5 ms·

Classic schemes like the cayman sandwich are getting broken by bank failures like svb. The cayman division was not fdic insured afaik.

chollida1 4y ago
> Classic schemes like the cayman sandwich are getting broken by bank failures like svb. The cayman division was not fdic insured afaik. This seems wrong to me based on my understanding but i'd be willing to be educated. Based on the fact that everyone got their money back from FDIC in what way have these bank failures caused "Cayman sandwich are getting broken by bank failures like svb" The Cayman's had one purpose for most hedge funds. Move assets off shore so all gains would be tax free. Once you want your money you onshore it again in and pay tax on that total. This allows your money to grow tax free, which means if you're good at it, it grows faster. It's just like a tax free retirement account that lets you deduct your contributes but makes you pay tax on the money you withdraw. As far as for companies using the cayman sandwich, what i've read says everyone got their assets out, no?
- kgwgk 4y ago
  > Based on the fact that everyone got their money back from FDIC Did they? https://twitter.com/mdudas/status/1641959202078720001 https://twitter.com/mdudas/status/1641959202078720001
  - whitemary 4y ago
    According to the shared documents, they will. They just need to file a claim first.
    - kgwgk 4y ago
      What documents? (Edit to add: If you meant the letter in that link what it says doesn't sound like "you will definitely get your money back, you just need to file a claim first" at all: "Balances held by customers in accounts at the Cayman Islands Branch at failure are not deposits under the Federal Deposit Insurance Act [...] Your status as a result of the Institution's failure is that of general unsecured creditor.")
      - yorwba 4y ago
        Second screenshot in the tweet you linked?
        kgwgk 4y ago
        What do you think that "general unsecured creditor" means?
        whitemary 4y ago
        It means "to be determined." To be clear, it does not mean their claim will be denied. And if very recent history, politics, presidential speeches are to be believed, it means their claim will be accepted. The first clue about contemporary political economy could tell us that the entire SVB meltdown would be socialized by the US state. See my comments in this thread for my predictions pre-bailout: https://news.ycombinator.com/item?id=35094447 https://news.ycombinator.com/item?id=35094447
        goatsi 4y ago
        The key point isn't if a claim is accepted or denied (the people getting the letters almost certainly have standing to be accepted), it's if there is money to pay the claims, and how soon they can get it. Having an unsecured claim isn't "Show up on Monday and the FDIC will hand you a bag of cash", it's "The bankruptcy court and trustees expect the final settlement to be in 3-5 years, with a haircut of 10-30%".
        whitemary 4y ago
        Source?
        kgwgk 4y ago
        https://www.fdic.gov/consumers/banking/facts/priority.html https://www.fdic.gov/consumers/banking/facts/priority.html "By law, after insured depositors are paid, uninsured depositors are paid next, followed by general creditors and then stockholders. In most cases, general creditors and stockholders realize little or no recovery. Payments of uninsured funds only, called dividends, depend on the net recovered proceeds from the liquidation of the bank's assets and the payment of bank liabilities according to federal statute. While fully insured deposits are paid promptly after the failure of the bank, the disbursements of uninsured funds may take place over several years based on the timing in the liquidation of the failed bank assets. "
- sokoloff 4y ago
  And if the investments do grow, the governments still get their money, just later (but in greater sums at that time).

chollida1 4y ago

> Classic schemes like the cayman sandwich are getting broken by bank failures like svb. The cayman division was not fdic insured afaik. This seems wrong to me based on my understanding but i'd be willing to be educated. Based on the fact that everyone got their money back from FDIC in what way have these bank failures caused "Cayman sandwich are getting broken by bank failures like svb" The Cayman's had one purpose for most hedge funds. Move assets off shore so all gains would be tax free. Once you want your money you onshore it again in and pay tax on that total. This allows your money to grow tax free, which means if you're good at it, it grows faster. It's just like a tax free retirement account that lets you deduct your contributes but makes you pay tax on the money you withdraw. As far as for companies using the cayman sandwich, what i've read says everyone got their assets out, no?

kgwgk 4y ago
> Based on the fact that everyone got their money back from FDIC Did they? https://twitter.com/mdudas/status/1641959202078720001 https://twitter.com/mdudas/status/1641959202078720001
- whitemary 4y ago
  According to the shared documents, they will. They just need to file a claim first.
  - kgwgk 4y ago
    What documents? (Edit to add: If you meant the letter in that link what it says doesn't sound like "you will definitely get your money back, you just need to file a claim first" at all: "Balances held by customers in accounts at the Cayman Islands Branch at failure are not deposits under the Federal Deposit Insurance Act [...] Your status as a result of the Institution's failure is that of general unsecured creditor.")
    - yorwba 4y ago
      Second screenshot in the tweet you linked?
      - kgwgk 4y ago
        What do you think that "general unsecured creditor" means?
        whitemary 4y ago
        It means "to be determined." To be clear, it does not mean their claim will be denied. And if very recent history, politics, presidential speeches are to be believed, it means their claim will be accepted. The first clue about contemporary political economy could tell us that the entire SVB meltdown would be socialized by the US state. See my comments in this thread for my predictions pre-bailout: https://news.ycombinator.com/item?id=35094447 https://news.ycombinator.com/item?id=35094447
        goatsi 4y ago
        The key point isn't if a claim is accepted or denied (the people getting the letters almost certainly have standing to be accepted), it's if there is money to pay the claims, and how soon they can get it. Having an unsecured claim isn't "Show up on Monday and the FDIC will hand you a bag of cash", it's "The bankruptcy court and trustees expect the final settlement to be in 3-5 years, with a haircut of 10-30%".
        whitemary 4y ago
        Source?
        kgwgk 4y ago
        https://www.fdic.gov/consumers/banking/facts/priority.html https://www.fdic.gov/consumers/banking/facts/priority.html "By law, after insured depositors are paid, uninsured depositors are paid next, followed by general creditors and then stockholders. In most cases, general creditors and stockholders realize little or no recovery. Payments of uninsured funds only, called dividends, depend on the net recovered proceeds from the liquidation of the bank's assets and the payment of bank liabilities according to federal statute. While fully insured deposits are paid promptly after the failure of the bank, the disbursements of uninsured funds may take place over several years based on the timing in the liquidation of the failed bank assets. "
sokoloff 4y ago
And if the investments do grow, the governments still get their money, just later (but in greater sums at that time).