classicJackets (FS) said:In reply to AngryCorvair (Forum Supporter) :
long term that's likely going to become true. They are saying it's not right now; they will use the bank's own assets to cover most of the cost, and then a fund that FDIC member banks pay into to cover the difference. If/when more banks continue to fail this may not work at each one and will likely expand, but that has been the explanation so far.
Eventually, somewhere down the line, the bank's customers will pay for it.
I understand the pros to making sure the depositors get their money back (keep in mind the uninsured depositors are largely businesses), but something to consider is this does set precedent that the FDIC limits dont actually matter. Im not a fan of this moral hazard.
Im interested to see how these "loans" go for the rest of the industry.
I keep telling people we dont have capitalism, we have corporate socialism.
AngryCorvair (Forum Supporter) said:is this the wrong place/time to ask "yeah, but where does the FDIC get the money to cover the deposits?" asking because i honestly have no idea, but i assume it's gotta be from taxpayers one way or another.
The I suggests to me that it's probably from premiums paid by the banks
eastsideTim said:Steve_Jones said:In reply to eastsideTim :
Debating on PacWest as well, I'm sure many are.
I jumped in at opening. Too early. Thankfully, only 100 shares. I figure if the calming measures prevent a general bank run, it'll recover. If they don't, then my portfolio has much bigger problems.
I got in at just under $6, so early compared to the $5 low, but not hateful. 500 shares just to see what happens :)
Last night I asked Alexa if more banks were going to fail soon and she said Yes. I don't think that The President's and Janet's calming words that 'everything is fine' are going to play out as mostly true.
Opti said:I understand the pros to making sure the depositors get their money back (keep in mind the uninsured depositors are largely businesses), but something to consider is this does set precedent that the FDIC limits dont actually matter. Im not a fan of this moral hazard.
Im interested to see how these "loans" go for the rest of the industry.
I keep telling people we dont have capitalism, we have corporate socialism.
Totally agree with this, although I'm not sure if one of the latter two systems is preferable or practically separable from the other...
In reply to aircooled :
One big thing that finally came out so I can say something on it is the lending practices of SVB. Basically they required the capital they lent to be deposited with them. No deposit no loan in almost all of the cases. So as a VC capital/Startup pipeline, it held a lot of startups hostage because they needed that lifeline that they could only get from SVB.
Because of this, I am a fan of the FDIC protection that they extended. It'll mean an increase in fees potentially long term but without it, we would see 100s of businesses burning through their remaining funds by Friday shuttering a large amount of jobs.
As a side note, I got 2 calls today from a couple of startups I do some side consulting for saying my contract has to be suspended effective immediately. Totally get it but now I have more garage time.
Long term, you'll see a change in the VC/Tech startup community. I'm glad I'm out of that world as my primary job but my consulting side gigs are taking a huge hit because they targeted the startup community.
Opti said:I understand the pros to making sure the depositors get their money back (keep in mind the uninsured depositors are largely businesses), but something to consider is this does set precedent that the FDIC limits dont actually matter. Im not a fan of this moral hazard.
Im interested to see how these "loans" go for the rest of the industry.
I keep telling people we dont have capitalism, we have corporate socialism.
The FDIC limits are guaranteed even if the bank has no assets. This is different, it is selling the banks assetts quickly to use that to pay the money back vs waiting 6 months to do so.
In reply to Steve_Jones :
If SVB had the assests with a FMV that would cover deposits why did this happen?They tried to convert some of those assets to cover (stock sale didnt work because stock price cratered, and selling treasuries realized a huge loss) and couldnt.
What bank has NO assets?
I have a feeling these Venture Capital firms are starting to pull the plug on high tech startups that continue to burn through cash while not making money. There could be more layoffs coming in high tech.
Elon Must fired 75% of the staff of Twitter and in spite of that Twitter is still operating when you click on it. Sure, all the moderators are gone now, but the place is actually still running. That should tell you something.
Snowdoggie (Forum Supporter) said:Elon Must fired 75% of the staff of Twitter and in spite of that Twitter is still operating when you click on it. Sure, all the moderators are gone now, but the place is actually still running. That should tell you something.
Barely still running though, not all the time and maybe not for long...the outages aren't the only incidents they're risking either, there are also security exploits to worry about.
