25 ms·

Federal Reserve lent $300B in emergency funds to banks in the past week

186 points by halabarouma 4y ago

luckylion 4y ago
Why are we even doing the dance that banks need to keep short term assets on hand to satisfy deposit outflow? Can't they just buy whatever government bonds they want (if the federal government defaults and does not honor its debt there are bigger issues than some regional bank) and give them to the Fed in exchange for freshly minted money? It's the end result in either case, but a lot of uncertainty and friction is added for some reason. Why?
- ClumsyPilot 4y ago
  Banks lend money to the US government so that a different branch of government can loan the money again to the banks? The whole thing sounds like a charade
  - HPsquared 4y ago
    The "real" circular economy.
  - inconceivable 4y ago
    wait until you realize that the deposits that first republic received last week came from the big 4 banks... which were flush from cash they received from transfers from smaller banks like first republic. we are living in financial clownworld now.
    - 29athrowaway 4y ago
      https://youtu.be/1aVYJ-krSMA?t=5 https://youtu.be/1aVYJ-krSMA?t=5
  - soheil 4y ago
    By having banks buy government bonds and/or lend money to the government, they are essentially investing in the stability of the government itself. This can help build confidence in the government and the banking sector, which can contribute to overall stability. Of course, there are still real risks and challenges that exist, such as potential default by the government or problems within the banking system.
  - checkcircuits 4y ago
    That's because it is a charade. The fed's entire job is basically a dependency injection in an otherwise free market. Money creation in a modern economy is literal magic and while they may claim it's tied to "metrics" these metrics are tenuous at best. Unfortunately, the clown show has been run for the last 20 years by people who do not have the country's best interests at heart. We are now reaping what was sown with the 20 years of free money to banks.
    - chii 4y ago
      > We are now reaping what was sown with the 20 years of free money to banks. This argument ignores the "black swan" events of covid, ukrainian invasion by russia, supply bottlenecks of various kinds, and trade tensions with china, all happening at the "same" time within the last 3 years.
- tripletao 4y ago
  Under previous policy, the Fed would lend only against the market value of an asset. The FMV of a long-term bond declines when interest rates increase, so that didn't help. This is roughly how the SVB failed. Under new policy, for the next year, the Fed will lend against the par value of certain assets purchased before the crisis. That's an undercollateralized loan, so it's a subsidy to banks that took excessive interest rate risks. Those banks are still worse off than if they hadn't taken that risk though, since the interest cost of the loan is greater than the interest paid by the asset. This policy change has no direct cost to the public if the loans are repaid. If a bank gets such a loan and then fails anyways, some losses will be socialized. https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm https://www.federalreserve.gov/newsevents/pressreleases/mone...
- haileys 4y ago
  > and give them to the Fed in exchange for freshly minted money? Is this not essentially QE?
Findeton 4y ago
This is another QE/Quantitative Easing, even if they don't call it that way. I hope inflation doesn't come back/get higher again because then we'd likely see the kind of second wave inflation people saw in the 70s.
- wesapien 4y ago
  According to the internet it's a loan to prevent these affected banks from failing. Some things are going to fail and go under in the effort to lower inflation. Better them than everyone else. Call it trimming the fat or taking out the trash. If it weren't for the low interest rates/near zero rates, some entities wouldn't even exists now. I spoke to a trader and he said even retail traders could've telegraphed the changing rate conditions and made adjustments. Why wouldn't banks?
- almost_usual 4y ago
  It’s a loan, not QE. QE is no strings attached money injected into the market. QT is still ongoing as of last week, however, I don’t see it lasting. I do think a .25 rate hike will still happen.
  - yieldcrv 4y ago
    its a 0% loan (edit: 4.68%) at a 100% loan to value ratio, actually at par value not even the current market value, and if the banks don't pay then the fed seizes the collateral this is QE with extra steps
    - ars 4y ago
      It is not as 0% loan, that's not true. The actual rate is 4.68%.
    - drexlspivey 4y ago
      > Rate: The rate for term advances will be the one-year overnight index swap rate plus 10 basis points; the rate will be fixed for the term of the advance on the day the advance is made. more like 5%
StopHammoTime 4y ago
Id be curious to know how much physical currency has been withdrawn and if there are pressures on that. Inter-bank deposits are covered for people fleeing bad banks, but anecdotally I know a few people who are withdrawing all their hard cash. I wonder if central banks will have issues with that soon.
- monero-xmr 4y ago
  [flagged]
  - _2d30 4y ago
