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WarGamer

(12,103 posts)
Sun Mar 12, 2023, 10:10 PM Mar 2023

NO BAILOUTS.

If you send your son to college with an American Express Card and pay for whatever they buy... they will never learn responsible fiscal behavior.

Maybe Roku shouldn't have kept a HALF a billion dollars at SVB. No one thought about dividing that up 10 ways and spreading the money around Goldman Sachs, JPM, WF, etc??

Maybe SVB should have worked harder to maintain their Moody's rating? Or maybe SVB seeking to sell $20B in shit bonds scared investors?

Last week, SVB Financial Group, the parent company of Silicon Valley Bank, received a call from Moody's Investors Service Inc. The rating agency informed the bank that it was preparing to downgrade its credit rating, sending alarm bells ringing throughout the financial industry. The phone call was the beginning of the process that led to Friday's collapse of the startup-focused lender, which is now considered the biggest bank failure since the 2008 financial crisis.

The collapse of SVB sent shockwaves through global markets and had a profound impact on banking stocks. The collapse has raised concerns that the Federal Reserve's aggressive interest rate increases aimed at combating inflation have exposed vulnerabilities in the financial system. The SVB collapse illustrates how quickly confidence in financial institutions can erode and how even the best-laid plans can backfire. The failure also sent shockwaves through California's startup economy, leaving many companies unsure about how much of their deposits they could recover and how they would pay their staff.

Moody's call came after the value of the bonds in which SVB had invested its money fell due to higher interest rates. SVB's management team became concerned that the downgrade would undermine the confidence of investors and clients in the bank's financial health. To mitigate the damage, SVB's Chief Executive Greg Becker's team sought advice from Goldman Sachs Group Inc bankers and flew to New York for meetings with Moody's and other rating firms.


https://www.businesstoday.in/silicon-valley-bank/story/silicon-valley-banks-demise-began-with-a-downgrade-threat-heres-how-it-all-went-crashing-373045-2023-03-11
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NO BAILOUTS. (Original Post) WarGamer Mar 2023 OP
Here we go again. roamer65 Mar 2023 #1
Just to add... WarGamer Mar 2023 #2
Silicon Valley Bank and Signature are gone. RandySF Mar 2023 #5
I think we got all that back IbogaProject Mar 2023 #7
we did. lapfog_1 Mar 2023 #15
The big banks repaid those bailout funds. betsuni Mar 2023 #20
Someone please help me out. RandySF Mar 2023 #3
It's not a bailout. This is ragebait posting. nt mathematic Mar 2023 #6
like it republianmushroom Mar 2023 #4
It isn't really a "bailout" FBaggins Mar 2023 #8
The assets will be sold for a slight discount to other institutions lapfog_1 Mar 2023 #14
Creation of money out of thin air is a stealth bailout. roamer65 Mar 2023 #9
SVB's assets are being used to secure deposits. RandySF Mar 2023 #10
nope... The FDIC collects from various financial institutions money for "insurance" lapfog_1 Mar 2023 #12
Nobody is creating anything FBaggins Mar 2023 #13
Congrats. roamer65 Mar 2023 #17
This is not a bailout lapfog_1 Mar 2023 #11
Janet Yellen agrees with you. Stinky The Clown Mar 2023 #16
It works the same way when an insurance company goes belly up. Xolodno Mar 2023 #18
Please stop perpetuating a myth about SVB. RandySF Mar 2023 #19

WarGamer

(12,103 posts)
2. Just to add...
Sun Mar 12, 2023, 10:23 PM
Mar 2023

Look at WHO got bailed out in 08, heres who got over a billion.

10/28/2008 Wells Fargo & Co. San Francisco Calif. $25,000,000,000

10/28/2008 State Street Corp. Boston Mass. $2,000,000,000

10/28/2008 Bank of America Corp.1 Charlotte N.C. $15,000,000,000

10/28/2008 JPMorgan Chase & Co. New York N.Y. $25,000,000,000

10/28/2008 Citigroup Inc. New York N.Y. $25,000,000,000

10/28/2008 Morgan Stanley New York N.Y. $10,000,000,000

10/28/2008 Goldman Sachs Group Inc. New York N.Y. $10,000,000,000

10/28/2008 Bank of New York Mellon Corp. New York N.Y. $3,000,000,000

11/17/2008 Regions Financial Corp. Birmingham Ala. $3,500,000,000



RandySF

(57,581 posts)
3. Someone please help me out.
Sun Mar 12, 2023, 10:53 PM
Mar 2023

SVB is being shuttered with the feds auctioning off the pieces. Depositors are being kept whole with the bank's assets. Am I incorrect because that doesn't sound like a bailout to me.

FBaggins

(26,693 posts)
8. It isn't really a "bailout"
Sun Mar 12, 2023, 10:57 PM
Mar 2023

The bank certainly isn’t going to be saved.

If what I’ve read is accurate (that the bank’s assets marked down to market are essentially equal to their liabilities), then depositors would largely be made whole. The problem is that it could take weeks to do so. During those weeks, many of those young companies would go under.

This not only keeps that from happening, but increases the chances that even the $250k in insurance won’t have to be paid out.

lapfog_1

(29,166 posts)
14. The assets will be sold for a slight discount to other institutions
Sun Mar 12, 2023, 11:18 PM
Mar 2023

and depositors will be directed to those new banks. Most will not want to withdraw the funds because they would simply need to put it back immediately into another bank so what's the point.

As your say, the assets will essentially match obligations (actually will exceed them if the bonds go to maturity) so the amount that the FDIC has to put in from the insurance fund will be minimal.

roamer65

(36,739 posts)
9. Creation of money out of thin air is a stealth bailout.
Sun Mar 12, 2023, 11:01 PM
Mar 2023

The Federal Reserve is creating money for use as the backstop.

The tax down the road on all of us will be higher inflation.

lapfog_1

(29,166 posts)
12. nope... The FDIC collects from various financial institutions money for "insurance"
Sun Mar 12, 2023, 11:14 PM
Mar 2023

and this is the source of the funds to pay back the bank customers. Over and above the FDIC insurance of $250,000 per account that we all have for any regular bank account in the USA. But same concept.

lapfog_1

(29,166 posts)
11. This is not a bailout
Sun Mar 12, 2023, 11:12 PM
Mar 2023

depositors, including a lot of small startups in Silly Valley, will get their money out.

This will not cost the taxpayers because the money will come from the assets of the bank plus some money from the FDIC funds that they have collected for years (decades) from financial institutions (for just such a purpose).

If the startups were to fail as a result of this bank failure, innovation in various tech related sectors could be impacted for years, VCs would not commit money to new startups and become even more risk adverse than they are right now.

A true bailout is the loan write off to college students... so you are against that too? Most Democrats support the proposed Loan Forgiveness program proposed by the Biden administration.

SVB is dead, the stock is no longer traded, the owners and shareholders are taking a bath (except for maybe the CEO who apparently started selling his shares 2 weeks before the failure... and THAT will likely be investigated).

Xolodno

(6,330 posts)
18. It works the same way when an insurance company goes belly up.
Sun Mar 12, 2023, 11:44 PM
Mar 2023

They will fold the company into others. SVB and Signature were niche banks, but as we seen, a lot of tech companies have been a hard time and laying off employees. So it goes to reason, banks were next to follow suit.

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