Yeah, my taxes pay local firemen's salary and pension, even if I never utilize their services.
Yeah, my taxes pay local firemen's salary and pension, even if I never utilize their services.It is kind of funny that finance people are mad about the idea of charging finance people the cost of insuring finance people’s mistakes.
That’s life, that’s the world. Grow up and accept it - this is the standard you apply everywhere else.
If it is indeed simple then you should be able to articulate all the immediate and downstream impacts by the increased insurance costs and cover any of the side effects those create. If you're involved with regulation at all you know that pretty much all regulation that applies to massive, substantially complex environments (and it doesn't get much more complex than finance) will cause consequences. And Banks will not just pay the materially significant higher insurance amounts and maintain business as usual. So - where will they adjust their operations? How will their changes be a net benefit for everyone as a result? How will you adjust for the risk Vic pointed out? There are other risks to what you propose so what are those?My position is simple. If you’re going to guarantee all deposits then charge depositors the cost of that.
This is not complicated, it’s basic capitalism. Charge people the cost of the insurance. If you want to offer welfare to banks then let’s talk about how much bank welfare we want to pay for.
It's kind of funny you think the finance people aren't going to pass along the costs. Capitalism means they'll pass on as much as they can and even figure out how to charge consumers more. So 'we're' paying for this one way or the other (Not that those costs can't be worth it but, realistically, the finance people won't be the ones paying for the majority of this)It is kind of funny that finance people are mad about the idea of charging finance people the cost of insuring finance people’s mistakes.
That’s life, that’s the world. Grow up and accept it - this is the standard you apply everywhere else.
Yes, they will pass on the costs and this is fine. Specifically the costs should be passed on to those gaining the additional protections beyond current FDIC insurance.It's kind of funny you think the finance people aren't going to pass along the costs. Capitalism means they'll pass on as much as they can and even figure out how to charge consumers more. So 'we're' paying for this one way or the other (Not that those costs can't be worth it but, realistically, the finance people won't be the ones paying for the majority of this)
Yes, flood and hurricane insurance are priced at below market rates and this is causing building in stupid and unsustainable places. Doing other stupid things is not an excuse to do more stupid things.And it really isn't the standard everywhere. Hurricane insurance isn't charged at proper rates. FEMA 'backstops' people who build in riskier areas. They cover people who don't insure they’re dwelling enough against natural disasters. Bankruptcy backstops people who don't pay enough for medical coverage - we don't saddle them with the debt forever (There are a ton of issues with health insurance but the point remains you're covered if you underinsure to an extend an event causes you to become financially insolvent Yes some people can't buy enough insurance but many take a risk and still get protected). While I'm less exposed to it now there were backstops for cybersecurity insurance for a number of years given the rapidly shifting landscape there. In highly prominent and unusual events it is not uncommon for Something To Be Done beyond the standard even when it comes to insurance.
This of course would be an equally good argument against FDIC insurance fees that already exist.If it is indeed simple then you should be able to articulate all the immediate and downstream impacts by the increased insurance costs and cover any of the side effects those create. If you're involved with regulation at all you know that pretty much all regulation that applies to massive, substantially complex environments (and it doesn't get much more complex than finance) will cause consequences. And Banks will not just pay the materially significant higher insurance amounts and maintain business as usual. So - where will they adjust their operations? How will their changes be a net benefit for everyone as a result? How will you adjust for the risk Vic pointed out? There are other risks to what you propose so what are those?
just to add fuel to the fire
Parent of Silicon Valley Bank seeks bankruptcy protection
SVB Financial Group is no longer affiliated with Silicon Valley Bank after its seizure by the Federal Deposit Insurance Corp.www.nbcnews.com
Yes, they will pass on the costs and this is fine. Specifically the costs should be passed on to those gaining the additional protections beyond current FDIC insurance.
Works for me!
Yes, flood and hurricane insurance are priced at below market rates and this is causing building in stupid and unsustainable places. Doing other stupid things is not an excuse to do more stupid things.
I clearly have over several previous posts - I've providing data that the existing mechanisms are not meaningfully bad to the general US populace and companies. And that it doesn't create a moral hazard. Your response is basically that you don't believe it's the right thing to do but your plan is an empty box. You can't or at least haven't supported your 'solution' by showing that it would be a net benefit for the US and avoids consequences to large groups of people. You say passing along the costs is 'fine' but there are several immediate problems with your ideaThis of course would be an equally good argument against FDIC insurance fees that already exist.
The question here is essentially if the government should subsidize holding large deposits in banks. I think the answer is no. You appear to think the answer is yes. Since you’re the one advocating for spending public money to insure deposits for free you should be able to articulate why that’s a good idea.
Okay, but again 'we're stupid in lots of other ways' doesn't matter.Never said it was an excuse - just pointing out that your statement that "this is the standard you apply everywhere else" is not how the world actually works a lot of the time.
