(03-27-2023 12:14 PM)Rice93 Wrote:  

(03-24-2023 06:11 AM)Owl 69/70/75 Wrote:  Back to the subject.

Rice is simply no longer the university which I attended. It may or may not be better--I think not, but that's a matter of opinion. But it's no longer the university that I attended, and not one that I would have chosen to attend.

Yep... things probably did change as compared to 40-50 years ago. I would hazard a guess that many universities that you would have considered in the 1960s are quite different than they were when you were a HS senior. It sounds like many of the changes are ones that you find unfavorable. My guess is these unfavorable changes would be found at most colleges that you considered back in the day.

My dad (your era) attended one of the military academies and he tells me that there is constant grousing amongst his alum peers about the "woke" changes that have been put into effect in the academies since their days there.

There is now Hillsdale and University of Austin (if that's what they call it... did that ever actually happen?)...

University of Austin is still in the 'getting it going' stage.

(03-27-2023 12:19 PM)tanqtonic Wrote:  

(03-27-2023 12:14 PM)Rice93 Wrote:  

(03-24-2023 06:11 AM)Owl 69/70/75 Wrote:  Back to the subject.

Rice is simply no longer the university which I attended. It may or may not be better--I think not, but that's a matter of opinion. But it's no longer the university that I attended, and not one that I would have chosen to attend.

Yep... things probably did change as compared to 40-50 years ago. I would hazard a guess that many universities that you would have considered in the 1960s are quite different than they were when you were a HS senior. It sounds like many of the changes are ones that you find unfavorable. My guess is these unfavorable changes would be found at most colleges that you considered back in the day.

My dad (your era) attended one of the military academies and he tells me that there is constant grousing amongst his alum peers about the "woke" changes that have been put into effect in the academies since their days there.

There is now Hillsdale and University of Austin (if that's what they call it... did that ever actually happen?)...

University of Austin is still in the 'getting it going' stage.

Do you think it's going to happen?

(03-27-2023 12:44 PM)Rice93 Wrote:  

(03-27-2023 12:19 PM)tanqtonic Wrote:  

(03-27-2023 12:14 PM)Rice93 Wrote:  

(03-24-2023 06:11 AM)Owl 69/70/75 Wrote:  Back to the subject.

Rice is simply no longer the university which I attended. It may or may not be better--I think not, but that's a matter of opinion. But it's no longer the university that I attended, and not one that I would have chosen to attend.

Yep... things probably did change as compared to 40-50 years ago. I would hazard a guess that many universities that you would have considered in the 1960s are quite different than they were when you were a HS senior. It sounds like many of the changes are ones that you find unfavorable. My guess is these unfavorable changes would be found at most colleges that you considered back in the day.

My dad (your era) attended one of the military academies and he tells me that there is constant grousing amongst his alum peers about the "woke" changes that have been put into effect in the academies since their days there.

There is now Hillsdale and University of Austin (if that's what they call it... did that ever actually happen?)...

University of Austin is still in the 'getting it going' stage.

Do you think it's going to happen?

https://www.uaustin.org/

They are trying to get the accreditation aspect in place, and started with symposia.


There are just too many people of note tied into this for it not too, imo.

Oh wow I forgot all about UATX. Super curious to see how it shapes up over the next year. According to the website, they’re shooting for Fall 2024 for their first cohorts.

(03-27-2023 11:58 AM)tanqtonic Wrote:  Glad to know my Mom's estate account is an investor. Nothing but downside acceptance and still an 'investor'.

Sorry Ham, I just think your use of that is a huge stretch.

Respectfully, Tanq.... you haven't demonstrated how my use of the term doesn't meet the definitions of either word... and your use of a different situation of which I know nothing about isn't appropriate.... You can't apply my words about one situation to a different situation and then associate that with me.

I'll say it simply... The SIPC says someone who rolls T-Bills is an investor. If they roll longer maturities, they are additionally at LEAST 'speculating' that rates won't rise faster than they can re-invest. They take no credit nor event risk, but they DO take rate risk. So the 'return' doesn't have to be significant in order for the terms 'investment' or 'speculative' to apply.

Once again, I ask you NOT what your mother's situation is... because I have absolutely no idea why your mother would take all the risk of something with zero reward.... but to address the situation at hand.

A comment I'm pretty sure you made (and numbers and I both speculated) implied that there was SOME advantage to the company (if nothing else, that they get to do business with that bank) for putting money in excess of the FDIC insurance into that bank. If you're saying they had no reason then they were just stupid... which as I said is certainly possible, but I don't think every one of those people is stupid

For reasons that we can speculate on, but only they know for certain, they accepted principal risk in the event of a bank failure. I call that a speculator, but if you don't, It doesn't really matter. What matters is that/if you agree that they put themselves at event risk and were not entitled to compensation above their insured amount.

If you don't believe that, then what is the purpose of limitations on FDIC insurance??

(03-27-2023 01:45 PM)Hambone10 Wrote:  

(03-27-2023 11:58 AM)tanqtonic Wrote:  Glad to know my Mom's estate account is an investor. Nothing but downside acceptance and still an 'investor'.

Sorry Ham, I just think your use of that is a huge stretch.

Respectfully, Tanq.... you haven't demonstrated how my use of the term doesn't meet the definitions of either word... and your use of a different situation of which I know nothing about isn't appropriate.... You can't apply my words about one situation to a different situation and then associate that with me.

I'll say it simply... The SIPC says someone who rolls T-Bills is an investor. If they roll longer maturities, they are additionally at LEAST 'speculating' that rates won't rise faster than they can re-invest. They take no credit nor event risk, but they DO take rate risk. So the 'return' doesn't have to be significant in order for the terms 'investment' or 'speculative' to apply.

Once again, I ask you NOT what your mother's situation is... because I have absolutely no idea why your mother would take all the risk of something with zero reward.... but to address the situation at hand.

A comment I'm pretty sure you made (and numbers and I both speculated) implied that there was SOME advantage to the company (if nothing else, that they get to do business with that bank) for putting money in excess of the FDIC insurance into that bank. If you're saying they had no reason then they were just stupid... which as I said is certainly possible, but I don't think every one of those people is stupid

For reasons that we can speculate on, but only they know for certain, they accepted principal risk in the event of a bank failure. I call that a speculator, but if you don't, It doesn't really matter. What matters is that/if you agree that they put themselves at event risk and were not entitled to compensation above their insured amount.

If you don't believe that, then what is the purpose of limitations on FDIC insurance??

My take is that those banking with SBV were not viewing their banking as an investment that was akin to investing in stocks or bonds and more akin to traditional banking, where the risk of loss is near 0 because loss only happens with the failure of the bank.

