Don't Worry, Be Happy!

[Kathianne]

Oh dear:

https://hotair.com/tree-hugging-sist...-today-n536171

Glad I'm working until Wednesday, this is the sort of thing that can get me obsessed.

[fj1200]

I think that piece greatly overstates the actual risk to the overall economy.

What have we learned?

[COLOR=var(--primary-text-color)]One of the big questions coming out of this will be which banks misjudged the match between the cost and lifespan of their deposits and the yield and duration of their assets. This is very different from the questions about bad lending that haunted the 2008 financial crisis.[/COLOR]
[COLOR=var(--primary-text-color)]As money flowed into banks during the pandemic, buying the shortest-term Treasurys or keeping the money in cash would have insulated them from the risk of rising interest rates. But it also would have depressed their income. Banks’ reach for “safe” yield may be what haunts them this time around.[/COLOR]

https://www.wsj.com/articles/silicon...ening-299e9b65

[fj1200]

Investors implore the government to step in after Silicon Valley Bank failure

https://www.cnbc.com/2023/03/11/sili...nment-aid.html

Of course they do.

[Black Diamond]

FB_IMG_1678651903483.jpg

[Black Diamond]

https://www.cnbc.com/2023/03/11/sili...nment-aid.html

Of course they do.

When you're too big to fail, you're more likely to take bad risks. Should I call them risks at all ?

[fj1200]

When you're too big to fail, you're more likely to take bad risks. Should I call them risks at all ?

I don't think SVB falls into that category as a regional bank. And from what I read they didn't seem to have assets in the truly risky category; government bonds that are getting crushed because of interest rate hikes, throw in an old fashioned run and they have to shut the doors. Some tech people are going to have to learn the lesson that you don't just toss millions of dollars into the bank and call it good. But what's a little moral hazard between friends.

Experts flag moral hazard risk as U.S. intervenes in SVB crisis

U.S. regulators may have stemmed a banking crisis by guaranteeing deposits of collapsed Silicon Valley Bank (SVB), but some experts warn that the move has encouraged bad investor behaviour.Following a weekend of discussions over the future of SVB owner SVB Financial Group , banking regulators unveiled emergency funding plans for the bank.
Billionaire hedge fund manager Bill Ackman wrote on Twitter that if authorities had not intervened, "we would have had a 1930s bank run continuing first thing Monday causing enormous economic damage and hardship to millions."

"More banks will likely fail despite the intervention, but we now have a clear roadmap for how the gov't will manage them."
Yet by guaranteeing that depositors would lose no money, authorities have again raised the question of moral hazard - removal of people's incentive to guard against financial risk.

...

https://www.reuters.com/business/fin...is-2023-03-13/

[Gunny]

https://www.cnbc.com/2023/03/11/sili...nment-aid.html

Of course they do.

Saw where the Dem rep for the district is standing on high, proclaiming no bailout BUT the Fed government needs to have investors' money ready to go for each and all first thing Monday AM. Bank execs' heads on platters makes the latter not a bailout?

If karma was ever real, seeing Yellen and other DC Dem bigmouths proclaim "no Federal bailout no matter what" would do the trick just as soon as they flip flop on it. They'll turn this into another Republican't bad guy moment and the Republicant's will play right into it.

[fj1200]

Saw where the Dem rep for the district is standing on high, proclaiming no bailout BUT the Fed government needs to have investors' money ready to go for each and all first thing Monday AM. Bank execs' heads on platters makes the latter not a bailout?

If karma was ever real, seeing Yellen and other DC Dem bigmouths proclaim "no Federal bailout no matter what" would do the trick just as soon as they flip flop on it. They'll turn this into another Republican't bad guy moment and the Republicant's will play right into it.

They say stuff without actually saying stuff. "No bailout!!!" but I'm guessing FDIC has enough money to cover any shortfall which is really unlikely to be very much anyway. A $200 billion bank but actual risk is miniscule.

And I don't think there's anything criminal in this whole debacle.

[Gunny]

They say stuff without actually saying stuff. "No bailout!!!" but I'm guessing FDIC has enough money to cover any shortfall which is really unlikely to be very much anyway. A $200 billion bank but actual risk is miniscule.

And I don't think there's anything criminal in this whole debacle.

I haven't come to any conclusion regarding blame. But, this is America. It cost money. Presumably, it's going to cost the Federal government money. In the name of only, the Federal government will have to take it out on someone that its going to have to give up some of our tax dollars it has otherwise earmarked for Federal fraud, waste and abuse.

The simple math to how banks function states this can happen without any wrongdoing. People who don't understand the bank doesn't take your money and put that specific amount in cash in a vault for your use only probably shouldn't be doing business at all.

Not sure how SVB specifically operates. My banks have specific daily limits on withdrawals. Not sure how that applies to businesses.

[Gunny]

https://thehill.com/homenews/adminis...ing-a-bailout/

[fj1200]

https://thehill.com/homenews/adminis...ing-a-bailout/

They should have summarized all of that with "Standard Operating Procedure."

[fj1200]

Bernie:

“Let’s be clear. The failure of Silicon Valley Bank is a direct result of an absurd 2018 bank deregulation bill signed by Donald Trump that I strongly opposed. Five years ago, the Republican Director of the Congressional Budget Office released a report finding that this legislation would ‘increase the likelihood that a large financial firm with assets of between $100 billion and $250 billion would fail.’
...

https://www.sanders.senate.gov/press...n-valley-bank/

Liz:

Elizabeth Warren: Silicon Valley Bank Is Gone. We Know Who Is Responsible.

https://www.nytimes.com/2023/03/13/o...lley-bank.html

I just might, might, be able to give these two any credit if they hadn't written these op-eds 5 years ago and were just waiting to be able to release them to the press after inserting the correct faux banking crisis of the day.

[Black Diamond]

I don't think SVB falls into that category as a regional bank. And from what I read they didn't seem to have assets in the truly risky category; government bonds that are getting crushed because of interest rate hikes, throw in an old fashioned run and they have to shut the doors. Some tech people are going to have to learn the lesson that you don't just toss millions of dollars into the bank and call it good. But what's a little moral hazard between friends.

Experts flag moral hazard risk as U.S. intervenes in SVB crisis

https://www.reuters.com/business/fin...is-2023-03-13/

Or Oprah.

Yeah i saw the whole 'investors want a bailout" and I got excited.

[Black Diamond]

received_739861287791829.jpeg

[Gunny]

They say stuff without actually saying stuff. "No bailout!!!" but I'm guessing FDIC has enough money to cover any shortfall which is really unlikely to be very much anyway. A $200 billion bank but actual risk is miniscule.

And I don't think there's anything criminal in this whole debacle.

It would not surprise me one bit to find out the FDIC is as underfunded as social security, and/or the supply rats (Congress) has been ratfucking the seabag.

To clarify the last for those not in the know, when you go out in the field/ashore, you stow your gear in your seabag and its warehoused at supply. When you return and find a hole in your seabag and items missing, it's been ratfucked, usually by those assigned to safeguard it. Their reasoning? Must've been rats

Anyway, I haven't much faith in the US government responsibly handling the people's money, and not without obvious and innumerable reasons.