    > It's all about crypto > Fiat is trash Okie dokie.
  - overthrow 4y ago
    > Fiat is trash I'll gladly take that trash off your hands if you hate it so much
    - spaceman_2020 4y ago
      Statistically, the majority of the world’s fiat IS trash. Most of the world’s currencies are not worth holding at all. You just happen to be born in a country that doesn’t have trash fiat - yet. But if you were born in Pakistan, Lebanon, Argentina, or even Turkey, you’d probably say that your fiat was trash.
      - dragonwriter 4y ago
        > Most of the world’s currencies are not worth holding at all. No currencies are worth holding (lending at interest isn’t holding.) Holding isn’t what currency is for.
        spaceman_2020 4y ago
        Most currencies are also not worth lending at prevailing local interest rates. Currently, that also applies to apparently non-trash currencies like Euro and to some degree, USD.
paxys 4y ago
I assume banks went ahead and bought subprime mortgage bonds with that $300B. And at this point why not? Everyone knows that the government will print an unlimited amount of money to keep the system going no matter what risks you take and how careless you are.
- bozhark 4y ago
  subprime auto loan defaults in first wave
  - jaggederest 4y ago
    Commercial real estate lending has to be pretty shaky too with the change in occupancy levels of offices since 2020.
- phailhaus 4y ago
  SVB and Signature banks both failed, their shareholders walked away with nothing. This does not encourage risk-taking on the part of the banks.
  - paxys 4y ago
    Why doesn't it? This bank may have failed. Their next one may not. They are playing with house money, and have limited time in the casino. Betting big is the optimal strategy.
  - NotYourLawyer 4y ago
    Shareholders aren’t the ones deciding the bank’s risk tolerance.
  - spaceman_2020 4y ago
    There is a long lag between taking on excessive risk and failure. In that period, your excessive risk taking will likely show excessive growth, which will likely lead to stronger stock prices. If you’re a banking exec, your salary is linked to stock performance. You can easily run up 5-8 years before the whole edifice crumbles, pocketing fat bonuses in the interim. Who cares if Joe Shareholder gets left with nothing at the end? You and all your exec buddies can make off like bandits in the interim.
theknocker 4y ago
[dead]
deleted 4y ago
[deleted]
jmyeet 4y ago
So here's what I'm confused by. The writing was on the wall a year ago for rapid interest rate hikes. This has well-known and predictable effects on long-term bond holdings. Why didn't banks liquidate their long-term bond holdings a year ago? I can guess the answer: they wanted to protect executive bonuses and share prices. They hoped they could just stick their heads in the sands and hold those bonds to maturity. Another question: why even hold their liquidity in long-term bonds that are more sensitive to interest rate changes? Banks could've rolled 90 day Fed debt instead of 10+ year bonds. Again, I can guess the answer: long-term bonds have better yields so the bank can artificially improve its position (ie executive bonuses and share prices again) by adding risk to their depositor funds. I'm happy to see the solution for poor financial management (eg SVB) is for the bank to be dissolved. Let shareholders bear the cost for poor management.
- rosywoozlechan 4y ago
  There was an article in the WSJ today how the San Francisco Fed cited SVB multiple times in 2022 for their risk to rising interest rates, and how SVB's models were wrong. SVB believed the rising interest rates would improve their outlook, not be a risk.
- joe_the_user 4y ago
  I think the main thing is that holding long bonds was a way to get profits and pay interest. Despite being doomed long term, there were a couple reasons banks did it - they couldn't make money by making conventional business loans, profitable loan opportunities weren't available and most banks expected to be bailed out when things went bad (Silicon Valley Bank and Signature had each been previously bailed out). The related question is why did regulators turn a blind eye? Interest rate risk is something regulators look at. I know SVB had some loopholes that prevented a lot of oversight but one other factor that comes to mind is that the Fed needed to get rid of high prices/low-interest Fannie Mae bonds somehow and letting bonds feed on them was one way.
  - Dylan16807 4y ago
    The fed sent multiple warnings. Not exactly a blind eye but not great either.
narrator 4y ago
The banks didn't need to buy those bonds back in 2021. The fed could have just done it and prevented all the ensuing drama once rates rose ahead of time.
fuoqi 4y ago
Is there anything preventing banks from buying treasures on open market by using funds they got from Fed by exchanging their treasuries on mark-to-maturity basis? Looks like a bailout with extra steps.
- arthurcolle 4y ago
  Can you explain the steps that you're thinking and explain why they would matter at this scale?
  - fuoqi 4y ago
    A bank has 10 year bond which trades 90 cents on the dollar on the open market. It gives the bond to Fed as collateral and receives 1 dollar. It uses this dollar to buy bonds on open market with rate higher than cost of the loan, after 90 days it sells the bond, gives the Fed 1 dollar and interest, and pockets the rate spread on 10 cents.