I personally don't think we want a banking system where we assume risk of failure for routine banking is further from 0 and the change of failure impacts decisions on where to bank. That would almost certainly result in a decrease in competition as people and businesses flock to larger, better capitalized banks who can more easily withstand a run on the bank.

Do small businesses now need to start asking about the investments that the bank is making with their funds?

(03-27-2023 01:54 PM)RiceLad15 Wrote:  My take is that those banking with SBV were not viewing their banking as an investment that was akin to investing in stocks or bonds and more akin to traditional banking, where the risk of loss is near 0 because loss only happens with the failure of the bank.

I agree... but Certificates of Deposit are considered 'investments'.... as are T-bills.... which don't carry a 250k 'limit'. They aren't nearly as speculative as stocks or bonds, but they are not without ANY risk.

Quote:I personally don't think we want a banking system where we assume risk of failure for routine banking is further from 0 and the change of failure impacts decisions on where to bank. That would almost certainly result in a decrease in competition as people and businesses flock to larger, better capitalized banks who can more easily withstand a run on the bank.

Do small businesses now need to start asking about the investments that the bank is making with their funds?

You're missing the 'insurance' issue. The whole purpose of the FDIC is to prevent just this. That insurance is not unlimited, though. If you want to make such insurance 'unlimited', that's fine... but that still isn't the case... and the very issue you bring up is what is CURRENTLY putting the system at risk.

As it stands right now, someone with 250k+ to put in a bank would perhaps be better advised to consider the 'size' of the bank they do business with (too big to fail) and/or the political importance of that bank.

I mean seriously... If you had to choose a 300mm bank with 10% capital and a clean loan portfolio and a 300byn bank with 5% capital and a risky portfolio, I'd probably be more inclined to choose the larger bank for my uninsured deposit. While the smaller bank may be less likely to default, the larger bank is more likely to be 'bailed out' if it does.


And would still beg the question...

In the event we went to an 'unlimited' FDIC insurance, the assessment to banks to fund that insurance would increase and be applied to all deposits....

so how is this NOT 'everyone', including a child's savings account with $25 in it from Grandma... paying to guarantee the funds of the extremely wealthy?


ETA: This is what I don't get... even if we all agree that a bail-out needed to happen, why isn't even THE LEFT complaining that this is a transfer of wealth that favors the wealthy??

(03-27-2023 02:13 PM)Hambone10 Wrote:  

(03-27-2023 01:54 PM)RiceLad15 Wrote:  My take is that those banking with SBV were not viewing their banking as an investment that was akin to investing in stocks or bonds and more akin to traditional banking, where the risk of loss is near 0 because loss only happens with the failure of the bank.

I agree... but Certificates of Deposit are considered 'investments'.... as are T-bills.... which don't carry a 250k 'limit'. They aren't nearly as speculative as stocks or bonds, but they are not without ANY risk.

Quote:I personally don't think we want a banking system where we assume risk of failure for routine banking is further from 0 and the change of failure impacts decisions on where to bank. That would almost certainly result in a decrease in competition as people and businesses flock to larger, better capitalized banks who can more easily withstand a run on the bank.

Do small businesses now need to start asking about the investments that the bank is making with their funds?

You're missing the 'insurance' issue. The whole purpose of the FDIC is to prevent just this. That insurance is not unlimited, though. If you want to make such insurance 'unlimited', that's fine... but that still isn't the case... and the very issue you bring up is what is CURRENTLY putting the system at risk.

As it stands right now, someone with 250k+ to put in a bank would perhaps be better advised to consider the 'size' of the bank they do business with (too big to fail) and/or the political importance of that bank.

I mean seriously... If you had to choose a 300mm bank with 10% capital and a clean loan portfolio and a 300byn bank with 5% capital and a risky portfolio, I'd probably be more inclined to choose the larger bank for my uninsured deposit. While the smaller bank may be less likely to default, the larger bank is more likely to be 'bailed out' if it does.


And would still beg the question...

In the event we went to an 'unlimited' FDIC insurance, the assessment to banks to fund that insurance would increase and be applied to all deposits....

so how is this NOT 'everyone', including a child's savings account with $25 in it from Grandma... paying to guarantee the funds of the extremely wealthy?


ETA: This is what I don't get... even if we all agree that a bail-out needed to happen, why isn't even THE LEFT complaining that this is a transfer of wealth that favors the wealthy??

I can explain why I personally don't see this as a transfer of wealth - those who received the "bailout" are primarily companies who were using the bank for its intended purpose. And the biggest reason for the bailout was so that payrolls could be made for the people working for said companies. It was a bailout, by and large, of white collar workers (likely some blue collar too), not C-suite executives and people that work for the bank that failed. It's taking care of the collateral damage.

If you wanted to split out individual accounts from business accounts, that could be a good approach to manage the externalities you are talking about.

(03-27-2023 02:49 PM)RiceLad15 Wrote:  I can explain why I personally don't see this as a transfer of wealth - those who received the "bailout" are primarily companies who were using the bank for its intended purpose. And the biggest reason for the bailout was so that payrolls could be made for the people working for said companies. It was a bailout, by and large, of white collar workers (likely some blue collar too), not C-suite executives and people that work for the bank that failed. It's taking care of the collateral damage.

If you wanted to split out individual accounts from business accounts, that could be a good approach to manage the externalities you are talking about.

But they didn't. The FDIC didn't discriminate on that basis.... what I mean is, they didn't JUST bail out companies who were making payroll... - They certainly didn't 'discriminate' between companies that needed that extra money to make payroll and those that may have just had excess cash.

I mean seriously... companies with payrolls VASTLY larger than 250k don't rely on the FDIC. I mean hell, some INDIVIDUALS make more than 250k in any specific payroll. How 'primarily' does that use need to be? 90%? 70%? 50.1%?

You're kind of avoiding the elephant in the room...
Is this the new rule?? That the 250k limit is no longer a limit? If it is now unlimited, then who pays those premiums and why are Democrats okay with having 'less wealthy' people help pay to insure wealthy people?? Yes, all sorts of things can be done to make the wealthy pay more, but that isn't what is happening... at least not yet.

If its NOT unlimited, then how will 'the next' failure be adjudicated? If this were a small bank in coal town West Virginia with one large depositor coal mining company, that they can be 100% ASSURED that they will receive the same treatment?? If not, why? And is that how you think things SHOULD be?? What if the next time, it's an environmental company and Republicans hold the cards??

Where are the lines drawn? And if your answer is that 'it depends' then I have a problem.

(03-27-2023 01:45 PM)Hambone10 Wrote:  

(03-27-2023 11:58 AM)tanqtonic Wrote:  Glad to know my Mom's estate account is an investor. Nothing but downside acceptance and still an 'investor'.

Sorry Ham, I just think your use of that is a huge stretch.

Respectfully, Tanq.... you haven't demonstrated how my use of the term doesn't meet the definitions of either word...

