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you got to love. how those with such little knowledge of the inner working of the banking system or skin in the game as in millions of your companies money ,have such strong opinions on how things should have been handled
you got to love. how those with such little knowledge of the inner working of the banking system or skin in the game as in millions of your companies money ,have such strong opinions on how things should have been handled
I suspect some of us have a lot more knowledge and experience in this area than you realize…just because there are differing opinions as to how this should have been handled, doesn’t mean others aren’t knowledgeable..
I suspect some of us have a lot more knowledge and experience in this area than you realize…just because there are differing opinions as to how this should have been handled, doesn’t mean others aren’t knowledgeable..
when they start to second guess the treasury dept and federal reserve i would doubt they are considering the same factors.
many here did not even realize companies have no choice but to go way over 250k in a bank just to operate
when they start to second guess the treasury dept and federal reserve i would doubt they are considering the same factors.
many here did not even realize companies have no choice but to go way over 250k in a bank just to operate
Even many well-known professionals in the financial field question things at times. I don’t think many think that the FED always makes the right decisions..
Even many well-known professionals in the financial field question things at times. I don’t think many think that the FED always makes the right decisions..
most are not qualified to even know all thats involved in most decisions.
the majority here are real pros at monday morning quarterbacking
Last edited by mathjak107; 03-18-2023 at 01:03 PM..
I'm not sure I agree with the bold. Isn't this game-theoretic? When a rational actor sees the beginnings of what he might consider an irrational run on the bank, is it irrational for him to GTFO and ask questions later? Game theory suggests it is very rational of him to pull his money, because every intelligent rational actor knows every single bank in existence is insolvent in the face of a sufficiently large run on the bank.
That's a big one.
Two more big ones:
1) SVB's Chief Administrative Officer was Joe Gentile. That name may sound familiar to those of us who were old enough to remember the 2008 financial crisis. Joe Gentile was the CFO of Lehman Brothers when it went belly-up.
2) Where the hell were SVB's regulators for the past 2 years? Its bank examiners for the past 2 years? Part of the answer be found in the Board of Directors of the Federal Reserve Bank of San Francisco (SVB's regulator). Greg Becker, SVB's CEO, was a member of the San Francisco Fed's Board of Directors.
1. Reformatted, if Nash or von Neumann were here they'd argue the game needs to be fixed if a few people acting in their own short term best interests wreck the game for many others. It's a play on Nash's allegory about a pretty woman sitting at the bar. If a bunch of guys/friends ask her out at the same time she'll run and the game (from one side of the equation) fails. If the group picks one guy to ask her out his chances are much better. Plus there's a chance she'll tell the first guy to show off giving the second guy at least a chance. Banks, even banks with screwy books, can nearly always deal with normal business - it's when for whatever reason(s) there is a bum rush of withdrawals things go south.
On topic if people had better information and listened to less shrill sources SVB would have had a better chance.
Peter Thiel made the game irrational or at least less rational.
2. Help me if I get this wrong but I think three director seats per Fed. bank are held by local bankers. No way around it tho. this fails the smell test badly.
3. I read about Gentile the other day. That guy needs to be become a cowboy, take a floor job at Home Depot whatever. Risk manger or not any decent CFO would have been all over this as soon as rates began to increase and deposits continued to swell.
From another poster in another thread, sums it up very well:
As Mattja and Lizap point out - the costs to FDIC will be passed to the banks, who in then pass it onto consumers through higher fees to consumers. Also, possibly lower interest rates on bank accounts or higher interest rates loans and credit cards, one way or the other, banks who are FDIC will have to make up the costs.
The Biden administration DID NOT HAVE TO DO THIS. They did not have to bail out consumers over the 250k FDIC protection limit. The question is whether it was done for legitimate reasons (to stop a possible bank run panic) or done for political reasons (many of the SVB Bay Area wealthy consumers are liberal democrats). Possibly both.
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Some related costs will likely increase trivially. Ironically The FDIC reset deposit insurance rates last Jan 1. for the rest time in several years.
My point is the costs would have been worse had action not been taken. Historically these things don't stop organically until lots and lots of damage has occurred.
There is also the very real possibility verging on likelihood that FDIC will get out of this at very little cost possibly no longer term cost to the insurance pool.
Biden has indirectly dirty hands. He deserves blame for priming the pump when the pump was already running hot........too much fiscal stimulus in the face to increasing inflation. He did that, everyone who is honest and has any idea how all this works knows it. His actions made the bond price mismatch SVB faced, and to be clear thousands of other banks face to a lesser degree, worse.
However, Biden did not order The Fed., FDIC and private banks into action.
Even many well-known professionals in the financial field question things at times. I don’t think many think that the FED always makes the right decisions..
There's one prominent figure (Ron Paul) who believes the FED should be ended altogether...
How do you justify guaranteeing that bank clients with more than $250k will be made whole?
Every single business in America has a business bank account exceeding $250K.
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