Posted on 03/14/2023 4:00:47 AM PDT by EBH
Many people have described the emergency measures as a bailout and say that they mark a major shift in how the federal government deals with banking crises. Until now, only deposits up to $250,000 were insured under federal law. But the Sunday decision by regulators will protect all deposits made at SVB and crypto-heavy Signature Bank, which regulators wound down on Sunday, to avoid “system risk.”
“We’ve changed the system,” economist Mohamed El-Erian, president of Queens’ College at the University of Cambridge, told CNBC’s Squawk Box on Monday. He also echoed Roger Altman, founder of investment bank advisory firm Evercore, that “we are now in a different world.”
(Excerpt) Read more at msn.com ...
The SVB bonuses were paid out last Friday because it was the company’s last payroll run before the 15th.
The FDIC is probably way undercapitalized.
The federal government is kicking the bundle of dynamite down the road.
“If a bank’s business customer has to worry about the $250,000 FDIC cap, much of the nation’s economy is going to grind to a halt.”
This is true—but why was this not the case in earlier large bank runs and closures?
What folks are missing is what is different this time and why the Feds had to act.
The sharp investors know what is different this time....
The entire world economy is vastly over-leveraged and is super fragile—anything could bring on total collapse.
The Fed needs to put a finger in the dike for even the smallest drip.
That is what raw fear looks like.
Crypto has spread toxic waste throughout the financial system.
No telling whose toilet will start smelling from it...
(Crypto has spread toxic waste throughout the financial system)
Yeah. I saw all the Bitcoin commercials on some games I played. A good number of “actors” in other commercials were Chinese or looked like Americans in some foreign land - which I guessed was China.
Same people over and over again.
This was done to stop a global collapse. That is what everyone keeps missing here. The reach of these banks was far beyond our shores too.
i think emergency powers cover this - FDIC in financial crisis extended insurance coverage to all deposits and that is not policy as stipulated in FDIC disclaimers. also they have latitude under 1991 FDIC Act to resolve emergencies in least costly manner. this backstopped 2 banks, not the whole system.
Someone pointed out yesterday that SVB is the 16th largest bank in the U.S. and only has 13 branches. It also only has about 38,000 customers. It’s much easier to have a bank run with 38,000 customers than with 3.8 million.
Correct. In the current global economy advances, the old system is failing.
Was this the right thing to do? Time will tell, but it is only a bandaid from what I see. Loans to the bank on devalued bonds? That feels like the car dealership offering me to swap out my old car at today’s price?
There is a systemic problem as well.
That is what the Fed and .gov are hoping to hide.
It is like natives wearing a fig leaf.
;-)
It looks to me like the “kick the can down the road” tactic is in place—an unlimited Fed window to keep banks afloat.
They can call them loans or grants or whatever they want—the bottom line is that all depositors must be kept whole or the complete system collapses.
It is kind of like a high school hockey goal-tender facing the NHL all stars.
The goal-tender will make a lot of saves for a while...
From here on out, any time difficulties arise with a bank that has done business with the woke or deep state it will be considered an "emergency".
The Fed has pivotted.
They can never, ever raise rates. If they did, banks that own huge amounts of lower-yield USTs will go under. And the Fed would end up buying those bonds at par so that losses can be socialised.
With the Iran/Saudi rapprochement and the imminent end of the petrodollar, foreigners will be divesting from the USD.
So the Fed must print. This won’t be a burden on taxpayers exactly, but on everyone who uses the dollar.
Re:21 - yes and those sales were ready scheduled.
Won’t deter people looking for a conspiracy to find one. There’s plenty of other ‘stuff to lambast Mgmt for - like having a vacant Chief Risk Officer for so long.
The crypto things had almost nothing to do with crypto. They had to do with scammers. Scammers have been scamming since markets were created.
Crypto, specifically things like Bitcoin, make a person their own bank. They provide a safe haven from the idiots running banks like SVB.
They are clearly not for everyone. And I would never suggest that anyone buy one (they are not ‘investments.’). But they will serve a purpose when the masses realize bank deposits are liabilities, not assets. And depositors are last on the list to bail out.
More failures to come now.
Weren’t there a couple of guys killed? (one I know for sure)
I’ve forgotten what all happened with it - in a short period of time
SBF did not kill himself (IOW, he knows too much)
You can tell that dude is a scammer; big time
And now every single big company knows they can take huge risks and simply get a bail out no matter how much they lose. OH but it will be covered by “fees” banks pay to the FDIC. And we know banks won’t dare think of passing the cost to their responsible depositors.
In this case this was the Federal Reserve’s fault...
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