Ham, I am using *your* first formulation, quoted below:

"If you put 500k into a bank account that is only insured for 250k, you are knowingly 'at risk' for 250k. That makes you an investor/speculator.... taking measurably more risk than someone who only puts 250k in."

If you want to reformulate please do. I am using *your* first crack at it.

Quote: and your use of a different situation of which I know nothing about isn't appropriate....

Yes, how dare I show a situation that cuts across your crack at it above.

Quote:I'll say it simply... The SIPC says someone who rolls T-Bills is an investor. If they roll longer maturities, they are additionally at LEAST 'speculating' that rates won't rise faster than they can re-invest. They take no credit nor event risk, but they DO take rate risk. So the 'return' doesn't have to be significant in order for the terms 'investment' or 'speculative' to apply.

And that was wholly absent from your crack at it quoted above. Some there may not have had an 'upside risk'. Some did.

Seemingly all this back and forth and minutiae in detail leads us to 'some might be an investor in your formulation, some might not.' Which leads us into limbo land with your somewhat overarching placement of everyone in the group of uninsured as automatically investors. *That* is *my* point.

And honestly I am getting rather tired of the constant 'you said, he said, it said, we said' that seems flying around here.

Quote:Once again, I ask you NOT what your mother's situation is... because I have absolutely no idea why your mother would take all the risk of something with zero reward.... but to address the situation at hand.

You are correct you didnt ask. It was presented as an example why your determination that all uninsured are investors. They simply are not.

Much like I am pooling cash to make a land purchase. And uninsured for a few days. And not an investor as your overarching definition seeks.

Quote:A comment I'm pretty sure you made (and numbers and I both speculated) implied that there was SOME advantage to the company (if nothing else, that they get to do business with that bank) for putting money in excess of the FDIC insurance into that bank. If you're saying they had no reason then they were just stupid... which as I said is certainly possible, but I don't think every one of those people is stupid

Or taking a guarded risk on nothing but downside. That is still not investing as you group everyone in that set as. It may well very well be stupid --- but again your comment above didnt make that distinction about benefit at first. Now you do. And one still cannot in a blanket manner call either situation 'stupid', or 'an investment'.

Have fun with that sand sifting.

Quote:For reasons that we can speculate on, but only they know for certain, they accepted principal risk in the event of a bank failure. I call that a speculator,

Again, most dont. Nor do most dictionaries. That is my point. But in all honesty, call it a squirrel or an apple or the tooth fairy at this point for all I care.

Quote:but if you don't, It doesn't really matter. What matters is that/if you agree that they put themselves at event risk and were not entitled to compensation above their insured amount.

And I agree with the moral hazard issue. For 'stupid' or as an 'investor' or as a 'squirrel', whichever side of that word cha cha cha one wants to pin the issue, there is still the moral hazard.

Quote:If you don't believe that, then what is the purpose of limitations on FDIC insurance??

I denoted that in this post. And had done so already.

(03-27-2023 03:09 PM)Hambone10 Wrote:  

(03-27-2023 02:49 PM)RiceLad15 Wrote:  I can explain why I personally don't see this as a transfer of wealth - those who received the "bailout" are primarily companies who were using the bank for its intended purpose. And the biggest reason for the bailout was so that payrolls could be made for the people working for said companies. It was a bailout, by and large, of white collar workers (likely some blue collar too), not C-suite executives and people that work for the bank that failed. It's taking care of the collateral damage.

If you wanted to split out individual accounts from business accounts, that could be a good approach to manage the externalities you are talking about.

But they didn't. The FDIC didn't discriminate on that basis.... what I mean is, they didn't JUST bail out companies who were making payroll... - They certainly didn't 'discriminate' between companies that needed that extra money to make payroll and those that may have just had excess cash.

I mean seriously... companies with payrolls VASTLY larger than 250k don't rely on the FDIC. I mean hell, some INDIVIDUALS make more than 250k in any specific payroll. How 'primarily' does that use need to be? 90%? 70%? 50.1%?

You're kind of avoiding the elephant in the room...
Is this the new rule?? That the 250k limit is no longer a limit? If it is now unlimited, then who pays those premiums and why are Democrats okay with having 'less wealthy' people help pay to insure wealthy people?? Yes, all sorts of things can be done to make the wealthy pay more, but that isn't what is happening... at least not yet.

If its NOT unlimited, then how will 'the next' failure be adjudicated? If this were a small bank in coal town West Virginia with one large depositor coal mining company, that they can be 100% ASSURED that they will receive the same treatment?? If not, why? And is that how you think things SHOULD be?? What if the next time, it's an environmental company and Republicans hold the cards??

Where are the lines drawn? And if your answer is that 'it depends' then I have a problem.

While this may not be a *rule*, and thus expressly a moral hazard, the very real implication is that probably north of 10k jobs didnt get cut at one fell swoop in a highly visible manner that could have been very destructive in the end game to the banking system.

Is it worth it? Dont know. But the shock waves of those 10k jobs, highly visible jobs, mind you, and the shock waves of a staggering loss of investment equity was at play *in this particular instance*.

That is what one has to weigh the moral hazard implications against. Worth it? I dont know. But that very unique aspect to *this* issue doesnt seem weigh very heavily (let alone being mentioned) in your comments.

(03-27-2023 03:09 PM)Hambone10 Wrote:  

(03-27-2023 02:49 PM)RiceLad15 Wrote:  I can explain why I personally don't see this as a transfer of wealth - those who received the "bailout" are primarily companies who were using the bank for its intended purpose. And the biggest reason for the bailout was so that payrolls could be made for the people working for said companies. It was a bailout, by and large, of white collar workers (likely some blue collar too), not C-suite executives and people that work for the bank that failed. It's taking care of the collateral damage.

If you wanted to split out individual accounts from business accounts, that could be a good approach to manage the externalities you are talking about.

But they didn't. The FDIC didn't discriminate on that basis.... what I mean is, they didn't JUST bail out companies who were making payroll... - They certainly didn't 'discriminate' between companies that needed that extra money to make payroll and those that may have just had excess cash.

I mean seriously... companies with payrolls VASTLY larger than 250k don't rely on the FDIC. I mean hell, some INDIVIDUALS make more than 250k in any specific payroll. How 'primarily' does that use need to be? 90%? 70%? 50.1%?

You're kind of avoiding the elephant in the room...
Is this the new rule?? That the 250k limit is no longer a limit? If it is now unlimited, then who pays those premiums and why are Democrats okay with having 'less wealthy' people help pay to insure wealthy people?? Yes, all sorts of things can be done to make the wealthy pay more, but that isn't what is happening... at least not yet.

