elected to run the government, what better mechanism is there for making this kind of decision?
  - berniedurfee 4y ago
    I wish this were true. This is how I thought things worked when I was a kid. Or did I miss your sarcasm?
    - edanm 4y ago
      I think it is true. Not sarcastic at all. Curios why you think it's not?
      - berniedurfee 4y ago
        Jaded, I suppose. I don’t think the majority of legislators truly align the best interests of individual citizens to their decisions and actions.
  - RandomLensman 4y ago
    I think the issue is that 15 years after the GFC, again the government seems to be needed to prevent a systemic banking crisis. What ever rules where enacted etc. had maybe very little effect if a small bank (and the 16th largest bank isn't a mega-bank) can bring down the system without a government backstop. If lending to banks is too risky for most, then perhaps most should not be allowed to lend to banks. Are bank deposits really the right way to fund banks if they come with these systemic risks or should it all be bonds etc. (and then also have very narrow limits for regulated investors)? Maybe a lot more should be direct lending and not bank lending?

eru 4y ago

Huh, how are strikes still widely legal, then?

SkeuomorphicBee 4y ago
I guess you haven't been following the news. The previous commenters clearly makes a reference to the rail worker's strike from a few months ago, which was the first strike in decades powerful enough to threaten a "wider disruption to the economy", and the fact that government quickly passed special laws to declare that strike illegal. So, to spell it out for other living under a rock: - Labor fighting for better work conditions threaten a wider disruption to the economy, government fights and bends rules against labor. - Capital losing bets threaten a wider disruption to the economy, government fights and bends rules in favor of capital.
- eru 4y ago
  Why don't they outlaw strikes in general?

cornholio 4y ago

> The criteria isn't threatening a "wider disruption to the economy", it's threatening the quality of life of a certain class of people. In support of this view, they could have easily extended FDIC on a dynamic metric, for example 20k for each employee. If you are 5 employee VC fund sitting on 0.5 billion in cash, no bailout for you from taxpayer money (because let's be real, FDIC is all taxpayer money, it's irrelevant if that tax is collected by the govt directly or indirectly via mandatory banking fees). An alternative path was to provide zero interest loans against your SVB holdings, with the expectation that you are on the hook for the shortfall that would be yielded by the liquidation. If SVB is well capitalized as the Fed claims it is and there is "no cost for the taxpayers", then this shortfall should be relatively small if any. Another, even more radical option would be to quickly set-up a secondary market for the debt issued by these banks and let the market provide liquity and discover the value of the assets. This is one of the few innovations form the crypto world I wish we could see in traditional finance, we can't keep bailing out rich mofos like it's 2008 when we have all these wonderful new technologies which can stop contagion and bank runs, protect depositors and zero in on those responsible.

boole1854 4y ago
> In support of this view, they could have easily extended FDIC on a dynamic metric, for example 20k for each employee. Implementing any such "dynamic metric" would have taken time, which would mean they would not have been able to restore all deposits by Monday, which means a significant risk of contagion.
- Swenrekcah 4y ago
  Also that would really have been an example of arbitrary changes to the rules on the fly.
  - cornholio 4y ago
    They can make those rules and preparations beforehand, for the next SVB, Signature etc. Banks would definitely want to optin under such a protective regime and have their systems ready since it alleviates customer panic in an event of a liquidity crisis.