  - iforgetti 4y ago
    A bond bought by a bank in the past at a lower interest rate than those offered today is worth less than those offered today. If the fed values those bonds at face value (rather than what the market would pay today) and allows the bank to borrow money using those as collateral, then a bank could simply borrow from the fed using the older less valuable bonds as collateral and then buy new more valuable bonds. The bank could then default on the loan and forfeit the original less valuable bond. This would effectively be the fed giving free money to the bank.
    - HDThoreaun 4y ago
      You can't just "default on a loan." The Fed would reposes their other assets...
- HDThoreaun 4y ago
  The interest rate on the loans is .1% higher than the 3 month T bills which is all they can get before the loan comes due. They would lose money with this strategy.
cinquemb 4y ago
More HQLA locked up for x amount of time... what could go wrong...
beiller 4y ago
The fed has backstopped the FDIC. Instead of letting taxpayers foot the bill, of which are majority of payers are the very wealthy, they will foot the bill via inflation by rolling back some of the QE. Sure it's just a loan but what if the loan has no one to repay. Who will repay this loan in SVB's situation (the shortfall of asset sales to account balances) maybe I am misunderstanding. The money to cover the shortfall of the FDIC was conjured. It will find a way to your grocery bill. If all the banks are paying a fee to foot the bill, the payers of that fee will be you the customer.
- HDThoreaun 4y ago
  > Who will repay this loan in SVB's situation? The FDIC has announced that any shortfalls wlil be paid by the collective member banks. As long as the banks can't pass these costs onto customers it will have no effect on taxpayers. There's good reason to believe that one time supply shocks don't effect prices, so I'd say taxpayers did not foot the bill here. Bank equity holders did.
  - chii 4y ago
    > As long as the banks can't pass these costs onto customers fat chance?
throwawaybank1 4y ago
I wish I started a bank
throwawaybank1 4y ago
13 years of QE. You don't have to be an economist to see the coming recession or even worse depression. Better prepare for the worse.
- jaimehrubiks 4y ago
  How do we prepare?
  - kayamon 4y ago
    Stack sats.
- NovaDudely 4y ago
  Prepare for the worst, hope for the best. I honestly do not think that all this flux in the banking system is 'The economic burst' (TM) but it will definitely be in the opening chapters of the book on it in a few decades time. Banks and governments have become very good at figuring out how to put band-aids over band-aids. SVB and the little heart skip the UK had last year are good examples. But the long term conditions they are creating is lining us up for a big drop in the next 5-10 years. When the symbolic claims we have de-laminate from the biophysical world, the drop is going to make a lot of people nauseous. The problems will be inflated to such a size that they cannot be saved in any meaningful manner. What to do with this information? Beats me! Personally I am getting the physical assets I actually use, reducing my physical needs were possible and then sitting back like legend of Nero and watching Rome burn while being more like the reality of Nero and helping who ever I can.
aussiedude 4y ago
So why did investors have to loose big time on a 1.8B loss when the bank had 16B in assets? Seems like SVB was scarified
- tommiegannert 4y ago
  NY Times alleges that the Fed had been telling SVB about the reserve issues since 2021. It sounds like SVB was a poorly run bank. When it came down, I'm sure a bunch of people said "told you so," but there was ample time to correct before then. https://www.smh.com.au/business/banking-and-finance/before-collapse-of-silicon-valley-bank-the-fed-spotted-big-problems-20230320-p5ctgy.html https://www.smh.com.au/business/banking-and-finance/before-c...
symlinkk 4y ago
This is one of those rare threads on HN where I can’t understand a single thing people are talking about
- yaacov 4y ago
  It’s okay, neither can the people posting
  - lamontcg 4y ago
    Be fair, they've laughed at uncountably many "money printer go brrrr" memes, so they're board certified as economists now.
iancmceachern 4y ago
I think what we're learning from all this is that the people we trust with our money, the "financial sector", can't be trusted with our money
- iancmceachern 4y ago
  To whomever downvoted this - what happened at SVB and Credit Suisse was confidence inspiring? Trust building?
  - cipheredStones 4y ago
    You're not being downvoted because people trust banks; you're being downvoted because commenting "you can't trust the banks" doesn't add anything interesting to the discussion, it's just a bare statement of a common opinion.
    - iancmceachern 4y ago
      And that's not ok why? It's not against the HN policies... And you are incorrect, my point is we can't trust the people currently in charge of much of our financial system. Not a mistrust of the institutions themselves.
      - orf 4y ago
        It’s perfectly ok to post that, but don’t expect to not be downvoted for it
steve76 4y ago
[dead]

