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Watch the exchange between Sen Lankford and Sec Yellen yourself: https://www.youtube.com/watch?v=Bcvl104tyRY https://www.youtube.com/watch?v=Bcvl104tyRY Yelle

by nugget 4y ago

Watch the exchange between Sen Lankford and Sec Yellen yourself: https://www.youtube.com/watch?v=Bcvl104tyRY https://www.youtube.com/watch?v=Bcvl104tyRY Yellen says unsecured depositors at TBTF banks will always be bailed out, but those at smaller banks are on their own. It's one of the most incredible moments I've witnessed. I'm not sure if there's some hidden agenda being pursued, or if Yellen is just so far removed from the real world that she doesn't understand the consequences of her statement. I'm not sure why any company or individual would hold >$250k at a non-TBTF bank after this. It borders on financial malpractice.

boomerango 4y ago
As I understand it, the piece you are missing is that she legally/procedurally cannot guarantee depositors prior to a bankruptcy - that would require an act of congress. The congressman know this as well, so it’s just grandstanding.
somenameforme 4y ago
I never understand things like this. She looks like a deer caught in the headlights when he asks her the most predictable and basic question about her decisions. How can you be in such a position, make such decisions, and be unable to offer a compelling answer to the most basic questions? Even if it some sort of a hidden agenda and [further] centralizing banking is just seen as a convenient stepping stone towards CBDCs or whatever, you'd come up with some passable explanation ahead of time. I mean it's not like the Senator there pulled out some gotcha she couldn't have expected.
- skellington 4y ago
  [flagged]
  - jquery 4y ago
    >Probably a Republican president would be just as bad Yes we all know the previous President famously kept his family far away from the levers of power.
    - hanselot 4y ago
      This is accurate. Don't you know his son had an infamous laptop that exposed all of his illicit dealings with Ukraine, never mind the straight up insane things regarding their family affairs. I mean, if there was ever a time to know the people supporting the current regime are in a cult, look no further.
      - cto_of_antifa 4y ago
        [dead]
  - SkyMarshal 4y ago
    You keep using that word nepotism. I do not think it means what you think it means. It’s not like Biden hired his daughter and son-in-law to bring peace to the Middle East and modernize the US govt among other tasks.
  - the_gipsy 4y ago
    Peak nepotism? Really?
  - nkrisc 4y ago
    You can make a point about the administration, but if you’re talking about nepotism, specifically, you’re making a point about the wrong administration. There’s a much better example of a recent administration engaging in “peak nepotism”, a recent one that had the president’s children working in the White House. I’m assuming the point you’re trying to make isn’t actually about nepotism and you’ve simply misunderstood what the word means.
    - AnimalMuppet 4y ago
      That's not peak nepotism. Peak nepotism would be family members on the Cabinet or the Supreme Court. Like, say, John F. Kennedy's brother.
      - nkrisc 4y ago
        Sure. I wasn’t trying to declare which administration was “peak nepotism”, only that calling the current one so is disingenuous when you have only to look as far as the previous one to find one that was more so.
- prennert 4y ago
