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> fund bank bailouts So far no bank has been bailed out. e.g. SVB had assets to cover deposit liabilities (just not in a liquid form).

the_third_wave 4y ago
...New York-based Signature Bank, which collapsed over the weekend and will be bailed out by the new Bank Term Funding Program (BTFP), the Biden administration announced on Sunday.... [1] Either Daily Caller is calling it incorrectly or at least one bank is being bailed out as of now. All comes down to the definition of 'bailing out', does it mean that depositors are made whole past the $250K limit, that investors are being made whole, that banks are simply taken over with their losses covered by the government which hopes to recoup the costs when the banks are sold on the market? [1] https://dailycaller.com/2023/03/13/former-dem-rep-landmark-financial-reform-law-board-ny-bank-biden-bailing-out/ https://dailycaller.com/2023/03/13/former-dem-rep-landmark-f...
freitzkriesler2 4y ago
The problem was their assets are going to pay out over at least a decade. If they wanted to redeem them "now" then those assets would have been sold on the open market below the par value. The fed is stepping in as the buyer of last resort and offering what is essentially QE in all but name again to buy those bonds/MBS at their par value. Releasing that cash out into the wider economy when it was initially locked up in loans increasing inflation which is a tax on all of us. It very much is a bailout and everyone who uses the dollar is paying for it.
- starkd 4y ago
  But this is a narrow interest so that depositors at least have access to their money. It does not reward the bank. So long as the bank isn't rewarded, it should be a caution flag for the other banks to take risk management more seriously. Startups have to also have to get their burn rate under control or go out of business.
  - nerdponx 4y ago
    I think the argument here is that the SVB execs were "in bed" (so to speak) with the VCs who were pushing their companies to deposit at SVB, and the now-fired execs still have their recent bonus payouts. So the punishment is not spread out far enough to discourage moral hazard and future systemically-risky gambling with millions of dollars of other people's money. I'm not sure the same argument applies for the other bank(s) with huge MBS investments with lower yields than equivalent Treasury bonds. I don't know enough about those casees.
MrMan 4y ago
that is a lie - the value of their assets is far below their liabilities. mods here need to somehow crack down on outright falsehoods

the_third_wave 4y ago

...New York-based Signature Bank, which collapsed over the weekend and will be bailed out by the new Bank Term Funding Program (BTFP), the Biden administration announced on Sunday.... [1] Either Daily Caller is calling it incorrectly or at least one bank is being bailed out as of now. All comes down to the definition of 'bailing out', does it mean that depositors are made whole past the $250K limit, that investors are being made whole, that banks are simply taken over with their losses covered by the government which hopes to recoup the costs when the banks are sold on the market? [1] https://dailycaller.com/2023/03/13/former-dem-rep-landmark-financial-reform-law-board-ny-bank-biden-bailing-out/ https://dailycaller.com/2023/03/13/former-dem-rep-landmark-f...

freitzkriesler2 4y ago

The problem was their assets are going to pay out over at least a decade. If they wanted to redeem them "now" then those assets would have been sold on the open market below the par value. The fed is stepping in as the buyer of last resort and offering what is essentially QE in all but name again to buy those bonds/MBS at their par value. Releasing that cash out into the wider economy when it was initially locked up in loans increasing inflation which is a tax on all of us. It very much is a bailout and everyone who uses the dollar is paying for it.

starkd 4y ago
But this is a narrow interest so that depositors at least have access to their money. It does not reward the bank. So long as the bank isn't rewarded, it should be a caution flag for the other banks to take risk management more seriously. Startups have to also have to get their burn rate under control or go out of business.
- nerdponx 4y ago
  I think the argument here is that the SVB execs were "in bed" (so to speak) with the VCs who were pushing their companies to deposit at SVB, and the now-fired execs still have their recent bonus payouts. So the punishment is not spread out far enough to discourage moral hazard and future systemically-risky gambling with millions of dollars of other people's money. I'm not sure the same argument applies for the other bank(s) with huge MBS investments with lower yields than equivalent Treasury bonds. I don't know enough about those casees.

MrMan 4y ago

that is a lie - the value of their assets is far below their liabilities. mods here need to somehow crack down on outright falsehoods