Bank collapse

[TexasTiger 12,836]

To bail out or not to bail out? I say no. Folks should know they are protected up to $250k an account. You can expand your coverage with joint accounts and PODs with different individuals. Have more money? Spread it across different banks & credit Unions. Or invest in other things. Folks made bad decisions here. Assumed risks. For most consumers the $250k insurance covers them. This would be a bail out for the relatively well to do.

https://www.washingtonpost.com/us-policy/2023/03/11/silicon-valley-bank-bailout-washington/?utm_source=substack&utm_medium=email

[SaltyTiger 7,794]

2 hours ago, TexasTiger said:

To bail out or not to bail out? I say no. Folks should know they are protected up to $250k an account. You can expand your coverage with joint accounts and PODs with different individuals. Have more money? Spread it across different banks & credit Unions. Or invest in other things. Folks made bad decisions here. Assumed risks. For most consumers the $250k insurance covers them. This would be a bail out for the relatively well to do.

https://www.washingtonpost.com/us-policy/2023/03/11/silicon-valley-bank-bailout-washington/?utm_source=substack&utm_medium=email

Wise to spread it around. Do you use like an excel spread sheet to keep up with all the institutions you use.

[TexasTiger 12,836]

31 minutes ago, SaltyTiger said:

Wise to spread it around. Do you use like an excel spread sheet to keep up with all the institutions you use.

I don’t have to spread it so widely I can’t keep up with it, myself. 😉 But if I had that problem, that would make sense.

[homersapien 11,367]

Guaranteeing depositors money is not the same as bailing out the bank itself.  The bank will cease to exist.

U.S. officials weigh protecting all deposits at Silicon Valley Bank - The Washington Post

 

[wcware 1,365]

2 hours ago, homersapien said:

Guaranteeing depositors money is not the same as bailing out the bank itself.  The bank will cease to exist.

U.S. officials weigh protecting all deposits at Silicon Valley Bank - The Washington Post

 

I think this is another example of the rich protecting the rich. Ruling class not allowing their friends to fall off the pedestal. My understanding is most of this banks clients weren’t regular Joe’s like me or you. Vast majority of clients had accounts over $250,000. Am I wrong for feeling this way?

[Cardin Drake 1,826]

I have mixed feelings on this one.  The Fed wants to stop runs on other banks. Many have the same problem; they are holding 1 or 2% t-bills that worth far less than the purchase price. The fed created the problem. Who ever would have thought buying 10 trillion dollars of your own debt might backfire? They have unleashed the inflation demon and have nothing but bad choices in front of them.

[TexasTiger 12,836]

6 hours ago, homersapien said:

Guaranteeing depositors money is not the same as bailing out the bank itself.  The bank will cease to exist.

U.S. officials weigh protecting all deposits at Silicon Valley Bank - The Washington Post

 

It’s bailing out folks (many who run businesses and have much more than the insured $250k) who ignored insurance limits by raising insurance costs on all other banks, thus costing folks who managed their risks or had less than $250K to begin with.

[AUDub 11,147]

Liz Warren with a good ELI5 essay.

https://www.nytimes.com/2023/03/13/opinion/elizabeth-warren-silicon-valley-bank.html

[wdefromtx 3,159]

11 hours ago, TexasTiger said:

It’s bailing out folks (many who run businesses and have much more than the insured $250k) who ignored insurance limits by raising insurance costs on all other banks, thus costing folks who managed their risks or had less than $250K to begin with.

While I partly agree with this....you also need to consider that depositors are constantly told by our government and those that are overseeing the banking system that things are healthy and the risk is minimal. Consider if you own a business and that business alone has an account that exceeds the 250K limit by say 750K so to run your business it would require 4 different banks to keep the funds below the insurance limit. That would create a bookkeeping nightmare.

Keep in mind that if they do not cover the deposits of businesses that have their money there they are not just hurting the company but the employees who may lose their jobs due to their company losing their money. 

I say cover the entire amounts of the deposits and only the deposits. Have a place for the account holders to move to, or take over and completely rid the bank of all management and investors. Any investors that lost money then tough luck........should not have been taking that risk. 

[icanthearyou 4,462]

Perhaps it is time to reconsider the idea of mixing retail banking and, investment banking.

[TexasTiger 12,836]

14 minutes ago, wdefromtx said:

While I partly agree with this....you also need to consider that depositors are constantly told by our government and those that are overseeing the banking system that things are healthy and the risk is minimal. Consider if you own a business and that business alone has an account that exceeds the 250K limit by say 750K so to run your business it would require 4 different banks to keep the funds below the insurance limit. That would create a bookkeeping nightmare.

Keep in mind that if they do not cover the deposits of businesses that have their money there they are not just hurting the company but the employees who may lose their jobs due to their company losing their money. 