If its NOT unlimited, then how will 'the next' failure be adjudicated? If this were a small bank in coal town West Virginia with one large depositor coal mining company, that they can be 100% ASSURED that they will receive the same treatment?? If not, why? And is that how you think things SHOULD be?? What if the next time, it's an environmental company and Republicans hold the cards??

Where are the lines drawn? And if your answer is that 'it depends' then I have a problem.

Can’t speak for Democrats - can only speak for myself and why I don’t see this as a transfer of wealth.

The bank is gone, purchased by First Citizens, the investors and stock holders are toast. All that was saved and made whole are those who had accounts in the bank - to me, the least responsible for the poor decision making were made whole and the potential catastrophe of not doing that was avoided.

(03-27-2023 03:28 PM)tanqtonic Wrote:  Is it worth it? Dont know. But the shock waves of those 10k jobs, highly visible jobs, mind you, and the shock waves of a staggering loss of investment equity was at play *in this particular instance*.

That is what one has to weigh the moral hazard implications against. Worth it? I dont know. But that very unique aspect to *this* issue doesnt seem weigh very heavily (let alone being mentioned) in your comments.

What is so unique about a bank that provides payroll cashing to companies with payroll of more than 250k??

Again, missing the point. I clearly said there were ways to do this... I simply disagreed with having it done via some extension of the FDIC.... and having those fees charged to other depositors. Those payrolls could have been covered in many ways. They CHOSE to cover them through a fund that was specifically designed NOT to cover those deposits. You said something sarcastic about 'all the downside but no upside', and this is a situation where there WAS no downside, until it was decided that they should cover something that their charter specifically says they will not?????

I haven't heard one person say that payrolls were protected, but simple excess deposits were not. I haven't heard one person answer whether or not this means that should something similar happen somewhere else, that the same thing would happen.

If there was a good reason, then please tell me EXACTLY what that reason is so that I can make an informed decision as to whether or not to be concerned about my own payroll check, which may be drawn on a less 'unique' bank.

(03-27-2023 06:59 PM)RiceLad15 Wrote:  The bank is gone, purchased by First Citizens, the investors and stock holders are toast. All that was saved and made whole are those who had accounts in the bank - to me, the least responsible for the poor decision making were made whole and the potential catastrophe of not doing that was avoided.

So you don't see having people whose only money comes from support systems cover deposits made by people (some of whom were paying payroll, but some of whom were not) IN EXCESS of the contracted/agreed upon amounts as a 'transfer of wealth'?

Question... what did all those depositors to the thousands of other banks that are the ones paying to cover these fees do to make THEM responsible for the poor decision making of the executives and stake-holders at SVB?

PURCHASED by First Citizens? What did they pay for the deposits and where did that money go??

It seems to me that using those purchase funds to reimburse the FDIC in exchange for the new ability to earn a margin on millions of new deposits and loans would have been ANOTHER way to not make 'everyone' pay for the mistakes of the wealthy.

And why do you not consider putting money into a bank in significant excess of the amount that they cover to be a mistake??

(03-28-2023 10:28 AM)Hambone10 Wrote:  

(03-27-2023 03:28 PM)tanqtonic Wrote:  Is it worth it? Dont know. But the shock waves of those 10k jobs, highly visible jobs, mind you, and the shock waves of a staggering loss of investment equity was at play *in this particular instance*.

That is what one has to weigh the moral hazard implications against. Worth it? I dont know. But that very unique aspect to *this* issue doesnt seem weigh very heavily (let alone being mentioned) in your comments.

What is so unique about a bank that provides payroll cashing to companies with payroll of more than 250k??

Again, missing the point. I clearly said there were ways to do this... I simply disagreed with having it done via some extension of the FDIC.... and having those fees charged to other depositors. Those payrolls could have been covered in many ways. They CHOSE to cover them through a fund that was specifically designed NOT to cover those deposits. You said something sarcastic about 'all the downside but no upside', and this is a situation where there WAS no downside, until it was decided that they should cover something that their charter specifically says they will not?????

I haven't heard one person say that payrolls were protected, but simple excess deposits were not. I haven't heard one person answer whether or not this means that should something similar happen somewhere else, that the same thing would happen.

If there was a good reason, then please tell me EXACTLY what that reason is so that I can make an informed decision as to whether or not to be concerned about my own payroll check, which may be drawn on a less 'unique' bank.

(03-27-2023 06:59 PM)RiceLad15 Wrote:  The bank is gone, purchased by First Citizens, the investors and stock holders are toast. All that was saved and made whole are those who had accounts in the bank - to me, the least responsible for the poor decision making were made whole and the potential catastrophe of not doing that was avoided.

So you don't see having people whose only money comes from support systems cover deposits made by people (some of whom were paying payroll, but some of whom were not) IN EXCESS of the contracted/agreed upon amounts as a 'transfer of wealth'?

Question... what did all those depositors to the thousands of other banks that are the ones paying to cover these fees do to make THEM responsible for the poor decision making of the executives and stake-holders at SVB?

PURCHASED by First Citizens? What did they pay for the deposits and where did that money go??

It seems to me that using those purchase funds to reimburse the FDIC in exchange for the new ability to earn a margin on millions of new deposits and loans would have been ANOTHER way to not make 'everyone' pay for the mistakes of the wealthy.

And why do you not consider putting money into a bank in significant excess of the amount that they cover to be a mistake??

I could be misunderstanding it, but I believe First Citizens is paying the FDIC for the assets, deposits, and loans it is purchasing from the FDIC. They are being purchased at a discount, so the FDIC will lose money.

As to your question about the other depositors, it seems like they were paying something akin to insurance. And if that insurance fund felt that the actions were necessary to avoid potential financial meltdown, that they would not be annoyed at their fees being used to prop up a system and not just a singular bank (which is what happened since SVB is no more).

(03-28-2023 10:28 AM)Hambone10 Wrote:  

(03-27-2023 03:28 PM)tanqtonic Wrote:  Is it worth it? Dont know. But the shock waves of those 10k jobs, highly visible jobs, mind you, and the shock waves of a staggering loss of investment equity was at play *in this particular instance*.

That is what one has to weigh the moral hazard implications against. Worth it? I dont know. But that very unique aspect to *this* issue doesnt seem weigh very heavily (let alone being mentioned) in your comments.

What is so unique about a bank that provides payroll cashing to companies with payroll of more than 250k??

Again, missing the point. I clearly said there were ways to do this... I simply disagreed with having it done via some extension of the FDIC.... and having those fees charged to other depositors. Those payrolls could have been covered in many ways. They CHOSE to cover them through a fund that was specifically designed NOT to cover those deposits. You said something sarcastic about 'all the downside but no upside', and this is a situation where there WAS no downside, until it was decided that they should cover something that their charter specifically says they will not?????

I haven't heard one person say that payrolls were protected, but simple excess deposits were not. I haven't heard one person answer whether or not this means that should something similar happen somewhere else, that the same thing would happen.

