Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Bank Rescue Plan

edited March 2023 in Other Investing
https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm
https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm

Notes to follow.

Signature Bank, NY also closed.

ALL depositors of Signature AND SVB Bank will be protected - insured & uninsured.

Stock and debt holders will not be protected.

New BTFP facility for 1-yr collateralized loans with $25 billion funding coming from Exchange Stabilization Fund.

Fed Discount Window access to be easier.
«1

Comments

  • Futures up on the news....
  • Saw somewhere -
    Interesting FDIC has 125billions. On the hook 25billions now .
  • So much for the $250,000 FDIC insurance. Everyone gets their money back.
  • Hopefully, these actions will alleviate concerns about bank stability and prevent bank runs.
  • Quick take : No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
    Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
    Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.
    My TAKE : If you're dumb enough to put more than $250 K into one account , you need to have your hand slapped !!
  • Hard to argue with that, @Derf...
  • I wonder if the CEO of SVB will get spanked for selling a bunch of shares 2 weeks ago.
  • Perhaps he likes that sort of thing...
  • edited March 2023
    I have searched the web on any news related to Silvergate Bank that also failed and is liquidating. NOTHING.

    The Fed/Treasury/FDIC announcement mentions only the SVB Bank and Signature Bank.
  • MikeM said:

    So much for the $250,000 FDIC insurance. Everyone gets their money back.

    Yes, it is heinous.
  • And you know damn well that if gummint slaps a "recovery fee" on banks, the retail consumer will somehow end-up paying it. ANGRY.
  • @ crash. You are right. It’s wrong and creates a moral hazard. But under the circumstances did the powers that be have a choice?
  • larryB said:

    @ crash. You are right. It’s wrong and creates a moral hazard. But under the circumstances did the powers that be have a choice?

    I guess they figured, "we broke it, we gotta fix it?"
  • @Crash 'recovery fee' on banks ??? I've had a busy day and need explaining for my tired brain cells. Thank you.
  • Who broke what? At the risk of a gross oversimplification the folks at SVB stashed too much of their assets in long dated assets. When rates went up the value of their assets were marked to market and went down. Thus their ratio of assets to liabilities declined. In even simpler terms they chased yields and did not ladder their stash or do liability matching. Then the whole house of card’s collapsed. I was a Marxist leaning history grad student who ridiculed business students and I could have managed that situation better than SVB. WHO BROKE WHAT?
  • edited March 2023
    Hi @catch22- I believe that he's referring to a "special assessment" that the FDIC will make on the FDIC covered banks, in addition to the normal ongoing assessments. And he's probably right- the banks will somehow make sure that we depositors pay for it... lower interest, who knows... but something, for sure.
  • https://www.cnbc.com/2023/03/12/regulators-close-new-yorks-signature-bank-citing-systemic-risk.html

    and now signature bank. "Crypto-focused." When will the idiots in charge of everything finally wake up and PROHIBIT crypto??? Shit.
  • Crash said:

    https://www.cnbc.com/2023/03/12/regulators-close-new-yorks-signature-bank-citing-systemic-risk.html

    and now signature bank. "Crypto-focused." When will the idiots in charge of everything finally wake up and PROHIBIT crypto??? Shit.

    First Genesis (lender), then Silvergate, now Signature..... fun times in cryptoland!
  • rforno said:

    Crash said:

    https://www.cnbc.com/2023/03/12/regulators-close-new-yorks-signature-bank-citing-systemic-risk.html

    and now signature bank. "Crypto-focused." When will the idiots in charge of everything finally wake up and PROHIBIT crypto??? Shit.

    First Genesis (lender), then Silvergate, now Signature..... fun times in cryptoland!
    A pox on them.
  • MikeM said:

    So much for the $250,000 FDIC insurance. Everyone gets their money back.

    We live in a world where profit is shared by the few (in private) and risks are shared by the many (in public). Another example of "disbursed costs (many taking on the risk) and concentrated benefit (while few take in the profit)".

  • bee said:

    MikeM said:

    So much for the $250,000 FDIC insurance. Everyone gets their money back.

    We live in a world where profit is shared by the few (in private) and risks are shared by the many (in public). Another example of "disbursed costs (many taking on the risk) and concentrated benefit (while few take in the profit)".

    Perfectly stated. (Groan.)
  • I say let SVB fail &stick to the $250k cap..Sickens me that these bank execs take huge risks & suffer none of the consequences. And love that they paid bonuses out just hours before the collapse. Gov't should clawback all that & all the bonuses & compensation from those in charge for the past 5 years at least. Only way they're gonna learn is if you hit them in their pockets instead of us little guys.
  • edited March 2023
    If the bank execs owned SVB stock, they are reaping the consequences of their actions. Depositors are being made whole; stock and bond holders are out of luck, getting hit hard unless they sold early, in which case clawbacks are in order, as well as prosecutions.
  • edited March 2023
    If companies hold over 250K cash in banks to meet payroll, and other expenses, what is to be gained by evaporating that money, beyond the temporary pleasure of sticking it to the big boys?

    If companies can't make payroll, or pay the other companies they do business with, we won't be talking about Fed rates. We will be talking about business failures, and unemployment.
  • @WABAC- exactly. Many commentators are failing to distinguish between rescuing banks (let 'em fail!!) and preventing a complete financial meltdown by not punishing bank depositors for, evidently, having too much money.
  • Well, the remedy is simple: it's an ounce of prevention: It doesn't matter WHO you are. Just be smart enough to spread your money around and not deposit more than $250k in one place. Duh. Utter stupidity. Total carelessness. Negligence. Scandalous.
  • edited March 2023
    Easy to say when you don't have to worry about spreading many millions of dollars of operating capital around, and yet also need to have that money quickly available when required. That's the way that a significant part of the national business community operates.

    Example: A company needs to safely deposit $20 million, and yet have it easily available, perhaps within a tight timeframe. So they're supposed to break that into eighty separate 250k deposits and find eighty separate banks to use, and yet have all of that quickly and easily available?

    Right.

    Given that reality maybe the federal financial administration ought to put in place a suitable mechanism for that type of business instead of playing games and taking the entire financial system right to the brink of disaster.

    Not all that hard for the fed money masters to do, either.
  • Elizabeth Warren's NYT oped is a reminder that the 2018 Dodd-Frank rollback set the stage for this mess, and that the SVB CEO was one of the exec gang who lobbied for it.
  • Barney Frank went to work for Signature Bank after he left Congress. Got $2 million plus but didn't stop them from doing the same thing SVB did
Sign In or Register to comment.