186 points by halabarouma 4y ago

Why are we even doing the dance that banks need to keep short term assets on hand to satisfy deposit outflow? Can't they just buy whatever government bonds they want (if the federal government defaults and does not honor its debt there are bigger issues than some regional bank) and give them to the Fed in exchange for freshly minted money? It's the end result in either case, but a lot of uncertainty and friction is added for some reason. Why?

ClumsyPilot 4y ago
Banks lend money to the US government so that a different branch of government can loan the money again to the banks? The whole thing sounds like a charade
- HPsquared 4y ago
  The "real" circular economy.
- inconceivable 4y ago
  wait until you realize that the deposits that first republic received last week came from the big 4 banks... which were flush from cash they received from transfers from smaller banks like first republic. we are living in financial clownworld now.
  - 29athrowaway 4y ago
    https://youtu.be/1aVYJ-krSMA?t=5 https://youtu.be/1aVYJ-krSMA?t=5
- soheil 4y ago
  By having banks buy government bonds and/or lend money to the government, they are essentially investing in the stability of the government itself. This can help build confidence in the government and the banking sector, which can contribute to overall stability. Of course, there are still real risks and challenges that exist, such as potential default by the government or problems within the banking system.
- checkcircuits 4y ago
  That's because it is a charade. The fed's entire job is basically a dependency injection in an otherwise free market. Money creation in a modern economy is literal magic and while they may claim it's tied to "metrics" these metrics are tenuous at best. Unfortunately, the clown show has been run for the last 20 years by people who do not have the country's best interests at heart. We are now reaping what was sown with the 20 years of free money to banks.
  - chii 4y ago
    > We are now reaping what was sown with the 20 years of free money to banks. This argument ignores the "black swan" events of covid, ukrainian invasion by russia, supply bottlenecks of various kinds, and trade tensions with china, all happening at the "same" time within the last 3 years.
tripletao 4y ago
Under previous policy, the Fed would lend only against the market value of an asset. The FMV of a long-term bond declines when interest rates increase, so that didn't help. This is roughly how the SVB failed. Under new policy, for the next year, the Fed will lend against the par value of certain assets purchased before the crisis. That's an undercollateralized loan, so it's a subsidy to banks that took excessive interest rate risks. Those banks are still worse off than if they hadn't taken that risk though, since the interest cost of the loan is greater than the interest paid by the asset. This policy change has no direct cost to the public if the loans are repaid. If a bank gets such a loan and then fails anyways, some losses will be socialized. https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm https://www.federalreserve.gov/newsevents/pressreleases/mone...
haileys 4y ago
> and give them to the Fed in exchange for freshly minted money? Is this not essentially QE?