If there was a good reason, then please tell me EXACTLY what that reason is so that I can make an informed decision as to whether or not to be concerned about my own payroll check, which may be drawn on a less 'unique' bank.

Ham -- Im not saying there was anything unique in the payroll process re: the bank.

The uniqueness of the SVB was that that zapping that money away *would have* resulted in very large number of very high profile jobs.

Dont make a mountain out of a molehill.

Yes, protecting uninsureds is unique. But in terms of payrolls from funds in the bank, SVB was a literal one of a kind institution. Because of its clients.

Zapping those excess funds would literally equate to a large number of very high profile job losses. In a field that is seen as some as the bellwether of the US economy.

No 'special program' --- ROKU cuts 80% of its workforce. Wash, rinse, repeat for literally *hundreds* of medium size and small startups.

That high impact, high profile event probably is singularly unique to the failure of SVB.

Yes, it was stupid for those companies to have those accounts. When a startup gets 40 million dollars to fund to profitabilility -- do you really expect a 30 person company to start and manage 160 bank accounts to do that?

Again, SVB is the most unique bank in that aspect.

I recognize and to a certain extent sympathize with the moral hazard issue. In just about any other bank issue that would be a no brainer for me. And it is given that the companies might have been 'stupid' for doing that.

As having done in a serial manner several start-ups -- I can tell you unequivocally that the 40 person to 200 person size company does not have the internal ability to manage 40 million in startup funds across 160 bank accounts.

But again, the failure of *that* bank, and without that very special procedure to many of those uninsured accounts, would have led to a *very high* profile of mass layoffs, and closings in many cases.

I think that that very singular and unique issue, and considered for that very singular and unique position of SVB in that space, I think that is a very valid factor to at least consider, instead of the a blind reliance on the moral hazard regime.

(A quick question, when a 50 person company gets 40 million in series A startup funds into one account (or heck, lets say 3 accounts) -- is that '50 investors', '1 investor', or '3 investors'?)

(03-28-2023 11:40 AM)RiceLad15 Wrote:  

(03-28-2023 10:28 AM)Hambone10 Wrote:  

(03-27-2023 03:28 PM)tanqtonic Wrote:  Is it worth it? Dont know. But the shock waves of those 10k jobs, highly visible jobs, mind you, and the shock waves of a staggering loss of investment equity was at play *in this particular instance*.

That is what one has to weigh the moral hazard implications against. Worth it? I dont know. But that very unique aspect to *this* issue doesnt seem weigh very heavily (let alone being mentioned) in your comments.

What is so unique about a bank that provides payroll cashing to companies with payroll of more than 250k??

Again, missing the point. I clearly said there were ways to do this... I simply disagreed with having it done via some extension of the FDIC.... and having those fees charged to other depositors. Those payrolls could have been covered in many ways. They CHOSE to cover them through a fund that was specifically designed NOT to cover those deposits. You said something sarcastic about 'all the downside but no upside', and this is a situation where there WAS no downside, until it was decided that they should cover something that their charter specifically says they will not?????

I haven't heard one person say that payrolls were protected, but simple excess deposits were not. I haven't heard one person answer whether or not this means that should something similar happen somewhere else, that the same thing would happen.

If there was a good reason, then please tell me EXACTLY what that reason is so that I can make an informed decision as to whether or not to be concerned about my own payroll check, which may be drawn on a less 'unique' bank.

(03-27-2023 06:59 PM)RiceLad15 Wrote:  The bank is gone, purchased by First Citizens, the investors and stock holders are toast. All that was saved and made whole are those who had accounts in the bank - to me, the least responsible for the poor decision making were made whole and the potential catastrophe of not doing that was avoided.

So you don't see having people whose only money comes from support systems cover deposits made by people (some of whom were paying payroll, but some of whom were not) IN EXCESS of the contracted/agreed upon amounts as a 'transfer of wealth'?

Question... what did all those depositors to the thousands of other banks that are the ones paying to cover these fees do to make THEM responsible for the poor decision making of the executives and stake-holders at SVB?

PURCHASED by First Citizens? What did they pay for the deposits and where did that money go??

It seems to me that using those purchase funds to reimburse the FDIC in exchange for the new ability to earn a margin on millions of new deposits and loans would have been ANOTHER way to not make 'everyone' pay for the mistakes of the wealthy.

And why do you not consider putting money into a bank in significant excess of the amount that they cover to be a mistake??

I could be misunderstanding it, but I believe First Citizens is paying the FDIC for the assets, deposits, and loans it is purchasing from the FDIC. They are being purchased at a discount, so the FDIC will lose money.

As to your question about the other depositors, it seems like they were paying something akin to insurance. And if that insurance fund felt that the actions were necessary to avoid potential financial meltdown, that they would not be annoyed at their fees being used to prop up a system and not just a singular bank (which is what happened since SVB is no more).

Full disclosure... It wasn't the FDIC alone who made this decsion. They consulted with the Tsy Secretary and the President. I think you're listening to what the media is reporting to you, while I'm reading comments and responses from Janet Yellen.

More full disclosure... they didn't JUST prop up the system no matter how often you want to try and hide it. They specifically violated the terms THEY set with their insured by honoring obligations in excess of the agreement to pay people who had NO LEGAL NOR MORAL right to be covered, were not making payroll and were not in ANY way a 'threat to the banking system'.

As I've repeatedly asked, if such a thing is the new normal as opposed to (paraphrasing something Tanq might ordinarily say) 'outside the 4 corners of the contract' then that is a political and governmental decision, and not one being made by the FDIC.... then we have an entirely new decision to make about smaller, less 'unique' banks. Guess everyone should make their deposits to 'unique' banks and not 'well run' ones.

This is not a question of whether or not they should do this.... This is a question of whether or not they should have done it THIS way.

For comparison...
Wells Fargo is about 2 trillion in assets. Too big to fail.
SVB was about 200byn
Cullen Frost is about 50byn
Wood Forest Bank, with branches in tons of Sams and Wal Marts serving tons of lower income depositors and small businesses and even Gallery Furniture is about 4byn in assets.

Interestingly, SVB was only about 75byn in loans.... so deposits were a TON more than their loans.... but I digress

Where are we drawing the line??

And why are you ascribing almost NO risk to the system of the apparent preference for AT LEAST larger banks that could easily cause the same kind of 'run' you seem worried about. At only 4byn, why should I keep my business account at Wood Forest?

But again, since MOST companies and individuals don't have more than 250k in their bank accounts, I'm wondering where the risk to the system is?? And if that isn't the case, why wealthy people should go to the effort of having 50 bank accounts to shelter their money and not just move it all to one very large one??

But yeah... what do I know about banking and economic crisis..... I was just intimately involved in it for 25 years and three seperate debacles.

