Silicon Valley Bank - The Feds step in

[rePete]

The feds and FDIC are going to make sure deposits are paid in full.

I'm pretty torn about this one. On the one hand I'm generally very against bailouts. Businesses, including banks and investment houses, should sink or swim on their own management and performance. On the other hand, it's irresponsible, unethical politicians who are the ones that enacted the deregulation that allows this kind of thing to happen - leaving taxpayers holding the bag (no matter what they say about taxpayers not being on the hook for this in the article). So once again, the government picks up the tab for public policy that's rooted in greed and corruption, and all this to avoid a snowball effect that should never be allowed in the first place.

https://abcnews.go.com/Business/silicon-valley-bank-collapse-treasury-fed-fdic-announce/story?id=97807268

[Yesed]

It’s only one bank, and about 6 other banks lost a lot of money because of this. Nothing to get too excited about. Good opportunity to spook the markets though.

[rePete]

It’s only one bank, and about 6 other banks lost a lot of money because of this. Nothing to get too excited about. Good opportunity to spook the markets though.

I believe it’s actually two banks that have failed. This one, and another one called signature. Whether or not this snowballs into a larger issue, I have no idea. I hope not. And I suppose that’s what the bail out is for…. To prevent this spreading any further. But at the end of the day, we shouldn’t even have to have this conversation. Government shouldn’t be bailing out banks, and banks shouldn’t be behaving in ways that increase the risk of this happening.

[Yesed]

I believe it’s actually two banks that have failed. This one, and another one called signature. Whether or not this snowballs into a larger issue, I have no idea. I hope not. And I suppose that’s what the bail out is for…. To prevent this spreading any further. But at the end of the day, we shouldn’t even have to have this conversation. Government shouldn’t be bailing out banks, and banks shouldn’t be behaving in ways that increase the risk of this happening.

I agree with you, and I think you’re right about Signature . Was discussing this with some friends and got a lot of theories. Bailouts on this scale doesn’t even help the little guy. Jobs maybe, but investors are insured.

[rePete]

I agree with you, and I think you’re right about Signature . Was discussing this with some friends and got a lot of theories. Bailouts on this scale doesn’t even help the little guy. Jobs maybe, but investors are insured.

I agree. This is the kind of structural thing that drives me crazy. It's entirely avoidable.

[alex peters]

I may be wrong but I thought Yellen said there would be no bailouts of the bank

[rePete]

I may be wrong but I thought Yellen said there would be no bailouts of the bank

Perhaps a distinction between a "bailout" (which implies saving the bank, I imagine) and the FDIC simply making good on the deposits? I'm not sure, tbh. Need to learn more. Either way, the FDIC shoudn't have to be stepping in in the first place.

[cjreyes]

Note to everyone: Ignore all posts from the above poster in this thread. You'll be glad you did.


Sorry Pete. I meant the one above you.

[rePete]

Note to everyone: Ignore all posts from the above poster in this thread. You'll be glad you did.


Sorry Pete. I meant the one above you.

Naw, his was a reasonable point. I wasn't sure about it myself.

[cjreyes]

Sorry man. Somehow I turn into a triggered, worked-up idiot over nuthin'. I'll do better to control myself. Didn't mean to mess with your thread.

[alex peters]

Perhaps a distinction between a "bailout" (which implies saving the bank, I imagine) and the FDIC simply making good on the deposits? I'm not sure, tbh. Need to learn more. Either way, the FDIC shoudn't have to be stepping in in the first place.

Again not sure but I thought I heard that the FDIC would make good on the deposits only up to $250,000 which is the insurance amount. In other words if you have any amount in any account above $250,000 you are out of that $.

[rePete]

Again not sure but I thought I heard that the FDIC would make good on the deposits only up to $250,000 which is the insurance amount. In other words if you have any amount in any account above $250,000 you are out of that $.

So it seems the bank is allowed to fail, but the depositors get their money back.
The statement is as follows:

Washington, DC -- The following statement was released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg:

Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.

After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.

We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.

Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.

Finally, the 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.

The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today's actions demonstrate our commitment to take the necessary steps to ensure that depositors' savings remain safe.

https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm

[alex peters]

So it seems the bank is allowed to fail, but the depositors get their money back.
The statement is as follows:




https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm

Ok. Thanks. I agree with that. Just hope it is not the beginning of more and more bank failures. From what I understand they were involved heavily in Tech startups . As many of the big tech companies are laying off it makes sense that the startups are failing.

[rePete]

Ok. Thanks. I agree with that. Just hope it is not the beginning of more and more bank failures. From what I understand they were involved heavily in Tech startups . As many of the big tech companies are laying off it makes sense that the startups are failing.

If they were heavily invested in tech start-ups, they should never have been allowed to call themselves a bank imo. Investment firm, fine. But not a bank.

[alex peters]

If they were heavily invested in tech start-ups, they should never have been allowed to call themselves a bank imo. Investment firm, fine. But not a bank.

Yes