  There is a concept in the armed forces for making decisions in a given timeframe (struggling to find a source for this). Essentially you do the best you can in the time you are given. Then you move on and iterate. If you dither too much you probably don't have to make a decision anymore as the enemy has made it for you. In that framework it is accepted that a solution is not perfect. I think about these crises the same way. They had 48h to sort it out and they had to make a decision. The decision has side-effect-like consequences. Should she now lie about this? So now, why did they only have 48h to make a decision? I don't know. I doubt nobody has thought about this before. But I assume that regulating banks is particularly hard, because of lobby pushback and the banks ability to exploit any loop hole quickly. They are literally organisations that look out for how to make money by exploiting asymmetries. These organisations work against the slow democratic decision making that involves non-aligned actors (who are also often not trained in this particular issue) in the upper and lower houses of parliaments of different countries. Another question is. Why are small banks treated differently than big banks. I have read somewhere that small banks have less regulatory oversight. Maybe the decision is much more to support heavily regulated banks and not so much those which are for various reasons not as much regulated. Why would the government want to hold the bag that it was not allowed to look into?
  - scrlk 4y ago
    > There is a concept in the armed forces for making decisions in a given timeframe (struggling to find a source for this). OODA loop? https://en.wikipedia.org/wiki/OODA_loop https://en.wikipedia.org/wiki/OODA_loop
    - samus 4y ago
      I was thinking the same. But it sounds more like how to prevent being OODAed by someone else.
  - throwaway049 4y ago
    They had 48h in this case, but who gets bailed out and on what terms is a massive strategic decision that should not be made on the hoof. I must be naive because I thought planning for this kind of problem was part of her job.
- revelio 4y ago
  >> you'd come up with some passable explanation ahead of time Central bankers are appointed based on two criteria: 1. A willingness to print money for the government so it can spend more than it raises in taxes. 2. Looking presentable, sounding sophisticated and emitting enough bafflegab that (1) seems scientific instead of ideological. Thinking deeply about economics and the role of banking/central banks in society is an anti criteria, because if you did think about those things you'd end up concluding that the only fair and stable solution is way less money printing and quite possibly none. That would directly undermine the government that appoints you. Your salary depends on you not understanding your own area of specialism. I do feel like the defining characteristic of the 2020s is turning out to be people's struggle to accept the horrible truth that government officials/scientists who claim to be experts systematically have no idea what they are doing.
- markus_zhang 4y ago
  Maybe it's a question not supposed to ask. They all know the answer but it's inconvenient to answer before the public.
theteapot 4y ago
> Yellen says unsecured depositors at TBTF banks will always be bailed out, but those at smaller banks are on their own. I agree SVB and Signature uninsured deposits shouldn't have been guaranteed, but that's not quite what Yellen said. The $250K guarantee applies to deposits at all insured banks. Having clarified that, Yellen said: > A bank only gets that treatment [guaranteeing all deposits] if a [super] majority of the FDIC, a super majority of the FED board, and I in consultation with the president determine that the failure to protect uninsured depositors would create a systemic risk and significant economic and and financial consequences ...
- boomerango 4y ago
  Exactly. The subtext to this clip is that she cannot do what the congressman is acting without an act of congress, and he should know that. It’s well executed grandstanding.

