noemon wrote:You are factually ranting dude. You are using a dirty term "bailout" to blame depositors for not doing due diligence and doubling down on your blaming depositors in this very post also so just be honest about it at the very least. Much like infowars and FDIC, whose job is to vilify others for their own business model to succeed.
No. You are factually incorrect.
Bailout is not a "dirty" term. I even posted verbatim definitions from 2 different dictionaries and provided you with examples of bailouts that have occurred towards people and/or companies that were in financial distress due to no fault of their own (aka COVID assistance, checks, lending easements, etc.) If you continue to see the term as a dirty term, that only reflects your own projections. Now, stop ranting.
Business has no option to not use a bank to conduct business transactions.
Yes, they have. Use cash. Or perhaps crypto
You mean they don't have an EASY and or CONVENIENT option.
And just for the record, there is no safe option. There was NEVER a safe option. Cash can be stolen and destroyed, even gold and silver coins can be stolen or destroyed. Obviously crypto is a scam. And as we have seen, even banks suffer from various downsides as well (fraud, liquidity problem, over-regulation, under regulation, poor management, etc).
You are conflating apples with oranges, confusing consumers with business who pay banking fees for all transactions, either in or out.
Confusing force majeure with investment decisions embedded within a particular regulatory framework.
No.
ou are also confusing the act of going into business with the act of using a bank to make transactions for which you pay fees for it. Conducting transactions to pay your liabilities is not an investment decision.
Making transactions is not investing. It's rather ridiculous that I have to tell you this.
Like seriously.
The exception of a bank in the US offering mortgages to doctors without life insurance, is not the rule but the exception and you still need house insurance to get a mortgage.
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Again, you are wrong. You are talking about property insurance now, which is not the same as mortgage insurance. You don't need mortgage insurance if you put more than 20% downpayment in most banks and even 0% if you are a physician (and a few other medical professionals, this includes dentists as well). What you are talking about is property insurance. When you buy a home with a mortgage, you don't really own the house, the bank does... therefore they can stipulate that they want the property insured until the property becomes rightfully yours when you pay the mortgage. Keep in mind, this does not protect 100% of the bank's risk either. The insurance that you bought could potentially become insolvent after a major hurricane or natural disaster thus putting at risk the bank's ability to recover the money it lend you. The bank knows this and still decides to lend you the money. There is risk everywhere dude... that is why companies have risk management departments.
And I don't know why you are even talking about life insurance, that is completely irrelevant.
And lastly, you are still evading the point of liability.
It is the Fed/Central Bank regulating the fractional reserve system, when you legislate that banks can use 90% or 95% of 99% of other people's money without their knowledge and consent then you are liable for that 90% being invested based on your legislation which also happens to be outside public/state oversight. This is fairly simple and the main point of this discussion, yet it is the point that you evade. "Do not use a bank" is not an option for business. What knowledge do depositors have of the risks taken with their money?
No. I am not. The Fed/Central bank does not make the government liable defacto for the failure of a bank and/or depositors. The FDA is not responsible for the failure of a drug or a medical device and the government, even though it regulates roads, car safety standards, etc, is not responsible for all accidents that have ever occurred and thus liable to print money to pay for the hospitalization of the person that developed an adverse reaction to a pill, the person that developed a hardware associated infection with a prosthetic hip or a driver that crashed his car on another driver's car.
You are engaged in victim semantology. The bank employee is now the victim of depositors who should have kept their money in a failing bank.
I am simply pointing out the fallacy of trying to assign blame and victimhood. Sometimes unfortunate events occur due to a series of unanticipated and/or unlikely events. This is the reason why you seek vilification where none exist.
This is why it is impossible to have a rational conversation even with those pretending to be so because they will say and come up with anything to pass the liability onto others.
I think I am in agreement with you on this. Go figure.
Lastly, the Fed is not the taxpayer.
First, don't confuse the fed as in federal reserve, vs FDIC. Different entities. But regardless, printed money is not printed wealth. Printed money devaluates other existing printed money, therefore effectively taxes everyone that holds a dollar or spends a dollar. So yes, the fed swooping in and paying with printed money is a defacto tax on anyone that owns a dollar.
It is quite unreal that you need to be told all these.
I don't need to be told this, especially when it is mostly wrong or inaccurate information. However, as long as you insist on doing so, I will correct you.
SVB has not been bailed out and as such, your rants remain nonsense.
Stop ranting then. I never said the bank got bailed, I said the depositors were bailed and they are in fact.
You consider your self entitled to your fake outrage but you do not consider depositors as entitled to their own money!
"Bailout" applies to companies that have failed.