(03-28-2023 10:28 AM)Hambone10 Wrote:  Question... what did all those depositors to the thousands of other banks that are the ones paying to cover these fees do to make THEM responsible for the poor decision making of the executives and stake-holders at SVB?

What did any one of a random 'Joe Blow' do to make THEM responsible for the hail damage to my roof?

Its root is in the concept of 'supplemental insurance'.

Quote:PURCHASED by First Citizens? What did they pay for the deposits and where did that money go??

I suggest looking that up before a comment. FDIC foreclosed and put SVB into receivership. First paid 500 million in equity appreciation rights -- i.e. long term upside to the FDIC.

Quote:It seems to me that using those purchase funds to reimburse the FDIC in exchange for the new ability to earn a margin on millions of new deposits and loans would have been ANOTHER way to not make 'everyone' pay for the mistakes of the wealthy.

Note the 'to the FDIC' above. Cant do insta cash for such rights. Not really liquid or fungible.

Again -- the idea behind supplemental insurance -- spreads the risk and adds another firewall in light of the lessons of 2008. Seems to have worked in this instance 'contagion-wise'

Quote:And why do you not consider putting money into a bank in significant excess of the amount that they cover to be a mistake??

Again, it is a mistake. The issue here were the unique after effects of a unique bank in a unique sector. Not saying it obviates the moral hazard issue inherent in the action, but, as denizen of this day and time, I am somewhat glad that we didnt have mass cuts in the workforce in the medium size tech sector space, or 100s of companies going on life support in that space because of a bank failure.

Again, an number of unique situations present.

Ham -- the FDIC cannot do this via their charter.

Nothing prevented them from implementing an alternative firewall mechanism and program, specifically empowered by Congress in wake of 2008 to set up alternative firewalls (such as being used).

You can disagree with the program and mechanism all you want. But it is a bit much to say 'against the law' and 'against the FDIC charter'.

(03-28-2023 12:20 PM)tanqtonic Wrote:  Ham -- Im not saying there was anything unique in the payroll process re: the bank.

The uniqueness of the SVB was that that zapping that money away *would have* resulted in very large number of very high profile jobs.

Dont make a mountain out of a molehill.

I assume you mean 'loss of' and further that this would be because these companies would have gone under if they lost their excess.

I'm suggesting that if there were an issue of payroll or any other 'need' by a particular company, that such a shortfall could have been addressed through the government and NOT by making blanket coverage for ALL deposits, even those who IGNORED the insurance maximums available.

I'm further suggesting that terms like 'high profile' are very nebulous and rife with possibility of abuse.... and that plenty of OTHER businesses make decisions that don't work out and they aren't bailed out, so why these?

Quote:Yes, protecting uninsureds is unique. But in terms of payrolls from funds in the bank, SVB was a literal one of a kind institution. Because of its clients.

So why are these clients more important than those of say, WoodForest Bank?

Quote:Zapping those excess funds would literally equate to a large number of very high profile job losses. In a field that is seen as some as the bellwether of the US economy.

Again, I didn't say they had to do that. I said they could have/should have done that through a more transparent means. How about we put those companies on a spreadsheet including whom these clients are and let politicians vote up or down on each one, making their case for or against it? I mean THAT would be transparency, right??

Quote:No 'special program' --- ROKU cuts 80% of its workforce. Wash, rinse, repeat for literally *hundreds* of medium size and small startups.

That high impact, high profile event probably is singularly unique to the failure of SVB.

If this happens at Gallery furniture, I'm betting THEY cur 80% of their workforce as well. What about if it happens with Kroger?? Wash, rinse repeat. I mean, there are LOTS of businnesses with say, 500k in the bank that would go under if they only got 250k of that back.

Quote:Yes, it was stupid for those companies to have those accounts. When a startup gets 40 million dollars to fund to profitabilility -- do you really expect a 30 person company to start and manage 160 bank accounts to do that?

Well yes. Are you suggesting that that 30 person company is qualified to get 40mm in investor funds but can't manage 160 bank accounts?? There are apps to do just that. That, or choose their bank partners more carefully. How can I trust ROKU to manage IDK, 100,000 customer accounts if they can't manage 160 bank accounts? OF course this ignores that if they put their money in a money market account, it isn't subject to FDIC insurance and they would likely immediately spend a whole lot of that 40mm, but I digress.

Yes, I expect them to be good stewards of investors money

Quote:I recognize and to a certain extent sympathize with the moral hazard issue. In just about any other bank issue that would be a no brainer for me. And it is given that the companies might have been 'stupid' for doing that.

As having done in a serial manner several start-ups -- I can tell you unequivocally that the 40 person to 200 person size company does not have the internal ability to manage 40 million in startup funds across 160 bank accounts.

But again, the failure of *that* bank, and without that very special procedure to many of those uninsured accounts, would have led to a *very high* profile of mass layoffs, and closings in many cases.

I think that that very singular and unique issue, and considered for that very singular and unique position of SVB in that space, I think that is a very valid factor to at least consider, instead of the a blind reliance on the moral hazard regime.

(A quick question, when a 50 person company gets 40 million in series A startup funds into one account (or heck, lets say 3 accounts) -- is that '50 investors', '1 investor', or '3 investors'?)

UNless they just got the money recently, I would expect that they wouldn't have $40mm in cash sitting in ANY bank(s). They would have money in tax escrow accounts and in payroll accounts and in vendor accounts... and if they were waiting to invest or buy equipment, that they would have their money in an SIPC insured brokerage account that held investments in t-bills or brokered bank CDs, which would vicariously add FDIC insurance limits to SIPC insurance limits. EASY ways to protect hundreds of millions of dollars. I used to do this for a living. The ability to insure tens of millions was part of my pitch

Let me ask you a similar question...
If those 50 investors sold the company tomorrow for $40mm, and got money wired to their banks... let's say they all used the same local bank in a small town... and the bank closed shop the next day.... would they get $1mm each?? Or would they get 250k from the FDIC??

If the former then the insurance limits are moot... and lets codify that so that the banking system is secure...
If the latter, how is that fair?? Thise people surely would have started new comapmnies employing all sort of people or what have you...

As I said... The question isn't should this be done... the question is, should it be done through a system that SPECIFICALLY excludes such depositors from being insured??

You give a better 'what if' later

(03-28-2023 12:34 PM)tanqtonic Wrote:  What did any one of a random 'Joe Blow' do to make THEM responsible for the hail damage to my roof?

Its root is in the concept of 'supplemental insurance'.

Which would be fine, except your insurance company has decided to cover people who didn't purchase (enough) insurance. That's not exactly the same thing.

Quote:

Quote:PURCHASED by First Citizens? What did they pay for the deposits and where did that money go??