I say cover the entire amounts of the deposits and only the deposits. Have a place for the account holders to move to, or take over and completely rid the bank of all management and investors. Any investors that lost money then tough luck........should not have been taking that risk. 

Doesn’t that just effectively remove the insurance cap on any amount for every bank in the country? No limits? How is that insurance funded?

[wdefromtx 3,159]

27 minutes ago, TexasTiger said:

Doesn’t that just effectively remove the insurance cap on any amount for every bank in the country? No limits? How is that insurance funded?

Yes and will require some type of bank regulation overhaul. I do not know about no limits but maybe having the option for some accounts with substantially higher limits. Increased insurance premiums to the banks that can pass it along to depositors above the FDIC amount of $250,000 essentially paying more into the FDIC for the increased amount to cover? Increased oversight and regulation of banks that have accounts above the $250,000 coverage. 

There is plenty of ways to handle it. 

I think it is better to cover the deposits of SVB considering the many companies in the tech industry that had accounts there and employee thousands. Maybe the business owners should have researched the banks investment practices and determined the risks. Keep in mind that many of these businesses got some of their initial startup funding by SVB and probably were too busy to worry about the bank's inner workings. 

[TexasTiger 12,836]

19 minutes ago, wdefromtx said:

Yes and will require some type of bank regulation overhaul. I do not know about no limits but maybe having the option for some accounts with substantially higher limits. Increased insurance premiums to the banks that can pass it along to depositors above the FDIC amount of $250,000 essentially paying more into the FDIC for the increased amount to cover? Increased oversight and regulation of banks that have accounts above the $250,000 coverage. 

There is plenty of ways to handle it. 

I think it is better to cover the deposits of SVB considering the many companies in the tech industry that had accounts there and employee thousands. Maybe the business owners should have researched the banks investment practices and determined the risks. Keep in mind that many of these businesses got some of their initial startup funding by SVB and probably were too busy to worry about the bank's inner workings. 

The CFO shouldn’t be too busy to manage the finances— that’s their job. But I agree that some of your suggestions have merit.

[Cardin Drake 1,826]

1 hour ago, icanthearyou said:

Perhaps it is time to reconsider the idea of mixing retail banking and, investment banking.

It's time to reconsider a lot of things. Starting with the government not buying it's own debt. 

[DKW 86 7,419]

8 hours ago, icanthearyou said:

Perhaps it is time to reconsider the idea of mixing retail banking and, investment banking.

It’s what caused all the problems in the first place. 

[Mikey 16,579]

Excessive government spending caused inflation, which caused the Fed to raise interest rates, which caused the government bonds the banks were holding as security to decrease in value, which caused the bank collapse.

If anybody wants to know where to place blame, it's right squarely on the failed fiscal and monetary policies of Washington, DC.

[arein0 950]

52 minutes ago, Mikey said:

Excessive government spending caused inflation, which caused the Fed to raise interest rates, which caused the government bonds the banks were holding as security to decrease in value, which caused the bank collapse.

If anybody wants to know where to place blame, it's right squarely on the failed fiscal and monetary policies of Washington, DC.

That's only partially true. You are forgetting that in Trumps bipartisan bank reform, they removed the Volcker Rule, which was put in place to prevent banks from taking risky bets for the sake of profit, meaning not at a customer's discretion and the bank holds all of the risk. They also would have had lowered the capital requirements, meaning banks can hold less cash. 

So in short you have banks holding less cash, taking on riskier portfolios, and have a sudden surge in rates. The perfect recipe for disaster.

Edit: Forgot to mention the current inflation is a global problem, not just in the US. It wouldn't have mattered who was president, we would still be facing it.

Edited March 14, 2023 by arein0

[TexasTiger 12,836]

58 minutes ago, Mikey said:

Excessive government spending caused inflation, which caused the Fed to raise interest rates, which caused the government bonds the banks were holding as security to decrease in value, which caused the bank collapse.

If anybody wants to know where to place blame, it's right squarely on the failed fiscal and monetary policies of Washington, DC.

Excessive government spending has been happening since Dubya blew up the balanced budgets he inherited. Inflation was hardly a blip until the pandemic upset the apple cart. Granted, the years of spending played a role along with juicing during the pandemic. It’s not what’s driving it now.

[DKW 86 7,419]

4 hours ago, Mikey said:

Excessive government spending caused inflation, which caused the Fed to raise interest rates, which caused the government bonds the banks were holding as security to decrease in value, which caused the bank collapse.

If anybody wants to know where to place blame, it's right squarely on the failed fiscal and monetary policies of Washington, DC.

Brother, you got the order completely backward. The banks must be able to adjust to fiscal policy and Fed Policy, not the other way around. 

You adjust the ship's direction to the storm, not try and adjust the storm to the ship.

[DKW 86 7,419]

3 hours ago, TexasTiger said:

Excessive government spending has been happening since Dubya blew up the balanced budgets he inherited. Inflation was hardly a blip until the pandemic upset the apple cart. Granted, the years of spending played a role along with juicing during the pandemic. It’s not what’s driving it now.

