3 ms·

No system is perfect. What would you suggest?

JumpCrisscross 4y ago
> What would you suggest? Fed accepts Treasuries at face value, not market, at the discount window. Stress testing for banks with more than $50bn deposits. (No Barney Frank/SVB exception.) New FDIC assessments for large deposits. Tier so banks can reasonably choose to refuse them, or charge an excess-deposit fee. ($1mm, $10mm, $100mm seem reasonable.)
- gruez 4y ago
  >Fed accepts Treasuries at face value, not market, at the discount window. Why would anyone buy short dated treasuries then, when you can load up on 25 year treasuries at a steep discount (relative to face value) then turn around and give it to the fed at face value? >Stress testing for banks with more than $50bn deposits. (No Barney Frank/SVB exception.) SVB had just shy of $20B in deposits >New FDIC assessments for large deposits. Tier so banks can reasonably choose to refuse them, or charge an excess-deposit fee. ($1mm, $10mm, $100mm seem reasonable.) Is this really an issue that exists? Are banks obligated by regulation to accept deposits or something?
  - JumpCrisscross 4y ago
    > when you can load up on 25 year treasuries at a steep discount (relative to face value) then turn around and give it to the fed at face value We’ve already answered this question with the bailouts of SVB and Signature’s depositors. (Granted, not shareholders.) Maybe a higher penalty rate for face-value borrowing? Or a limit to it, such that it serves as a canary? > SVB had just shy of $20B in deposits After the run. Before it had close to $200bn [1]. > really an issue that exists It doesn’t, and that’s the problem. The FDIC assesses a uniform charge on all of a bank’s liabilities. It’s clear some depositors pose a greater risk than others. I’m proposing differentiating the FDIC’s fee to incorporate that information, thereby encouraging banks to differentiate. Want to be a loosely-regulated community bank that can offer small depositors a higher rate because you aren’t paying to insure Peter Thiel? Great, now you can. [1] https://www.nytimes.com/2023/03/10/business/silicon-valley-bank-stock.html https://www.nytimes.com/2023/03/10/business/silicon-valley-b...
  - deleted 4y ago
    [deleted]

> What would you suggest? Fed accepts Treasuries at face value, not market, at the discount window. Stress testing for banks with more than $50bn deposits. (No Barney Frank/SVB exception.) New FDIC assessments for large deposits. Tier so banks can reasonably choose to refuse them, or charge an excess-deposit fee. ($1mm, $10mm, $100mm seem reasonable.)

gruez 4y ago
>Fed accepts Treasuries at face value, not market, at the discount window. Why would anyone buy short dated treasuries then, when you can load up on 25 year treasuries at a steep discount (relative to face value) then turn around and give it to the fed at face value? >Stress testing for banks with more than $50bn deposits. (No Barney Frank/SVB exception.) SVB had just shy of $20B in deposits >New FDIC assessments for large deposits. Tier so banks can reasonably choose to refuse them, or charge an excess-deposit fee. ($1mm, $10mm, $100mm seem reasonable.) Is this really an issue that exists? Are banks obligated by regulation to accept deposits or something?
- JumpCrisscross 4y ago
  > when you can load up on 25 year treasuries at a steep discount (relative to face value) then turn around and give it to the fed at face value We’ve already answered this question with the bailouts of SVB and Signature’s depositors. (Granted, not shareholders.) Maybe a higher penalty rate for face-value borrowing? Or a limit to it, such that it serves as a canary? > SVB had just shy of $20B in deposits After the run. Before it had close to $200bn [1]. > really an issue that exists It doesn’t, and that’s the problem. The FDIC assesses a uniform charge on all of a bank’s liabilities. It’s clear some depositors pose a greater risk than others. I’m proposing differentiating the FDIC’s fee to incorporate that information, thereby encouraging banks to differentiate. Want to be a loosely-regulated community bank that can offer small depositors a higher rate because you aren’t paying to insure Peter Thiel? Great, now you can. [1] https://www.nytimes.com/2023/03/10/business/silicon-valley-bank-stock.html https://www.nytimes.com/2023/03/10/business/silicon-valley-b...
- deleted 4y ago
  [deleted]