Findeton 4y ago

This is another QE/Quantitative Easing, even if they don't call it that way. I hope inflation doesn't come back/get higher again because then we'd likely see the kind of second wave inflation people saw in the 70s.

wesapien 4y ago
According to the internet it's a loan to prevent these affected banks from failing. Some things are going to fail and go under in the effort to lower inflation. Better them than everyone else. Call it trimming the fat or taking out the trash. If it weren't for the low interest rates/near zero rates, some entities wouldn't even exists now. I spoke to a trader and he said even retail traders could've telegraphed the changing rate conditions and made adjustments. Why wouldn't banks?
almost_usual 4y ago
It’s a loan, not QE. QE is no strings attached money injected into the market. QT is still ongoing as of last week, however, I don’t see it lasting. I do think a .25 rate hike will still happen.
- yieldcrv 4y ago
  its a 0% loan (edit: 4.68%) at a 100% loan to value ratio, actually at par value not even the current market value, and if the banks don't pay then the fed seizes the collateral this is QE with extra steps
  - ars 4y ago
    It is not as 0% loan, that's not true. The actual rate is 4.68%.
  - drexlspivey 4y ago
    > Rate: The rate for term advances will be the one-year overnight index swap rate plus 10 basis points; the rate will be fixed for the term of the advance on the day the advance is made. more like 5%

StopHammoTime 4y ago

Id be curious to know how much physical currency has been withdrawn and if there are pressures on that. Inter-bank deposits are covered for people fleeing bad banks, but anecdotally I know a few people who are withdrawing all their hard cash. I wonder if central banks will have issues with that soon.

monero-xmr 4y ago
[flagged]
- _2d30 4y ago
  > It's all about crypto > Fiat is trash Okie dokie.
- overthrow 4y ago
  > Fiat is trash I'll gladly take that trash off your hands if you hate it so much
  - spaceman_2020 4y ago
    Statistically, the majority of the world’s fiat IS trash. Most of the world’s currencies are not worth holding at all. You just happen to be born in a country that doesn’t have trash fiat - yet. But if you were born in Pakistan, Lebanon, Argentina, or even Turkey, you’d probably say that your fiat was trash.
    - dragonwriter 4y ago
      > Most of the world’s currencies are not worth holding at all. No currencies are worth holding (lending at interest isn’t holding.) Holding isn’t what currency is for.
      - spaceman_2020 4y ago
        Most currencies are also not worth lending at prevailing local interest rates. Currently, that also applies to apparently non-trash currencies like Euro and to some degree, USD.

paxys 4y ago

I assume banks went ahead and bought subprime mortgage bonds with that $300B. And at this point why not? Everyone knows that the government will print an unlimited amount of money to keep the system going no matter what risks you take and how careless you are.

