5 ms·

That is not how it ever works. When my mortgage was sold by the original bank I didn't get anything.

s1artibartfast 3y ago
Did your bank also go bankrupt and zero out your account? Because that's what's going on here. It is a question of which debts a bank pays before its assets can be sold off to another bank. In this case, I think it is reasonable that a bank use the assets it has to pay back depositors, before those assets can be sold to someone else.
- imustbeevil 3y ago
  If your bank sells your mortgage to another bank, the second bank now owns that debt. If the first bank goes out of business, you very obviously (separately from the previous transaction) lose any money that isn't insured. I'm not sure what else you would expect to happen.
  - s1artibartfast 3y ago
    yes, and I am saying the first bank should have to use the assets it has tied to you to pay off the debt it has to you, before it can sell them in bankruptcy to bank #2.
    - imustbeevil 3y ago
      And we're saying that's not how that works. When the FDIC takes over the bank, they pay out all of the insured deposits, sell all of the assets, and distribute the remaining funds, which in cases like this one are not enough to cover uninsured deposits. https://www.fdic.gov/consumers/banking/facts/priority.html https://www.fdic.gov/consumers/banking/facts/priority.html https://www.fdic.gov/resources/deposit-insurance/faq/ https://www.fdic.gov/resources/deposit-insurance/faq/
      - s1artibartfast 3y ago
        yes, And I am saying that it is not unreasonable that the bank should have to pay back individuals with assets for sale before covering those without assets. It all comes down to priority in asset recovery. There is no moral, philosophical, or biblical truth that FDIC insured depositors must be paid out first. It is just as conceivable to have a system where customers with both bank assets and debts have higher priority to recovery, at least for to funds recovered from their assets..
        imustbeevil 3y ago
        Anyone using the bank signed a contract that defined how a failure affects them. There is absolutely a moral, philosophical, and biblical truth behind honoring that contract. Galatians 3:15: "To give a human example, brothers: even with a man-made covenant, no one annuls it or adds to it once it has been ratified." Proverbs 17:18: "One who has no sense shakes hands in pledge and puts up security for a neighbor." Outside of that fact, the reason that the system is designed this way is to protect normal people from Rich people destroying these banks. If it were the way you're proposing, only the Rich people taking on the most risk and debt would get paid out, and every normal person using the bank would lose everything. We know this, because that's exactly what happened before the FDIC, which is the entire reason it exists.
        s1artibartfast 3y ago
        I understand that there are legal regulations which generally specify these matters. However, to think that these are immutable is just wrong. Banking regulations change over time and jurisdiction. To be clear, I'm not advocating abolition of the FDIC. Normal people wouldn't lose everything. The rich still would pay for FDIC payments, just like they now. You would just see some individuals have less damage, specifically when bank assets in their name are commensurate with bank debt in their name. FDIC payouts would be slightly larger, but again, these are recouped by banking fees, largely paid by the rich
        HWR_14 3y ago
        > There is no moral, philosophical, or biblical truth that FDIC insured depositors must be paid out first. No, but it is US federal bankruptcy law. And it was when all the business relationships with SVB were made.
    - HWR_14 3y ago
      How do you think the bankrupt bank pays it's creditors/depositors? It sells all the assets in bankruptcy to bank #2 and then uses that cash to reimburse the people it owes money to in an orderly way. It doesn't go to each creditor and negotiate the debt separately. The entire point of bankruptcy proceedings are to ensure that the CEO doesn't make his golfing buddies whole by settling their debts and leaves everyone else out to dry. Assets -> cash -> distributed according to the courts.
      - s1artibartfast 3y ago
        in the USA, the order is: Assets -> cash -> forgive any loans to the people who had accounts -> payoff FDIC insured accounts -> distribute remainder according to the courts This is what happened for US customers with both loans and unsecured accounts. bank #2 says they dont have to forgive the loans specifically for some customers.
        HWR_14 3y ago
        Technically it goes: FDIC takes over bank -> FDIC allows people to pay off their loans with the same bank using funds at the same bank -> FDIC pays off insured accounts and takes on debt from the bank -> Sells Assets -> Uses cash to pay itself back by being first in line with the courts. If it gets to Bank #2, it's not their problem and they specifically don't have to. Also, this wasn't a US bank! It wasn't under FDIC control. That payoff happens before bankruptcy. If the FDIC doesn't take over your bank it doesn't apply.
        s1artibartfast 3y ago
        >Also, this wasn't a US bank! It wasn't under FDIC control That's the part that I disagree with. My understanding is that FDIC took possession and sold off the International loans to bank number two, but did not discount them by the international account balances. It doesn't seem right to me that the FDIC can say "it's not my problem we don't have control“ while simultaneously taking and selling the international loans