I suggest looking that up before a comment. FDIC foreclosed and put SVB into receivership. First paid 500 million in equity appreciation rights -- i.e. long term upside to the FDIC.

I asked a question. OF COURSE they did. Note that the bank has 200byn in deposits and only 75byn in loans. 500mm is what, 0.66% of loans and 0.25% of assets?

That is literally a drop in the bucket. I don't think you'd get that good a deal on credit card receivables with no assets.

Quote:

Quote:It seems to me that using those purchase funds to reimburse the FDIC in exchange for the new ability to earn a margin on millions of new deposits and loans would have been ANOTHER way to not make 'everyone' pay for the mistakes of the wealthy.

Note the 'to the FDIC' above. Cant do insta cash for such rights. Not really liquid or fungible.

No, but would certainly replace the need for a special assessment, which also isn't liquid or fungible.

Quote:Again -- the idea behind supplemental insurance -- spreads the risk and adds another firewall in light of the lessons of 2008. Seems to have worked in this instance 'contagion-wise'

My issue is with the lack of disclosure.

A better example would be that people in Wyoming had to pay increased hurricane insurance premiums because insurance comapnies in florida decided to cover people who didn't purchase insurance. If that happened, you would be rightfully upset.

Quote:

Quote:And why do you not consider putting money into a bank in significant excess of the amount that they cover to be a mistake??

Again, it is a mistake. The issue here were the unique after effects of a unique bank in a unique sector. Not saying it obviates the moral hazard issue inherent in the action, but, as denizen of this day and time, I am somewhat glad that we didnt have mass cuts in the workforce in the medium size tech sector space, or 100s of companies going on life support in that space because of a bank failure.

Again, an number of unique situations present.

and again, didnt say it shouldn't be done.... I am troubled by the lack of disclosure (is it JUST these unique situations??) Are there NO simple large depositors or companies that COULD have had 2 or 6 accounts rather than 160 and simply chose not to?? and at least ONE of the means of recovery (an assessment on unrelated depositors of ALL sizes)... the one specifically listed by Yellen.

(03-28-2023 12:40 PM)tanqtonic Wrote:  Ham -- the FDIC cannot do this via their charter.

Nothing prevented them from implementing an alternative firewall mechanism and program, specifically empowered by Congress in wake of 2008 to set up alternative firewalls (such as being used).

You can disagree with the program and mechanism all you want. But it is a bit much to say 'against the law' and 'against the FDIC charter'.

I didn't say against the law... and since it is pretty clear that the FDIC insures depositors up to 250k, that to insure anyone above that amount is not what any reasonable person understood them to be doing. It's right there on their brochures.

As I've repeatedly said, had the government funded this through taxes, at least it would ONLY be taxpayers paying it. Had they funded it instead with a 'tax' on the wealthy (many investors in startups who aren't the founders are 'the wealthy') that would have been even better. How about a 'claw back' on excess profits for people who get such seed money and turn it into personal billions?? That would be even better.

Instead, we get a 'gift' to one bank... and a tax on depositors who had nothing to do with any of this.... and now a moral hazard question for any 'less unique' bank.... however THAT is defined.

Biden promised a transparent administration, and I see this as the polar opposite of that. Biden promised to look out for the poor and middle class, and I see this as the opposite of that. No, I don't personally lay this at Joe Biden's feet... but it is an example of a PERFECT opportunity to put an administrations words into actions, and instead we get 'more of the same'. Progressives AND libertarians should be upset about this. NOT that the companies were bailed out, but that 'the little guy' is paying ONE SINGLE DIME for this.

(03-28-2023 03:04 PM)Hambone10 Wrote:  I'm suggesting that if there were an issue of payroll or any other 'need' by a particular company, that such a shortfall could have been addressed through the government and NOT by making blanket coverage for ALL deposits, even those who IGNORED the insurance maximums available.

I noted payroll *and* the elimination of working capital -- the elimination of the business. I dont think *right* now, you want to even hint at the idea of "Bank failure, 80 mid size companies fail, other mid-size, fairly large, *and* small businesses slash their workforces *to* survive.' That news style cause and effect even in the best of times is bad, but in those times that alternative 'make them whole' isnt needed.

If you havent noticed, these *arent* those best of times, and in fact was almost the worst of times to even *hint* that that level of damage can be caused by a bank failure.

This particular firewall did its job. Very well.

Quote:I'm further suggesting that terms like 'high profile' are very nebulous and rife with possibility of abuse.... and that plenty of OTHER businesses make decisions that don't work out and they aren't bailed out, so why these?

Because of the very unique combination of timing, bank structure re: its depositors, and two or three other very uniques situations. Almost a literal perfect storm.

Quote:

Quote:Yes, protecting uninsureds is unique. But in terms of payrolls from funds in the bank, SVB was a literal one of a kind institution. Because of its clients.

So why are these clients more important than those of say, WoodForest Bank?

Because of the size and scope of the ramifications across a very large swath of depositors. I dont know if you understand the very unique position SVB held in the tech sector. I cant think of any other back that has as unique a presence and scope of interaction across the whole of an entire sector, and in the end, led to the very unique and somewhat unheard of ratio of uninsureds using that bank. I heard somewhere in the neighborhood of 90% of the deposits were uninsured.

I dont think erasing WoodForest's uninsured pile would be anywhere the sector wide impact, and job loss impact, to SVBs.

Quote:

Quote:Zapping those excess funds would literally equate to a large number of very high profile job losses. In a field that is seen as some as the bellwether of the US economy.

Again, I didn't say they had to do that. I said they could have/should have done that through a more transparent means. How about we put those companies on a spreadsheet including whom these clients are and let politicians vote up or down on each one, making their case for or against it? I mean THAT would be transparency, right??

Yep would be better. But that isnt the question here, is it?

Quote:

Quote:No 'special program' --- ROKU cuts 80% of its workforce. Wash, rinse, repeat for literally *hundreds* of medium size and small startups.

That high impact, high profile event probably is singularly unique to the failure of SVB.

If this happens at Gallery furniture, I'm betting THEY cur 80% of their workforce as well. What about if it happens with Kroger?? Wash, rinse repeat. I mean, there are LOTS of businnesses with say, 500k in the bank that would go under if they only got 250k of that back.

And no one bank really had, nor ahs, that type of impact straight at the heart of a single economic sector that SVB did. Again, any job loss is bad because of this. The filaure of SVB would have nad-kicked an entire indutry sector.

All in all, this is *not* the time to help with a nad-kick to the guts of any sector. Let alone the background that a bank failure was at the root.

If you think it beneficial to nad-kick an entire economic sector *at this time* in highly uncertain and charged economic time -- you are free to have that opinion.

If you think it beneficial to nad-kick an entire economic sector *at this time* in highly uncertain and charged economic time, and stack on top of it 'because of a bank failure', let alone *another* bank failure -- you are free to have that opinion as well.