bozhark 4y ago
subprime auto loan defaults in first wave
- jaggederest 4y ago
  Commercial real estate lending has to be pretty shaky too with the change in occupancy levels of offices since 2020.
phailhaus 4y ago
SVB and Signature banks both failed, their shareholders walked away with nothing. This does not encourage risk-taking on the part of the banks.
- paxys 4y ago
  Why doesn't it? This bank may have failed. Their next one may not. They are playing with house money, and have limited time in the casino. Betting big is the optimal strategy.
- NotYourLawyer 4y ago
  Shareholders aren’t the ones deciding the bank’s risk tolerance.
- spaceman_2020 4y ago
  There is a long lag between taking on excessive risk and failure. In that period, your excessive risk taking will likely show excessive growth, which will likely lead to stronger stock prices. If you’re a banking exec, your salary is linked to stock performance. You can easily run up 5-8 years before the whole edifice crumbles, pocketing fat bonuses in the interim. Who cares if Joe Shareholder gets left with nothing at the end? You and all your exec buddies can make off like bandits in the interim.

theknocker 4y ago

[dead]

deleted 4y ago

[deleted]

jmyeet 4y ago

So here's what I'm confused by. The writing was on the wall a year ago for rapid interest rate hikes. This has well-known and predictable effects on long-term bond holdings. Why didn't banks liquidate their long-term bond holdings a year ago? I can guess the answer: they wanted to protect executive bonuses and share prices. They hoped they could just stick their heads in the sands and hold those bonds to maturity. Another question: why even hold their liquidity in long-term bonds that are more sensitive to interest rate changes? Banks could've rolled 90 day Fed debt instead of 10+ year bonds. Again, I can guess the answer: long-term bonds have better yields so the bank can artificially improve its position (ie executive bonuses and share prices again) by adding risk to their depositor funds. I'm happy to see the solution for poor financial management (eg SVB) is for the bank to be dissolved. Let shareholders bear the cost for poor management.

rosywoozlechan 4y ago
There was an article in the WSJ today how the San Francisco Fed cited SVB multiple times in 2022 for their risk to rising interest rates, and how SVB's models were wrong. SVB believed the rising interest rates would improve their outlook, not be a risk.
joe_the_user 4y ago
I think the main thing is that holding long bonds was a way to get profits and pay interest. Despite being doomed long term, there were a couple reasons banks did it - they couldn't make money by making conventional business loans, profitable loan opportunities weren't available and most banks expected to be bailed out when things went bad (Silicon Valley Bank and Signature had each been previously bailed out). The related question is why did regulators turn a blind eye? Interest rate risk is something regulators look at. I know SVB had some loopholes that prevented a lot of oversight but one other factor that comes to mind is that the Fed needed to get rid of high prices/low-interest Fannie Mae bonds somehow and letting bonds feed on them was one way.
- Dylan16807 4y ago
  The fed sent multiple warnings. Not exactly a blind eye but not great either.

narrator 4y ago

The banks didn't need to buy those bonds back in 2021. The fed could have just done it and prevented all the ensuing drama once rates rose ahead of time.

fuoqi 4y ago

Is there anything preventing banks from buying treasures on open market by using funds they got from Fed by exchanging their treasuries on mark-to-maturity basis? Looks like a bailout with extra steps.

arthurcolle 4y ago
Can you explain the steps that you're thinking and explain why they would matter at this scale?
- fuoqi 4y ago
  A bank has 10 year bond which trades 90 cents on the dollar on the open market. It gives the bond to Fed as collateral and receives 1 dollar. It uses this dollar to buy bonds on open market with rate higher than cost of the loan, after 90 days it sells the bond, gives the Fed 1 dollar and interest, and pockets the rate spread on 10 cents.
- iforgetti 4y ago
  A bond bought by a bank in the past at a lower interest rate than those offered today is worth less than those offered today. If the fed values those bonds at face value (rather than what the market would pay today) and allows the bank to borrow money using those as collateral, then a bank could simply borrow from the fed using the older less valuable bonds as collateral and then buy new more valuable bonds. The bank could then default on the loan and forfeit the original less valuable bond. This would effectively be the fed giving free money to the bank.
  - HDThoreaun 4y ago
    You can't just "default on a loan." The Fed would reposes their other assets...
HDThoreaun 4y ago
The interest rate on the loans is .1% higher than the 3 month T bills which is all they can get before the loan comes due. They would lose money with this strategy.