Well, not defending Bush43 here at all. His initial reaction to 9-11 was as most Americans wanted and thought rational. His stupidity was in keeping us there indefinitely. Obama's contribution was more stupidity, keeping us there another 8 years and blowing up spending for NOTHING. The only thing trump may have gotten right was getting us the hell out of there and certainly one of the few things Biden has done right was getting us out of the ME in force. 

Perpetual war is not who we are as a nation. Perpetual War is now the new business model of the MIC, however. 
I told the board we would be in a new war within 2 years as we withdrew from Afghanistan. Well, Putin made it easy on everyone in Washington and the Press Corps by gifting the MIC with Ukraine. The MIC, Wall Street, and effectively Congress are all welcoming to the War in Ukraine. We really need the historians to frame it correctly as they write about it going forward. We should call it the Fortunate War, or maybe the MIC Nirvana. Perpetual War with very few American Casualties... Can you imagine anything more perfect than a very profitable war for the MIC and Wall Street that has all the mommas and daddies not having to bury their kids? Throw in lower VA costs and it is Nirvana even for DC. Oh yeah, and Defeating Putin, who so many in the media are convinced cost HRC the WH in 2016 is just the Strawberry Cheesecake ending for DC. They have to be in near orgasm collectively. 

Now, if we can just moderate that war so that the Ukrainians cant defeat Putin, and Putin cant win, and keep it going another 30-40 years. It will change the complete face of America forever. We will just be the Weaponizers for the world. Safe in America, profitable to MIC and Wall Street, keeping friendly pols in power forever, by supplying arms to every war in the world. 

Edited March 14, 2023 by DKW 86

[TexasTiger 12,836]

3 hours ago, DKW 86 said:

Well, not defending Bush43 here at all. His initial reaction to 9-11 was as most Americans wanted and thought rational. His stupidity was in keeping us there indefinitely. Obama's contribution was more stupidity, keeping us there another 8 years and blowing up spending for NOTHING. The only thing trump may have gotten right was getting us the hell out of there and certainly one of the few things Biden has done right was getting us out of the ME in force. 

Perpetual war is not who we are as a nation. Perpetual War is now the new business model of the MIC, however. 
I told the board we would be in a new war within 2 years as we withdrew from Afghanistan. Well, Putin made it easy on everyone in Washington and the Press Corps by gifting the MIC with Ukraine. The MIC, Wall Street, and effectively Congress are all welcoming to the War in Ukraine. We really need the historians to frame it correctly as they write about it going forward. We should call it the Fortunate War, or maybe the MIC Nirvana. Perpetual War with very few American Casualties... Can you imagine anything more perfect than a very profitable war for the MIC and Wall Street that has all the mommas and daddies not having to bury their kids? Throw in lower VA costs and it is Nirvana even for DC. Oh yeah, and Defeating Putin, who so many in the media are convinced cost HRC the WH in 2016 is just the Strawberry Cheesecake ending for DC. They have to be in near orgasm collectively. 

Now, if we can just moderate that war so that the Ukrainians cant defeat Putin, and Putin cant win, and keep it going another 30-40 years. It will change the complete face of America forever. We will just be the Weaponizers for the world. Safe in America, profitable to MIC and Wall Street, keeping friendly pols in power forever, by supplying arms to every war in the world. 

It wasn’t just the spending. Clinton’s tax rates worked. Dubya cut them because he said surpluses were the people’s money. Then whose debt is it? We had a huge debt that needed reducing— that takes a surplus.  Now we have an insurmountable debt that grows rapidly. Dubya set that in motion.

[AUDub 11,147]

This guy is so stupidly locked into his talking points. 

 

[TitanTiger 20,472]

44 minutes ago, AUDub said:

This guy is so stupidly locked into his talking points. 

 

DeSantis answers questions and comments on issues like one of those Speak and Say toys where you pull a string and it randomly lands on some canned response.  Allows him not to think but still belch out hot button buzzwords that generate Pavlovian reactions from the MAGA base.

[AUDub 11,147]

49 minutes ago, TitanTiger said:

DeSantis answers questions and comments on issues like one of those Speak and Say toys where you pull a string and it randomly lands on some canned response.  Allows him not to think but still belch out hot button buzzwords that generate Pavlovian reactions from the MAGA base.

"This hurricane presents a serious crisis, Governor DeSantis."

"GO WOKE GO BROKE!"

[TexasTiger 12,836]

2 hours ago, TexasTiger said:

It wasn’t just the spending. Clinton’s tax rates worked. Dubya cut them because he said surpluses were the people’s money. Then whose debt is it? We had a huge debt that needed reducing— that takes a surplus.  Now we have an insurmountable debt that grows rapidly. Dubya set that in motion.

Whatcha disagreeing with, @Mikey?