(Edit: Plus having no moderators brings on the longer-term business risks of turning Twitter into 4chan such as advertisers and celebrity users leaving, legal exposure from illegal materials being hosted, etc)
In reply to Opti :
Ok, instead of no assets, not enough assets to cover. At this point the gov't is guaranteeing the value of securities and bonds vs having the bank sell them at a bigger and bigger loss.
GameboyRMH said:Snowdoggie (Forum Supporter) said:Elon Must fired 75% of the staff of Twitter and in spite of that Twitter is still operating when you click on it. Sure, all the moderators are gone now, but the place is actually still running. That should tell you something.
Barely still running though, not all the time and maybe not for long...the outages aren't the only incidents they're risking either, there are also security exploits to worry about.
(Edit: Plus having no moderators brings on the longer-term business risks of turning Twitter into 4chan such as advertisers and celebrity users leaving, legal exposure from illegal materials being hosted, etc)
The place is already more like 4chan and so what? If you want a moderated site, go to Mastadon. I remember how moderated the Usenet was back in the 90s. Not very. As for illegal materials, that battle has yet to be fought but will be coming to the Supreme Court soon. If they rule that site operators are responsible for anything that is snuck on their site by an anonomous user, this will go way past just Twitter and may shut down many sites, if not most of the Internet.
Musk may just keep the thing running at his own expense as his own personal vanity site, or he may burn it to the ground. Many users have already moved on to Mastadon and Dorsey is already working on a new, improved version to replace it.
And the band plays on...
Snowdoggie (Forum Supporter) said:GameboyRMH said:Snowdoggie (Forum Supporter) said:Elon Must fired 75% of the staff of Twitter and in spite of that Twitter is still operating when you click on it. Sure, all the moderators are gone now, but the place is actually still running. That should tell you something.
Barely still running though, not all the time and maybe not for long...the outages aren't the only incidents they're risking either, there are also security exploits to worry about.
(Edit: Plus having no moderators brings on the longer-term business risks of turning Twitter into 4chan such as advertisers and celebrity users leaving, legal exposure from illegal materials being hosted, etc)
The place is already more like 4chan and so what? If you want a moderated site, go to Mastadon. I remember how moderated the Usenet was back in the 90s. Not very. As for illegal materials, that battle has yet to be fought but will be coming to the Supreme Court soon. If they rule that site operators are responsible for anything that is snuck on their site by an anonomous user, this will go way past just Twitter and may shut down many sites, if not most of the Internet.
Musk may just keep the thing running at his own expense as his own personal vanity site, or he may burn it to the ground. Many users have already moved on to Mastadon and Dorsey is already working on a new, improved version to replace it.
And the band plays on...
Snowdoggie (Forum Supporter) said:The place is already more like 4chan and so what? If you want a moderated site, go to Mastadon. I remember how moderated the Usenet was back in the 90s. Not very. As for illegal materials, that battle has yet to be fought but will be coming to the Supreme Court soon. If they rule that site operators are responsible for anything that is snuck on their site by an anonomous user, this will go way past just Twitter and may shut down many sites, if not most of the Internet.
Usenet wasn't a commercial success though, community-run systems can get away with content that commercially-supported systems can't due to their reliance on advertising. Sites get killed quickly for hosting CSAM or pirated IP, that's not a new issue for any court to weigh in on.
GameboyRMH said:Snowdoggie (Forum Supporter) said:The place is already more like 4chan and so what? If you want a moderated site, go to Mastadon. I remember how moderated the Usenet was back in the 90s. Not very. As for illegal materials, that battle has yet to be fought but will be coming to the Supreme Court soon. If they rule that site operators are responsible for anything that is snuck on their site by an anonomous user, this will go way past just Twitter and may shut down many sites, if not most of the Internet.
Usenet wasn't a commercial success though, community-run systems can get away with content that commercially-supported systems can't due to their reliance on advertising. Sites get killed quickly for hosting CSAM or pirated IP, that's not a new issue for any court to weigh in on.
Killed quickly? It's still there. That's all I'm saying. This ship is still upright despite what everyone is saying.
How long will it last? Who knows. He stopped paying rent on his offices a while ago. He hasn't been evicted yet, however he has been sued. His company is squatting now. Maybe he will move the whole thing to a shack in South Texas. Maybe he will move Twitter to Mexico next to his latest factory.
People have been planning the funeral for Tesla for years and it is still there as well.