Did your bank also go bankrupt and zero out your account? Because that's what's going on here. It is a question of which debts a bank pays before its assets can be sold off to another bank. In this case, I think it is reasonable that a bank use the assets it has to pay back depositors, before those assets can be sold to someone else.

imustbeevil 3y ago
If your bank sells your mortgage to another bank, the second bank now owns that debt. If the first bank goes out of business, you very obviously (separately from the previous transaction) lose any money that isn't insured. I'm not sure what else you would expect to happen.
- s1artibartfast 3y ago
  yes, and I am saying the first bank should have to use the assets it has tied to you to pay off the debt it has to you, before it can sell them in bankruptcy to bank #2.
  - imustbeevil 3y ago
    And we're saying that's not how that works. When the FDIC takes over the bank, they pay out all of the insured deposits, sell all of the assets, and distribute the remaining funds, which in cases like this one are not enough to cover uninsured deposits. https://www.fdic.gov/consumers/banking/facts/priority.html https://www.fdic.gov/consumers/banking/facts/priority.html https://www.fdic.gov/resources/deposit-insurance/faq/ https://www.fdic.gov/resources/deposit-insurance/faq/
    - s1artibartfast 3y ago
      yes, And I am saying that it is not unreasonable that the bank should have to pay back individuals with assets for sale before covering those without assets. It all comes down to priority in asset recovery. There is no moral, philosophical, or biblical truth that FDIC insured depositors must be paid out first. It is just as conceivable to have a system where customers with both bank assets and debts have higher priority to recovery, at least for to funds recovered from their assets..
      - imustbeevil 3y ago
        Anyone using the bank signed a contract that defined how a failure affects them. There is absolutely a moral, philosophical, and biblical truth behind honoring that contract. Galatians 3:15: "To give a human example, brothers: even with a man-made covenant, no one annuls it or adds to it once it has been ratified." Proverbs 17:18: "One who has no sense shakes hands in pledge and puts up security for a neighbor." Outside of that fact, the reason that the system is designed this way is to protect normal people from Rich people destroying these banks. If it were the way you're proposing, only the Rich people taking on the most risk and debt would get paid out, and every normal person using the bank would lose everything. We know this, because that's exactly what happened before the FDIC, which is the entire reason it exists.
        s1artibartfast 3y ago
        I understand that there are legal regulations which generally specify these matters. However, to think that these are immutable is just wrong. Banking regulations change over time and jurisdiction. To be clear, I'm not advocating abolition of the FDIC. Normal people wouldn't lose everything. The rich still would pay for FDIC payments, just like they now. You would just see some individuals have less damage, specifically when bank assets in their name are commensurate with bank debt in their name. FDIC payouts would be slightly larger, but again, these are recouped by banking fees, largely paid by the rich
      - HWR_14 3y ago
        > There is no moral, philosophical, or biblical truth that FDIC insured depositors must be paid out first. No, but it is US federal bankruptcy law. And it was when all the business relationships with SVB were made.
  - HWR_14 3y ago
    How do you think the bankrupt bank pays it's creditors/depositors? It sells all the assets in bankruptcy to bank #2 and then uses that cash to reimburse the people it owes money to in an orderly way. It doesn't go to each creditor and negotiate the debt separately. The entire point of bankruptcy proceedings are to ensure that the CEO doesn't make his golfing buddies whole by settling their debts and leaves everyone else out to dry. Assets -> cash -> distributed according to the courts.
    - s1artibartfast 3y ago
      in the USA, the order is: Assets -> cash -> forgive any loans to the people who had accounts -> payoff FDIC insured accounts -> distribute remainder according to the courts This is what happened for US customers with both loans and unsecured accounts. bank #2 says they dont have to forgive the loans specifically for some customers.
      - HWR_14 3y ago
        Technically it goes: FDIC takes over bank -> FDIC allows people to pay off their loans with the same bank using funds at the same bank -> FDIC pays off insured accounts and takes on debt from the bank -> Sells Assets -> Uses cash to pay itself back by being first in line with the courts. If it gets to Bank #2, it's not their problem and they specifically don't have to. Also, this wasn't a US bank! It wasn't under FDIC control. That payoff happens before bankruptcy. If the FDIC doesn't take over your bank it doesn't apply.
        s1artibartfast 3y ago
        >Also, this wasn't a US bank! It wasn't under FDIC control That's the part that I disagree with. My understanding is that FDIC took possession and sold off the International loans to bank number two, but did not discount them by the international account balances. It doesn't seem right to me that the FDIC can say "it's not my problem we don't have control“ while simultaneously taking and selling the international loans