Actually, no. The whole point of a bailout is to prevent the companies from failing. So technically a bailout would apply to companies that are in the process of failing, not to companies that have already failed. It is impossible to bail Toys R US... they are gone, they "have failed" you cannot bail out a failed company. You can only bail one that is in the process of failing. Furthermore, failing does not imply a mistake, miscalculation or unwarranted risk taken by said company. Sometimes they do everything by the book but the market conditions/competition/timing/etc is such that they cannot thrive. Furthermore, you are only focusing on a portion of possible bailout, a bailout is also lending money to a company in financial distress, and you can also bail out individuals and not companies. The government intervening to facilitate liquidity by means of either cash injection, loans, etc to assist the depositors that might/are facing financial distress is by definition a bailout. Whether the depositors have any blame or not, the bank has any blame or not, the regulators have any blame or not is completely inconsequential to the actual meaning of the word. The word carries no implicit derogative connotations and you are the one assuming so.
Technically, this is not a bailout of SVB.
And technically I didn't say otherwise. This is technically a strawman.
Rancid wrote:Sure, but these contagions are not in isolation.
Well sure that is why contagion is used as an analogy here, implying we should quarantine the spread
because it is not perceived as an isolation case. That is why I am a bit skeptical about this whole situation, there have been 500+ bank failures in 2 decades but this one needed the FDIC to create new rules? They were worried about something else. They say, depositors... I doubt this was the main reason. Millions of people get their life affected on a daily basis on a far more profound matter and the government barely lift a finger, if this was the ONLY concern, I don't think it would have been unreasonable to see it unravel. Some pain at the beginning, but the assets to give a good chunk of the existing deposits, even if not 100%. Yes it would be disruptive for business operations and for individual financials, but a late paycheck or a 30% loss of capital does not even come close to an actual catastrophe. So that is why I think the FDIC knows more than they are saying and want to make it clear that they will intervene so this does not spread. Do I think this is the wrong move? No I don't, it is
probably the right move. I don't know and probably they don't know either but have an educated guess that it will, after all when we deal with people behavior there are many unknowns. People are like wildebeests and they spook easily.
Rancid wrote:I wonder if increasing the insurance amount would help with inflation in some way. :?:
FYI, for those of you that maybe don't remember. From the 80s through to 2008, the FDIC insurance was 100k (I recall this because I opened my first bank account well before 2008 and remember being told about the insurance on the account). It was during the 2008 recession that they raised it to the current 250k. With the over supply of money (and thus inflation). I propose that it should be raised anyway. Especially after this event. I say make it 500k, and grant that level of (grandfathered) insurance to depositors of SVB. Anything over 500k can go under receivership certs. Sell the bank and/or it's asset to cover the certs. Fire the executives and seize their personal assets to also cover the certs for fucking up, and leave the share holders high and dry completely.. fuck'em.
BOOM! the FDIC and central bank should hire me.
That said, I'm sure the assets over insurance would drop from 88% to like 70% only.
Raising the limit would raise the premiums that banks have to pay on that insurance. Which is fine with me. It will result in lower interest rates on things like savings accounts for depositors (but inflation counters that too I guess... maybe this would help dampen inflation...), but I would recommend against pooling (too much) money in a savings account anyway.
I remember this as well. Not personally, but my grandfather would tell me this all the time. I had the punny little student account that I opened with a $200 USD in now-defunct Wachovia bank and they gave my brother and I a tiny 14" CRT TV and a sandwich toaster for opening the account:lol: . Not surprising they went out of business giving free tvs and toasters to students that are not paying fees for the accounts
Anyhow I vividly remember him telling him how he had all his money across different accounts specifically so it wouldn't go over the 100k limit.
Anyhow, methods to insure $$ and mitigate any potential loses do exist already. I think a FDIC-sponsored program in which depositors can opt-in for additional insurance above and beyond a "standard of 250k" in which you choose the amount you want to insure at increasing fees schedule per deposit is not unreasonable.
The idea of giving absolute insurance to a third-party, for-profit entity such as a bank, which are not particularly well known for their prudency seems like a recipe for disaster. They take on the risk with depositors' money and then the government (taxpayers really) ensure that money. If we are going that way, perhaps we should discuss full nationalization of banks. Now, this is not something I support at all, but the idea of having the bank use my money that is insured by my money to take risks to enrich themselves seems dystopian to me.
wat0n wrote:Who pays for the European guarantee?
Perhaps more importantly, how strict are the banking regulations for European banks vs Americans?
Also, I don't think this is the way it goes in europe, a quick search seems to suggest UK limits to 85k pounds and the EU up to 100k euros.