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Empirically, banks which get involved in any kind of financial activity tend to blow up: lending money, mortgages, forex trading, interest rate trading, ...
by dist-epoch 2y ago
Empirically, banks which get involved in any kind of financial activity tend to blow up: lending money, mortgages, forex trading, interest rate trading, ...
- mmooss 2y agoIt's the opposite. Regulated banks do not blow up - that's the point of regulation, to prevent those disasters. See my comment in this same subthread: https://news.ycombinator.com/item?id=43510850 https://news.ycombinator.com/item?id=43510850
- sleepybrett 2y agono, the blow up and then the american taxpayer foots the bill for picking up the pieces.
- mmooss 2y agoCould you give some examples?
- sleepybrett 2y agoAn example of bank bailouts? jesus man, pay some attention: https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008 https://en.wikipedia.org/wiki/Emergency_Economic_Stabilizati...
- mmooss 2y agoThat was 2008, which was an extraordinary event - many say it was the worst economic crisis since the Great Depression. People are claiming bank bailouts are regular events - are there recent ones?
- dist-epoch 2y agoRegulated banks don't blow up because the gov bails them out every time.
- kasey_junk 2y agoIt is extremely rare for the us gov to bailout the _banks_. 2008 was an abnormality (and one that will be studied for a long time). The normal procedure is that the blown up bank is sold to another bank and the _depositors_ are bailed out by deposit insurance. There are ~4500 banks in the US and about 2 blow up a year https://www.fdic.gov/bank-failures/failed-bank-list https://www.fdic.gov/bank-failures/failed-bank-list
- mmooss 2y agoWhere do you get that information?
- dist-epoch 2y agohttps://www.businessinsider.com/why-silicon-valley-bank-customers-were-bailed-out-2023-3 https://www.businessinsider.com/why-silicon-valley-bank-cust...
- mmooss 2y agoThe article itself says: Did the government bail out Silicon Valley Bank? No. SVB was closed by regulators, and is now under the control of the FDIC. When a bank fails, this is the government agency that ensures depositors get access to their money. Shareholders will get wiped out, and management has been removed.
- dist-epoch 2y agoFDIC has limits. They were not respected, everybody was made whole. $150 billion of uninsured money was bailed out by the government. > So, the FDIC, the Fed and the Treasury Department decided to go big and guarantee all SVB's deposits, even the roughly $150 billion that was supposed to be uninsured. > Shareholders were wiped out. Sure, but all the depositors were bailed out, which is what bailing out a bank means.