5 ms·

Another bank, another leeway for the FDIC insurance limit?

VagueMag 3y ago
It's an interesting question in this case because last month a consortium of banks made a big show of depositing $30B "uninsured" as a show of confidence, and it's not clear whether it's still there.
- tedunangst 3y ago
  I guess they just bought FRC's loan book at par.
- zaroth 3y ago
  What do you mean it's not clear it's still there? It was there when they had their earnings call 4 days ago.
  - VagueMag 3y ago
    4 days is a long time in bank deposit land now!
- deleted 3y ago
  [deleted]
justapassenger 3y ago
Silicon Valley bank had sudden collapse. While I don't agree with the decision of FDIC to make everyone whole, I understand why. First Republic Bank was collapsing for more than a month. If anyone still kept uninsured money there, it's mostly on them.
- justrealist 3y ago
  The whole point of the FDIC is that it's not good idea to reward people for participating in a bank run.
  - salawat 3y ago
    ...Actually, there is no disincentive built into the FDIC for people to participate in bank runs. In fact, the entire point of the FDIC was to insulate depositors from banks doing stupid things with everyone's money. Now that the Fed has bailed out the creme de la creme, I'd like to see the argument employed when the FDIC hasn't got the liquidity left to backstop every other depositor in subsequent bank failures.
    - willcipriano 3y ago
      They don't have to argue anymore, this isn't the era you grew up in, that world is gone. A reporter who has a question about it won't be selected to ask one. Recent example of how fake it all is: https://nypost.com/2023/04/26/biden-cheat-sheet-shows-he-had-advance-knowledge-of-journalists-question/ https://nypost.com/2023/04/26/biden-cheat-sheet-shows-he-had...
      - ahahahahah 3y ago
        Yeah, maybe learn how fake the nypost is. This is typical preparation for a high profile q&a: https://www.cnn.com/2023/04/27/politics/biden-note-card-white-house-press-conference/index.html https://www.cnn.com/2023/04/27/politics/biden-note-card-whit...
        tjfl 3y ago
        Except for the incoming question being on there, per your link: > While it was notable that a potential question was written on Biden’s card, every White House press office takes scrupulous care to prepare their president for news conferences.
        ahahahahah 3y ago
        Except for the question on there wasn't the question that was asked. Do you understand how q&a (or for that matter court) prep goes? The question on there was an example question that they expected would be along the lines of what that person would be interested in and how they would phrase it (or what particular things they would try to attack/draw out). The article you just quoted even said that.
- dragontamer 3y ago
  > First Republic Bank was collapsing for more than a month. If anyone still kept uninsured money there, it's mostly on them. The big banks deposited 30-billion dollars uninsured to try to rescue FRC. Are you saying that you don't want big-banks trying to rescue smaller banks anymore? Moral hazards, all the way down. We like the deposit they made, but they did so because FDIC seemed to offer assurances to cover even uninsured deposits. We're back to SIVB questions and just delayed by a month.
  - justapassenger 3y ago
    Big banks and small banks are businesses. I don’t want big bank to “rescue” smaller bank if it doesn’t make economical sense to them.
- diebeforei485 3y ago
  > If anyone still kept uninsured money there, it's mostly on them. It's been very difficult for small businesses to open accounts at other banks to move money to. The waiting list is very long, because business accounts require a lot of KYC. And importantly, the moving out of uninsured deposits (by people who were fortuitous enough to have other accounts to move it to) actually caused the problems we see today.

It's an interesting question in this case because last month a consortium of banks made a big show of depositing $30B "uninsured" as a show of confidence, and it's not clear whether it's still there.

tedunangst 3y ago
I guess they just bought FRC's loan book at par.
zaroth 3y ago
What do you mean it's not clear it's still there? It was there when they had their earnings call 4 days ago.
- VagueMag 3y ago
  4 days is a long time in bank deposit land now!
deleted 3y ago
[deleted]

justapassenger 3y ago

Silicon Valley bank had sudden collapse. While I don't agree with the decision of FDIC to make everyone whole, I understand why. First Republic Bank was collapsing for more than a month. If anyone still kept uninsured money there, it's mostly on them.

justrealist 3y ago
The whole point of the FDIC is that it's not good idea to reward people for participating in a bank run.
- salawat 3y ago
  ...Actually, there is no disincentive built into the FDIC for people to participate in bank runs. In fact, the entire point of the FDIC was to insulate depositors from banks doing stupid things with everyone's money. Now that the Fed has bailed out the creme de la creme, I'd like to see the argument employed when the FDIC hasn't got the liquidity left to backstop every other depositor in subsequent bank failures.
  - willcipriano 3y ago
    They don't have to argue anymore, this isn't the era you grew up in, that world is gone. A reporter who has a question about it won't be selected to ask one. Recent example of how fake it all is: https://nypost.com/2023/04/26/biden-cheat-sheet-shows-he-had-advance-knowledge-of-journalists-question/ https://nypost.com/2023/04/26/biden-cheat-sheet-shows-he-had...
    - ahahahahah 3y ago
      Yeah, maybe learn how fake the nypost is. This is typical preparation for a high profile q&a: https://www.cnn.com/2023/04/27/politics/biden-note-card-white-house-press-conference/index.html https://www.cnn.com/2023/04/27/politics/biden-note-card-whit...
      - tjfl 3y ago
        Except for the incoming question being on there, per your link: > While it was notable that a potential question was written on Biden’s card, every White House press office takes scrupulous care to prepare their president for news conferences.
        ahahahahah 3y ago
        Except for the question on there wasn't the question that was asked. Do you understand how q&a (or for that matter court) prep goes? The question on there was an example question that they expected would be along the lines of what that person would be interested in and how they would phrase it (or what particular things they would try to attack/draw out). The article you just quoted even said that.
dragontamer 3y ago
> First Republic Bank was collapsing for more than a month. If anyone still kept uninsured money there, it's mostly on them. The big banks deposited 30-billion dollars uninsured to try to rescue FRC. Are you saying that you don't want big-banks trying to rescue smaller banks anymore? Moral hazards, all the way down. We like the deposit they made, but they did so because FDIC seemed to offer assurances to cover even uninsured deposits. We're back to SIVB questions and just delayed by a month.
- justapassenger 3y ago
  Big banks and small banks are businesses. I don’t want big bank to “rescue” smaller bank if it doesn’t make economical sense to them.
diebeforei485 3y ago
> If anyone still kept uninsured money there, it's mostly on them. It's been very difficult for small businesses to open accounts at other banks to move money to. The waiting list is very long, because business accounts require a lot of KYC. And importantly, the moving out of uninsured deposits (by people who were fortuitous enough to have other accounts to move it to) actually caused the problems we see today.