cinquemb 4y ago

More HQLA locked up for x amount of time... what could go wrong...

beiller 4y ago

The fed has backstopped the FDIC. Instead of letting taxpayers foot the bill, of which are majority of payers are the very wealthy, they will foot the bill via inflation by rolling back some of the QE. Sure it's just a loan but what if the loan has no one to repay. Who will repay this loan in SVB's situation (the shortfall of asset sales to account balances) maybe I am misunderstanding. The money to cover the shortfall of the FDIC was conjured. It will find a way to your grocery bill. If all the banks are paying a fee to foot the bill, the payers of that fee will be you the customer.

HDThoreaun 4y ago
> Who will repay this loan in SVB's situation? The FDIC has announced that any shortfalls wlil be paid by the collective member banks. As long as the banks can't pass these costs onto customers it will have no effect on taxpayers. There's good reason to believe that one time supply shocks don't effect prices, so I'd say taxpayers did not foot the bill here. Bank equity holders did.
- chii 4y ago
  > As long as the banks can't pass these costs onto customers fat chance?

throwawaybank1 4y ago

I wish I started a bank

throwawaybank1 4y ago

13 years of QE. You don't have to be an economist to see the coming recession or even worse depression. Better prepare for the worse.

jaimehrubiks 4y ago
How do we prepare?
- kayamon 4y ago
  Stack sats.
NovaDudely 4y ago
Prepare for the worst, hope for the best. I honestly do not think that all this flux in the banking system is 'The economic burst' (TM) but it will definitely be in the opening chapters of the book on it in a few decades time. Banks and governments have become very good at figuring out how to put band-aids over band-aids. SVB and the little heart skip the UK had last year are good examples. But the long term conditions they are creating is lining us up for a big drop in the next 5-10 years. When the symbolic claims we have de-laminate from the biophysical world, the drop is going to make a lot of people nauseous. The problems will be inflated to such a size that they cannot be saved in any meaningful manner. What to do with this information? Beats me! Personally I am getting the physical assets I actually use, reducing my physical needs were possible and then sitting back like legend of Nero and watching Rome burn while being more like the reality of Nero and helping who ever I can.

aussiedude 4y ago

So why did investors have to loose big time on a 1.8B loss when the bank had 16B in assets? Seems like SVB was scarified

tommiegannert 4y ago
NY Times alleges that the Fed had been telling SVB about the reserve issues since 2021. It sounds like SVB was a poorly run bank. When it came down, I'm sure a bunch of people said "told you so," but there was ample time to correct before then. https://www.smh.com.au/business/banking-and-finance/before-collapse-of-silicon-valley-bank-the-fed-spotted-big-problems-20230320-p5ctgy.html https://www.smh.com.au/business/banking-and-finance/before-c...

symlinkk 4y ago

This is one of those rare threads on HN where I can’t understand a single thing people are talking about

yaacov 4y ago
It’s okay, neither can the people posting
- lamontcg 4y ago
  Be fair, they've laughed at uncountably many "money printer go brrrr" memes, so they're board certified as economists now.

iancmceachern 4y ago

I think what we're learning from all this is that the people we trust with our money, the "financial sector", can't be trusted with our money

iancmceachern 4y ago
To whomever downvoted this - what happened at SVB and Credit Suisse was confidence inspiring? Trust building?
- cipheredStones 4y ago
  You're not being downvoted because people trust banks; you're being downvoted because commenting "you can't trust the banks" doesn't add anything interesting to the discussion, it's just a bare statement of a common opinion.
  - iancmceachern 4y ago
    And that's not ok why? It's not against the HN policies... And you are incorrect, my point is we can't trust the people currently in charge of much of our financial system. Not a mistrust of the institutions themselves.
    - orf 4y ago
      It’s perfectly ok to post that, but don’t expect to not be downvoted for it

steve76 4y ago

[dead]