TL/DR
Has anyone mentioned that Signature Bank failed yesterday, Sunday?
And then we have this:
STEVE MOORE: I agree with the president that we don't have an overall banking crisis. The system is sound, but I do think you have a lot of major banks that are in some trouble. And SVB, the Silicon Valley Bank, may just be the tip of the iceberg here. And I think it's important for people to understand how this potential banking crisis happened. It's not because there aren't enough bank regulators, as Biden is trying to say. It's because of the massive inflation and the trillions and trillions of dollars of borrowing that the federal government has done that has put our financial system in great jeopardy and great peril.
You can't just keep doing this month after month, year after year, borrowing trillions and trillions of dollars. And so what happened, because of the Biden spending and debt policies, is that not only did inflation go up, but interest rates have gone up. Harris, as you know, the Fed has had to raise interest rates eight or nine times, and they're talking about more interest rate increases to come. And that's caused a lot of financial problems for these big banks is the interest rates go up.
So two pretty big banks (I think I heard SVB was 8th largest) and a bunch of others that are in the same situation. Another article I read today named the top 10 or so that have their heads stuck out too far on the chopping block.
I think we are in for a hell of a ride in the next few years.
Big problem for many banks is buying T bills at 1% interest and then trying to sell them off quick to raise cash.... at what discount ?
In reply to preach (dudeist priest) :
Yeah, Steve_Jones and I mentioned Signature above. Signature bank was similar to Silvergate in that they were heavily exposed to crypto. Also, Steve Moore may have a few things right, but he's not exactly someone I would trust when it comes to assigning blame based on his history. Any more than that, and it goes into politics.
I will mention SVB was one of the ones lobbying to increase the stress test limit of Dodd-Frank from 50 to 250 billion. That meant they didn't have to pass the same stress tests that, say, Chase or Bank of America have to.
tuna55 said:Opti said:In reply to Mr_Asa :
Same dude that dumped 3.5M in stock a couple weeks ago.
This is the part that kills me.
I'm a free market guy, but if you expect the FDIC to bail you out, and in this case going far above and beyond their responsibility to do so, then you ought to be in jail for obvious insider trading, and ought to never be able to hold this type of office again when your sentence is over.
Unless you got tits, you aint going to jail for insider trading.
californiamilleghia said:Big problem for many banks is buying T bills at 1% interest and then trying to sell them off quick to raise cash.... at what discount ?
Guessing somebody TOLD them that interest rates were going to stay at zero for perpetuity. Cause these SVB and who knows who else, was ALL in on that belief.
Stampie said:In reply to AnthonyGS (Forum Supporter) :
Why would you compare the US national debt to a metal who's only usefulness is it conducts electricity and doesn't tarnish? Might as well compare it to the value of all the diamonds in the world.
The silly metal has been accepted my ch longer. As a matter of fact US currency was backed by that metal longer. There was once a legal definition of the dollar based on the silly metal. Now it's based on zilch. So what do you compare it too? Unicorn tears?
Maybe go read why they wanted to do away with that legal definition and why. Maybe all of this isn't just some random freak accident but an actual foreseeable consequence of a lot of bad decisions.
Not one bank can cover their obligations with cash. I guess a few people finally figured that out.....
Funny thing about the govt debt too. If I did my accounting the way they do, I'd get Enroned into prison. If they did it the way they require corporations too the debt is well over $100 trillion.
Good news though! The world needs the "silly metal" and "it's all okay" types to keep this charade going! Enjoy!
In reply to AnthonyGS (Forum Supporter) :
That silly metal is just as silly as any other method of placing value on something. The US dollar is no more or less silly. Wampum works just as well as both. Point being unless you want to go to a barter economy then we need something that people can agree can be exchanged for goods. Right now the world agrees that the US dollar is the most stable of them.
NOHOME said:Unless you got tits, you aint going to jail for insider trading.
The insider trading thing should be fairly obvious if he's guilty or not. Most people with a CxO title don't actually control the sales of their stock directly, they either create a written sales plan years in advance that specifies how many shares are sold on what date or they put it into a trust where they give management control over to an independent party. While it is technically legal to sell shares as a "permanent insider" for 4 brief periods a year (one after each quarter's earnings report), doing so amounts to an open invitation to shareholder lawsuits whenever the stock goes down.
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