Uhmm, you're simultaneously arguing that the cost of these failures is very small, meaning the fees to offset them would be very small, AND that businesses would radically reorient their financial procedures to avoid them. That makes no sense.I clearly have over several previous posts - I've providing data that the existing mechanisms are not meaningfully bad to the general US populace and companies. And that it doesn't create a moral hazard. Your response is basically that you don't believe it's the right thing to do but your plan is an empty box. You can't or at least haven't supported your 'solution' by showing that it would be a net benefit for the US and avoids consequences to large groups of people. You say passing along the costs is 'fine' but there are several immediate problems with your idea
I'll just give the first one. Banks will not pass on costs relative to those gaining protections beyond FDIC and regulators will not force them to. Why? Those large depositors (typically companies) would just find alternative means - moving money outside of well understood, regulated areas with above average oversight and insight. Companies will choose to undertake risker and more shadowy activities. You might be tempted to explain that away with a 'this isn't complicated just regulate it more' but there has not been a single time in the history of the US that additional financial regulations have been foolproof and prevented credit\stock\asset crises. Relying on those is choosing to fail in some new and novel way at some point in the future. Our current system has been iterated enough we have the lowest number of bank failures and recessions at any point in the history of the US. You might be tempted to say 'well those companies deserve their fate!'. Except that big institutions can do such risky things they blow up everything for everyone when they do those together and pushing those increased fee costs to all the companies in the US is going to drive a massive flight to these alternative stashes. In addition the huge single depositor also has influence and can be wooed by banks with low fees so banks will also be in tight competition with eachother to lower costs for these marquis customers.
So - where do those costs go? We know from a fairly well established pattern that they will get heaped on those who cost the banks the most - low deposit base individuals. The venn diagram of this group and the poor, minorities and other marginalized groups is substantial. Not only the branches that serve those communities but the service and support available in general as well. One of the unintended consequences of Dodd-Frank was that it ended up being an additional incentive for banking consolidation (it certainly wasn't the only driver but it did play a role). This is one of the biggest reasons Barney wanted to raise the cap. The banking consolidation since 2009 has disproportionally hit low income areas who already pay substantially more fees as it is.
Realistically this is as far as I'll go with this: The system works 99.8% of the time and has cost "us" a grand total of -$15Bn in the 15 years leading up to this month. The cost for the current predicament has yet to be totaled and likely won't be for several years. By current appearances (acknowledgements to the chance of changing) adding in this month may make the cost $10Bn total or $660M a year - which is absolutely tiny in comparison to our economy. For that amount of money you want to materially change or set hard limits for an incredibly complex and interconnected system handling trillions of dollars a year leading to a likely array of negative outcomes including further marginalization of already marginalized groups, creation of moral hazards elsewhere, and greater disruption\consequences during a crisis. To attempt what? Get to 100% success? The risk doesn't seem worth it to me. I doubt we will be able to convince eachother
It is kind of funny that finance people are mad about the idea of charging finance people the cost of insuring finance people’s mistakes.
That’s life, that’s the world. Grow up and accept it - this is the standard you apply everywhere else.
Yes, that's fine too. The important part to me is that the federal government should not be saying 'the rules are X' and then changing them ex post facto for some players and not others. It's a moral hazard. If the government is not actually willing for those deposits (or more realistically, some fraction of them) to be lost then it needs to adjust its regulations accordingly.I'm a finance person, and I'm not upset with that idea at all. I just think that if a depositor wants their funds insured above the $250k FDIC cap then they need to obtain that coverage from a private insurer.
Peter Thiel strikes again, I know. That being said, SVB became vulnerable to that bank run specifically due to sitting on a huge amount of obviously declining assets at the same time they should have known their clients would probably be making higher than usual withdrawals and having no chief risk officer. This was not a responsibly run institution.It helps IMO to understand that SVB was an otherwise perfectly solvent bank that was forced into a liquidity crisis through a contrived bank run from a small number of its high value clients. Had that not happened, SVB would have continued operating normally and would have realized its bond and crypto losses as its balance sheet allowed.
Hallelujah! But who said it first?
I see no mention of Iceland actually locking bankers up.Hallelujah! But who said it first?
Page 7 - Silicon Valley Bank collapses
Page 7 - Seeking answers? Join the AnandTech community: where nearly half-a-million members share solutions and discuss the latest tech.forums.anandtech.com
I saw a story today that UBS is buying Credit Suisse and this one about who could be next.
US banking crisis: Close to 190 banks could collapse, according to study
The Fed's aggressive interest rate hikes have eroded the value of bank\u00a0assets such as government bonds and mortgage-backed securities.www.usatoday.com
Keep your eyes on this one too.
You sound like a highly leveraged banker.Selling panic through youtube videos doesn't help. We already get enough of it from CNN.
Wouldn't that be awesome! But here in The States we can't do that because they are rich and rich people courts can only sentence a rich person to prison time under the most extreme of circumstances, like them having stolen from people even richer or being black.View attachment 78385
Iceland puts bankers in jail rather than bailing them out - and it worked!
You're going to have to fill me in on this one. Putting out press releases doesn't generally fall under doing something "on the sly".I wonder why they did this on the sly?
Yellen called an emergency meeting so you tell me what it means.You're going to have to fill me in on this one. Putting out press releases doesn't generally fall under doing something "on the sly".
Yellen and the fed have switched more positions in the last week than a yard engine building a consist and now that a liquidity crisis has been exposed in the small banks they are unsure of how to address it. Their strategy is to raise rates until over 2m jobs are lost which causes a domino effect across multiple market sectors.I asked you what it means and you responded by posting a youtube neckbeard.