by nugget 4y ago

boomerango 4y ago

As I understand it, the piece you are missing is that she legally/procedurally cannot guarantee depositors prior to a bankruptcy - that would require an act of congress. The congressman know this as well, so it’s just grandstanding.

somenameforme 4y ago

I never understand things like this. She looks like a deer caught in the headlights when he asks her the most predictable and basic question about her decisions. How can you be in such a position, make such decisions, and be unable to offer a compelling answer to the most basic questions? Even if it some sort of a hidden agenda and [further] centralizing banking is just seen as a convenient stepping stone towards CBDCs or whatever, you'd come up with some passable explanation ahead of time. I mean it's not like the Senator there pulled out some gotcha she couldn't have expected.

skellington 4y ago
[flagged]
- jquery 4y ago
  >Probably a Republican president would be just as bad Yes we all know the previous President famously kept his family far away from the levers of power.
  - hanselot 4y ago
    This is accurate. Don't you know his son had an infamous laptop that exposed all of his illicit dealings with Ukraine, never mind the straight up insane things regarding their family affairs. I mean, if there was ever a time to know the people supporting the current regime are in a cult, look no further.
    - cto_of_antifa 4y ago
      [dead]
- SkyMarshal 4y ago
  You keep using that word nepotism. I do not think it means what you think it means. It’s not like Biden hired his daughter and son-in-law to bring peace to the Middle East and modernize the US govt among other tasks.
- the_gipsy 4y ago
  Peak nepotism? Really?
- nkrisc 4y ago
  You can make a point about the administration, but if you’re talking about nepotism, specifically, you’re making a point about the wrong administration. There’s a much better example of a recent administration engaging in “peak nepotism”, a recent one that had the president’s children working in the White House. I’m assuming the point you’re trying to make isn’t actually about nepotism and you’ve simply misunderstood what the word means.
  - AnimalMuppet 4y ago
    That's not peak nepotism. Peak nepotism would be family members on the Cabinet or the Supreme Court. Like, say, John F. Kennedy's brother.
    - nkrisc 4y ago
      Sure. I wasn’t trying to declare which administration was “peak nepotism”, only that calling the current one so is disingenuous when you have only to look as far as the previous one to find one that was more so.
prennert 4y ago
There is a concept in the armed forces for making decisions in a given timeframe (struggling to find a source for this). Essentially you do the best you can in the time you are given. Then you move on and iterate. If you dither too much you probably don't have to make a decision anymore as the enemy has made it for you. In that framework it is accepted that a solution is not perfect. I think about these crises the same way. They had 48h to sort it out and they had to make a decision. The decision has side-effect-like consequences. Should she now lie about this? So now, why did they only have 48h to make a decision? I don't know. I doubt nobody has thought about this before. But I assume that regulating banks is particularly hard, because of lobby pushback and the banks ability to exploit any loop hole quickly. They are literally organisations that look out for how to make money by exploiting asymmetries. These organisations work against the slow democratic decision making that involves non-aligned actors (who are also often not trained in this particular issue) in the upper and lower houses of parliaments of different countries. Another question is. Why are small banks treated differently than big banks. I have read somewhere that small banks have less regulatory oversight. Maybe the decision is much more to support heavily regulated banks and not so much those which are for various reasons not as much regulated. Why would the government want to hold the bag that it was not allowed to look into?
- scrlk 4y ago
  > There is a concept in the armed forces for making decisions in a given timeframe (struggling to find a source for this). OODA loop? https://en.wikipedia.org/wiki/OODA_loop https://en.wikipedia.org/wiki/OODA_loop
  - samus 4y ago
    I was thinking the same. But it sounds more like how to prevent being OODAed by someone else.
- throwaway049 4y ago
  They had 48h in this case, but who gets bailed out and on what terms is a massive strategic decision that should not be made on the hoof. I must be naive because I thought planning for this kind of problem was part of her job.
revelio 4y ago
>> you'd come up with some passable explanation ahead of time Central bankers are appointed based on two criteria: 1. A willingness to print money for the government so it can spend more than it raises in taxes. 2. Looking presentable, sounding sophisticated and emitting enough bafflegab that (1) seems scientific instead of ideological. Thinking deeply about economics and the role of banking/central banks in society is an anti criteria, because if you did think about those things you'd end up concluding that the only fair and stable solution is way less money printing and quite possibly none. That would directly undermine the government that appoints you. Your salary depends on you not understanding your own area of specialism. I do feel like the defining characteristic of the 2020s is turning out to be people's struggle to accept the horrible truth that government officials/scientists who claim to be experts systematically have no idea what they are doing.
markus_zhang 4y ago
Maybe it's a question not supposed to ask. They all know the answer but it's inconvenient to answer before the public.

theteapot 4y ago

> Yellen says unsecured depositors at TBTF banks will always be bailed out, but those at smaller banks are on their own. I agree SVB and Signature uninsured deposits shouldn't have been guaranteed, but that's not quite what Yellen said. The $250K guarantee applies to deposits at all insured banks. Having clarified that, Yellen said: > A bank only gets that treatment [guaranteeing all deposits] if a [super] majority of the FDIC, a super majority of the FED board, and I in consultation with the president determine that the failure to protect uninsured depositors would create a systemic risk and significant economic and and financial consequences ...

boomerango 4y ago
Exactly. The subtext to this clip is that she cannot do what the congressman is acting without an act of congress, and he should know that. It’s well executed grandstanding.