4 ms·

Why hedge when we privatize the profits and socialize the losses? SVB execs sold tens of $millions in stock before the failure. Are the execs going to be forced

Why hedge when we privatize the profits and socialize the losses? SVB execs sold tens of $millions in stock before the failure. Are the execs going to be forced to return the compensation they received for showing higher profits by not hedging?

psychlops 4y ago
Don't forget they also paid bonuses the morning they failed.
- fnordpiglet 4y ago
  This is the time of the year when banks pay bonuses for the prior years work. My understanding is it was scheduled annually at the same time and happened to occur the day they went insolvent. Frankly I’m down with Nancy in client confirm generation getting her bonus. The senior managers all got fired and their comp clawed back, so seems legit.
  - psychlops 4y ago
    I've no problems with Nancy, she's pretty cool. Firing isn't really enough, loss of license and industry bans should be on the table as well as criminal investigations for fraud and negligence of custodial funds.
  - jgon 4y ago
    You seem pretty emphatic that senior managers have had their compensation clawed back but have posted absolutely zero proof that this is the case. Care to show any reason we should believe you?
fnordpiglet 4y ago
Yes. It’s called clawback provisions. They were summarily fired and their compensation was clawed back. And how are the losses being socialized? The assets of the bank are collateralizing the lines of credit they’re getting to stay solvent. It won’t cost anyone a thin penny, other than bank management and shareholders.
- nerdponx 4y ago
  I imagine taxpayers did pay at least something in the form of treasury and fed employees working over the weekend and getting paid overtime. Or is that not how it works?
  - ip26 4y ago
    Are police wages “socializing the cost of crime”? I consider enforcement necessary overhead.
    - nerdponx 4y ago
      I'd say they are. And I agree with you that it's necessary overhead. The action is what "cost the taxpayers money" because it required enforcement action. Crime is actually a great example: we all pay when crimes are committed, so we should all take interest in preventing crime rather than just reacting whenever it happens. The same is true for things like rail freight safety, air travel safety, and banking.
- tripletao 4y ago
  The FDIC is guaranteeing all SVB deposits, including deposits above $250k. Any deficit will be paid from the FDIC's insurance fund, which if necessary will be topped up by a special assessment on all participating banks. So the losses (if any) won't be socialized over taxpayers, but they will be socialized over some combination of bank owners and customers. https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm https://www.federalreserve.gov/newsevents/pressreleases/mone...
  - dragonwriter 4y ago
    > So the losses (if any) won’t be socialized over taxpayers, I mean, a “special assessment” is just a different word for a one-time tax, and it being directly on all banks and indirectly on everyone who banks, or does business with entities who bank, makes distinguishing the payers of this tax and “taxpayers” ludicrous hair-splitting.
  - 4y ago

psychlops 4y ago

Don't forget they also paid bonuses the morning they failed.

fnordpiglet 4y ago
This is the time of the year when banks pay bonuses for the prior years work. My understanding is it was scheduled annually at the same time and happened to occur the day they went insolvent. Frankly I’m down with Nancy in client confirm generation getting her bonus. The senior managers all got fired and their comp clawed back, so seems legit.
- psychlops 4y ago
  I've no problems with Nancy, she's pretty cool. Firing isn't really enough, loss of license and industry bans should be on the table as well as criminal investigations for fraud and negligence of custodial funds.
- jgon 4y ago
  You seem pretty emphatic that senior managers have had their compensation clawed back but have posted absolutely zero proof that this is the case. Care to show any reason we should believe you?

fnordpiglet 4y ago

Yes. It’s called clawback provisions. They were summarily fired and their compensation was clawed back. And how are the losses being socialized? The assets of the bank are collateralizing the lines of credit they’re getting to stay solvent. It won’t cost anyone a thin penny, other than bank management and shareholders.

nerdponx 4y ago
I imagine taxpayers did pay at least something in the form of treasury and fed employees working over the weekend and getting paid overtime. Or is that not how it works?
- ip26 4y ago
  Are police wages “socializing the cost of crime”? I consider enforcement necessary overhead.
  - nerdponx 4y ago
    I'd say they are. And I agree with you that it's necessary overhead. The action is what "cost the taxpayers money" because it required enforcement action. Crime is actually a great example: we all pay when crimes are committed, so we should all take interest in preventing crime rather than just reacting whenever it happens. The same is true for things like rail freight safety, air travel safety, and banking.
tripletao 4y ago
The FDIC is guaranteeing all SVB deposits, including deposits above $250k. Any deficit will be paid from the FDIC's insurance fund, which if necessary will be topped up by a special assessment on all participating banks. So the losses (if any) won't be socialized over taxpayers, but they will be socialized over some combination of bank owners and customers. https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm https://www.federalreserve.gov/newsevents/pressreleases/mone...
- dragonwriter 4y ago
  > So the losses (if any) won’t be socialized over taxpayers, I mean, a “special assessment” is just a different word for a one-time tax, and it being directly on all banks and indirectly on everyone who banks, or does business with entities who bank, makes distinguishing the payers of this tax and “taxpayers” ludicrous hair-splitting.
- 4y ago