Quote:Let me ask you a similar question...
If those 50 investors sold the company tomorrow for $40mm, and got money wired to their banks... let's say they all used the same local bank in a small town... and the bank closed shop the next day.... would they get $1mm each?? Or would they get 250k from the FDIC??

I dont know. I agree that the moral hazard is a strong point. I have agreed to that all along.

What I am asking you to consider, and you keep giving 'what about this and what about that', is do you not understand the very unique and highly singular issues that pervade *this* bank failure?

Your insistence of equating Gallery Furniture to an entire sector doesnt give me faith that you understand how deep SVB is to the SV tech sector.

Your insistence on using WoodForest (which I will assume ahs at or near the national average of 17% uninsured, and I would also assume has a deposit average well south of the 4.1 million that sat at SVB) as a direct comparison also detracts from that faith.

SVB had a highly unusual relationship with the *sector* it was pre-eminent in. Which led to highly unusual uninsured ratios, and corrrespndingly massively high deposit averages.

SVB was *uniquely* positioned to hurt an entire economic sector if it failed. In a normal economic time that alone would be an issue that might cut against the idea in my head of the problem inherent in the moral hazard issue. And Im all for not continuing in support of moral hazard undertaking.

Also, having the unique impact as a direct result of the SVB failure is *not* one I think is beneficial to the *current* economic client -- that is the *right now* and the *right here*.

Quote:If the former then the insurance limits are moot... and lets codify that so that the banking system is secure...

No problem with me there. Maybe 'uninsured ratio' requirements akin to deposit reqts. That is all fine and dandy. It is also, in terms of the right here and right now issue of SVB, a non-point. SVB is dead, and you are wholly unsupportive of *why* the Feds acted as they did *for* the SVB instance. In addressing whether the Feds should have or not, the issue of 'should we put in other items' is somewhat superfluous.

Quote:

(03-28-2023 12:34 PM)tanqtonic Wrote:  What did any one of a random 'Joe Blow' do to make THEM responsible for the hail damage to my roof?

Its root is in the concept of 'supplemental insurance'.

Which would be fine, except your insurance company has decided to cover people who didn't purchase (enough) insurance. That's not exactly the same thing.

The FDIC insurance actually did not, you are correct.

The program that covered was *not* what you mention. You are throwing the action of the FDIC (up to 250k) together in the same pool as the program that is seemingly covering the excess, and trying to tell us it is all the same as the FDIC.

The excess of 250k is not the insurance at play. It is the other program, with other benefits and strictures, that is covering the excess.

Quote:

Quote:PURCHASED by First Citizens? What did they pay for the deposits and where did that money go??

I suggest looking that up before a comment. FDIC foreclosed and put SVB into receivership. First paid 500 million in equity appreciation rights -- i.e. long term upside to the FDIC.

I asked a question. OF COURSE they did. Note that the bank has 200byn in deposits and only 75byn in loans. 500mm is what, 0.66% of loans and 0.25% of assets?

That is literally a drop in the bucket. I don't think you'd get that good a deal on credit card receivables with no assets. [/quote]

It is, and its not like First was the only bidder. If it is such a good deal, that price should have reflected that. Not like it is a closed, one party auction going on there.

Quote:

Quote:It seems to me that using those purchase funds to reimburse the FDIC in exchange for the new ability to earn a margin on millions of new deposits and loans would have been ANOTHER way to not make 'everyone' pay for the mistakes of the wealthy.

Note the 'to the FDIC' above. Cant do insta cash for such rights. Not really liquid or fungible.

No, but would certainly replace the need for a special assessment, which also isn't liquid or fungible.[/quote]

That doesnt address the issue that *you* brought forth about using the sales to offset the means to address the uninsured account. I mean, you said above -- 'using those purchase funds to reimburse the FDIC'. The 'purchase' price isnt funds -- it is a future right to participate in equity upside. Not something that is readily fungible to use for the purpose that you propose.

Quote:

Quote:Again -- the idea behind supplemental insurance -- spreads the risk and adds another firewall in light of the lessons of 2008. Seems to have worked in this instance 'contagion-wise'

My issue is with the lack of disclosure.

A better example would be that people in Wyoming had to pay increased hurricane insurance premiums because insurance comapnies in florida decided to cover people who didn't purchase insurance. If that happened, you would be rightfully upset.

What is your personal knowledge of the disclosure, or lack thereof, to the banks?

Quote:

(03-28-2023 12:40 PM)tanqtonic Wrote:  Ham -- the FDIC cannot do this via their charter.

Nothing prevented them from implementing an alternative firewall mechanism and program, specifically empowered by Congress in wake of 2008 to set up alternative firewalls (such as being used).

You can disagree with the program and mechanism all you want. But it is a bit much to say 'against the law' and 'against the FDIC charter'.

I didn't say against the law...

You specifically said it was against their charter. To go beyond their charter is illegal. That is against the law. You did not say that verbatim, but saying it is against their charters specifically includes the idea that it is against the law.

My apologies for saying 'you said it was against the law'. You did not use the exact phrase 'against the law'. You used a phrase that when noted means just that.

Quote:and since it is pretty clear that the FDIC insures depositors up to 250k, that to insure anyone above that amount is not what any reasonable person understood them to be doing. It's right there on their brochures.

Again, the FDIC did not insure the affected depositors beyond the limits. Another program stepped in to do just that.

Quote:As I've repeatedly said, had the government funded this through taxes, at least it would ONLY be taxpayers paying it. Had they funded it instead with a 'tax' on the wealthy (many investors in startups who aren't the founders are 'the wealthy') that would have been even better. How about a 'claw back' on excess profits for people who get such seed money and turn it into personal billions?? That would be even better.

How about we let a supplemental insurance-style alternative that works in conjunction to the issue, funded by the banks themselves, and implemented and designed to provide such a stop-gap to address the issues presented by 2008, do the job?

Seems to have worked.

Quote:Instead, we get a 'gift' to one bank... and a tax on depositors who had nothing to do with any of this....

A tax on banks is not a tax on depositors, mind you. The tax comes out of bank profits -- it isnt borne on any depositor.

Quote:Biden promised a transparent administration, and I see this as the polar opposite of that. Biden promised to look out for the poor and middle class, and I see this as the opposite of that. No, I don't personally lay this at Joe Biden's feet... but it is an example of a PERFECT opportunity to put an administrations words into actions, and instead we get 'more of the same'. Progressives AND libertarians should be upset about this. NOT that the companies were bailed out, but that 'the little guy' is paying ONE SINGLE DIME for this.

When you misstate the payment mechanism, your statement on 'the little guy' is paying for it is accurate. Unfortunately the tax or assessment or appropriation isnt on the 'little guy', it is on the bank.