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This is a bad take on what FDIC did with SVB, and certainly not an assumption that is safe to rely on. Please do not spread this, as people who believe it carry

This is a bad take on what FDIC did with SVB, and certainly not an assumption that is safe to rely on. Please do not spread this, as people who believe it carry a real risk of financial harm. There are multiple threads trying to go into detail about the nuance of what happened, so I'll spare from rehashing it here. But it certainly was not promising FDIC coverage on all deposited funds.

qeternity 4y ago
> and certainly not an assumption that is safe to rely on. What scenario can you imagine where this does not hold true? SVB is almost the perfect scenario in which to haircut depositors, and yet here we are.
- colinmorelli 4y ago
  The Failed Bank List on the FDIC has quite a few examples. You can see dividend payouts from failed banks here: https://closedbanks.fdic.gov/dividends/ https://closedbanks.fdic.gov/dividends/ There are many examples of cases in which depositors take a 4-10% haircut, and receive it months or years after the failure (meaning the haircut is quite a bit larger when factoring for time).
  - Scoundreller 4y ago
    Thanks for that. Looks like the IndyMac uninsured did only get 50% on the uninsured portion. Was always wondering if they got more, but nope. (They did get lucky in that fdic limit was $100k and I think they retroactively upped it to $250k on this failure, but that probably hurt rather than helped anyone with over $500k or so). Many other examples of >10% losses, would be cool if someone did an analysis.
generj 4y ago
Right if you bank at a regional bank that isn’t connected to influential VC your deposits might still lose value.
berkle4455 4y ago
How much would you like to bet that FDIC will formally announce 100% protection for depositors and the cost of that will be borne by FDIC member banks along with dramatically increasing banking scrunity for banks of all sizes. Bank stocks will crash more, and consumers will ultimately feel the pinch as banks use the only tools then available to create margins: dramatically increased fees and cost of borrowing.
- colinmorelli 4y ago
  And if they do, then that's the right time to begin claiming that 100% of deposits are FDIC insured. That time is not now.
  - berkle4455 4y ago
    It’s already the time. The decision was made literally yesterday with SVB and Signature.
    - colinmorelli 4y ago
      There was absolutely zero announcement yesterday that 100% of all deposits in all banks are guaranteed by FDIC. There was a commitment to cover 100% of SVB and Signature Bank deposits under the systemic risk exception. You can take issue with this, or suggest that they will offer protection for 100% of deposits in the future, and that's fine. I'm not going to argue that point, since I don't know what will happen next. But to say that the FDIC came out and announced 100% protection of all deposits is no more true today than it was when banks were bailed out in the '08 crisis, and there have been many, many examples of depositors losing money since those bailouts happened.
      - berkle4455 4y ago
        I’m not talking about failures since 08. Just since Thursday. It’s a new policy. You can debate the nuances all you want, I’m sticking with the simple proof and reality. FDIC member banks offer 100% depositor protection now.
deleted 4y ago
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qeternity 4y ago

> and certainly not an assumption that is safe to rely on. What scenario can you imagine where this does not hold true? SVB is almost the perfect scenario in which to haircut depositors, and yet here we are.

colinmorelli 4y ago
The Failed Bank List on the FDIC has quite a few examples. You can see dividend payouts from failed banks here: https://closedbanks.fdic.gov/dividends/ https://closedbanks.fdic.gov/dividends/ There are many examples of cases in which depositors take a 4-10% haircut, and receive it months or years after the failure (meaning the haircut is quite a bit larger when factoring for time).
- Scoundreller 4y ago
  Thanks for that. Looks like the IndyMac uninsured did only get 50% on the uninsured portion. Was always wondering if they got more, but nope. (They did get lucky in that fdic limit was $100k and I think they retroactively upped it to $250k on this failure, but that probably hurt rather than helped anyone with over $500k or so). Many other examples of >10% losses, would be cool if someone did an analysis.

generj 4y ago

Right if you bank at a regional bank that isn’t connected to influential VC your deposits might still lose value.

berkle4455 4y ago

How much would you like to bet that FDIC will formally announce 100% protection for depositors and the cost of that will be borne by FDIC member banks along with dramatically increasing banking scrunity for banks of all sizes. Bank stocks will crash more, and consumers will ultimately feel the pinch as banks use the only tools then available to create margins: dramatically increased fees and cost of borrowing.

colinmorelli 4y ago
And if they do, then that's the right time to begin claiming that 100% of deposits are FDIC insured. That time is not now.
- berkle4455 4y ago
  It’s already the time. The decision was made literally yesterday with SVB and Signature.
  - colinmorelli 4y ago
    There was absolutely zero announcement yesterday that 100% of all deposits in all banks are guaranteed by FDIC. There was a commitment to cover 100% of SVB and Signature Bank deposits under the systemic risk exception. You can take issue with this, or suggest that they will offer protection for 100% of deposits in the future, and that's fine. I'm not going to argue that point, since I don't know what will happen next. But to say that the FDIC came out and announced 100% protection of all deposits is no more true today than it was when banks were bailed out in the '08 crisis, and there have been many, many examples of depositors losing money since those bailouts happened.
    - berkle4455 4y ago
      I’m not talking about failures since 08. Just since Thursday. It’s a new policy. You can debate the nuances all you want, I’m sticking with the simple proof and reality. FDIC member banks offer 100% depositor protection now.

deleted 4y ago

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