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Old_Joe : are you self promoting yourself ?"
@Derf- sorry if it came across that way. No, I just think that if a dummy like me can come up with ideas to keep the financial system from self-destruction then maybe the government isn't really trying a…
"Sherman’s policy preference would be a 1-2 bps / year charge for insurance on accounts over $250k with an opt-out provisio"
Exactly what I suggested several days ago:
The problem is with accounts in excess of 250k: there is no government mechanism…
Sounds very good. Thanks for info.
I wonder if a mechanism like this could make possible almost instantaneous bank runs. I'm thinking that if a bank was in trouble they would likely kill this immediately.
@Schwab, Wednesday, 1:50 pm PST:
1yr CD: 5.4%
1yr T-bill: 4.744%
Note: Schwab Bank is among the offerings @5.4%, so this group may be under some pressure.
Additional Note: @ Wednesday, 1:59 pm PST:
Schwab & a couple of other 5.4% offerings no…
Ridicule, @Anna. As long as they're eliminating almost everything that increases in cost anyway, might as well just invent "CPI-ex-Inflation". It would be about as useful.
"I suggest banks should recover these extra costs by charging corporate accounts a fee on the basis of average balance, and perhaps a risk premium."
@WhollyTerriers: Exactly right. Those accounts should be offered a "not insured/no-charge/you're on…
"the tech sector is famously full of libertarians who like to denounce big government right up to the minute they themselves needed government aid."
Well, hard to dispute that part.
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 comm…
Early on in this post I posed the following question:
Question: If a major source of the problem is that Silicon Valley Bank was forced to sell US Gov't securities at a loss because their current value is less than their maturity value, why would th…
"I just walked past a First Republic branch (no lines outside, seemed sedate inside). The window had a sign for a 60 day 4.25%"
@msf- That is indeed very unusual for First Republic. Normally their CD offerings to bank customers is paltry... typical…
If you purchase newly issued CDs, the yield to maturity is exactly as issued... that isn't affected by market gyrations. Treasuries available at a brokerage, on the other hand, will continually fluctuate in yield as the market dictates.
Yesterday I looked at Schwab to buy a few more Treasuries, but that facility "wasn't available" until the start of business today. They knew what was coming.
@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.
"when the #*&# hits the fan the government will step in and cover everyone."
@hank- It's important to be clear when we use "verbal shorthand". Yes, the FDIC is a government agency. No, the FDIC does not use "government money" to make depositors…
"So it’s not automatic. If it were automatic there’d be no need for FDIC insurance."
@hank: For bank account amounts of 250k or less FDIC insurance is "automatic".
The problem is with accounts in excess of 250k: there is no government mechanism fo…
@catch22- As you would know from our conversations over the years, I have no tolerance for government rescue of institutions or businesses that get into trouble due to stupidity or greed.
But it's painfully obvious that in today's financial environ…
I didn't realize that such an option existed. But I'll tell you straight out: I wouldn't trust ANY private operation in the long run. That's just transferring the risk of loss from a poorly managed bank to a possibly poorly managed private concern. …
Well here's what I'm seeing: It's just a fact that in today's financial arena there are certain types of businesses that have a need to maintain very large amounts of cash which is readily available for deployment on short notice.
As far as I can s…
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 f…
"Where does the government get all this money to cover depositors not covered by FDIC insurance?"
From what I've read so far, from the FDIC, which will then replace at least some of that expenditure by a special assessment (ie: in addition to the r…
Yes, not much info re Silvergate. Did find this, though:
How Silvergate’s Crypto Collapse Differed From Silicon Valley Bank’s: No Bailout
and this:
Silvergate Capital Corporation announced the immediate winding down of the bank’s operations along…
"more likely the previous decline before the SVB news had to do with rate hikes and Wells Fargo layoffs:"
You think maybe Wells Fargo laid off the guys who just said to "buy Signature Bank, New York", which was closed today by its state chartering …
