noemon wrote:You are now repeating my arguments back to me.
I am not repeating your arguments. I am quoting your statements.
The FED has a liability towards all depositors as I keep saying, not only the lucky ones of SVB.
FED does not have liability. The FDIC has liability up to the insured 250k that they insure. Above and beyond that they are not on the hook as I already explained.
The state should also provide free health-care, not "bailouts" to people with health problems.
You misunderstood the whole point.
As for youtubers, twitterati and other outraged individuals calling it an SVB bailout, we know that is not the case because SVB has not been bailed out.
You keep making the strawman. Not the point, I already explained this.
This is contradictory. People fled because they had the common sense to risk-manage their money. Those that did you blame for causing a bank run and those that did not you blame for not managing their risk.
This is the classic self-fulfilling prophecy effect. The people believing the bank was going to crash caused the crash. It is not contradictory at all.
The liability lies entirely with the bank, the regulatory authorities and the Government who not only raised the thresholds for systemic bank stress tests under Trump and the Republicans but mainly it allows the Regulators to make money off people's deposits and then wash their hands when that whole scheme(of using people's deposits to make interest on) goes bad.
I already addressed this on my prior post.
Why should the depositors be liable for the losses of their own money, when it is not them making the risk decisions with their own deposits but third parties?
If you have a baby, and you let the baby stay with the nanny and you come 4 hours later and your baby has a broken arm... who is liable? The nanny or the police?
The nanny is the bank, it was keeping your baby safe (the money).
If the baby dies instead or loses the arm.... nobody is making the parents "whole". Like it or not, the parents decided to trust the nanny... it is their duty to research the nannys credentials and abilities.
In the US banks are private entities not a branch of the government. The government is not responsible for your money stored in the bank. Now, you can make a solid argument that it should... but as of today and as of the day SVB collapsed, that is not the case.
Why would deposits that are not paid interest be allowed to enter the pyramid scheme?
Banks are not pyramid schemes.
Rancid wrote:@XogGyux there is a bit more nuance to the "government is a hypocrite" because it doesn't bail out students but turns around and does bail out banks for example.
No, this is not what I meant. Let me explain. There have been 500+ failures of banks within the last 20 years alone. Far more in the record. Think about that.... that is about 25 failures per year, about 2 failures per month. This is not a rare, unexpected event. How come this particular bank needed special services arranged for it? It was so urgent that it couldn't wait to be solved via the regular means that most all previous failures go through (typically another bank buys the failing bank and honors all deposits and people don't actually lose their money). Would it have been catastrophic if the FDIC had to liquidate the bank and pay 80cents on the dollar so people lost maybe 20% of their deposits? This bank held money for venture capitalists and big companies, do you think that these entities don't really have other accounts on other banks that they can use temporarily to fulfill their payroll requirements if need so while this issue is properly settled? Or that they couldn't access credit to fulfill their obligations with the cash in the bank as collateral?
Maybe this was a completely honest action by the government to try to prevent more bank runs and that was the only motivation. If that is the truth, and the only truth, then I am in no position to second guess that as I have previously said... But it seems there is far more to the story and being skeptical and demanding for accountability is not the same thing as asshattery and parroting infowar propaganda.
Clearly, there is division in the government (and population) that needs to be factored in here. There is a large segment of elected officials, including the executive branch that would also like to do student debt forgiveness as well. Except, not enough people are on board with this (moron MAGAs in particular). Are those people that fail to push through forgiveness of student debt but at the same time able to save this bank hypocrites? I'd say, it's not a simple yes/no answer.
Forget that for an instance. Bernie in 2018 gave a speech in congress and warned that this was going to happen. He doesn't have magical powers, but what he has is the hindsight of having lived through the 2008 crash and some common sense. Nonetheless, congress passed the bill that removed restrictions on banks such as SVB for increased accountability/safety precisely to prevent this.
This is a vicious cycle, we cannot keep making shit laws and keep trying to plug the holes of the ship with some duct tape. We might need some pain so that people realize that we cannot keep having this problem all the time. This was never going to be a catastrophe. Some wealthy depositors would have lost a small percentage of their vast fortunes, consider it a 1 time tax payment on the millions and billions that they don't pay.
The issue here is the special treatment for these people.
Overall, both sides support this because thousands of Americans not receiving paychecks is a bad thing for elections.
That is how they justified it. Let me ask you this. Did anyone release an itemized statement showing how many companies and what percentage of capital ultimately destined to payroll was actually in the bank? I know what they said, anyone actually verified this information? Is it too much to ask that you show that the money that you are receiving as a bailout is actually going to be used to pay the salary of employees?
Here's a trick politicians use to be able to say they are against something, but then support it through action or inaction (in the SVB case it's support through inaction). Politicians like to give power to entities like the Fed, or the FCC, or the SEC, etc. so that they gain plausible deniability against the electorate. This allows them to secretly agree with whatever these agencies decide to do, but public claim they disagree (for votes). In this case, I'd say democrats are consistent if you compare with the student debt position as in, they want help people, and banks. Republicans are the hypocrites by secretly supporting the SVB action, but publicly claiming it's terrible (to fool their moron voters). Both sides will engage in their usual political finger pointing of course.
Exactly. But this is unfair though. What happens to Mary? Despite her working 40+ hours she is considered "part time" or "contractor" and does not get health insurance, her wages are low enough that paying a $500/month premium is simply not possible. She gets a pneumonia and spends 2 days in the hospital and gets billed $20k which makes her even more broke. Why is the venture capitalist be more worthy of our bailout than Mary? Worse, there is a posibility that the venture capitalist is being made whole, in part, with tax contributions from mary and/or bank fee contributions from her.
So except for posibility that this could have triggered a panic massive nation-wide bank run and/or economic collapse similar to 2008... I am not losing any sleep about the posibility of someone with over 250k in the bank losing 20cents/dollar in the very unlikely event of a bank failure (and most of the time they don't even lose anything because another bank assumes liabilities when they inevitable buys the failed bank). So as far as I am concerned, if there is any fake ourage, it is the fake outrage of the people that are not questioning our government to the fire on this. I voted for Biden and generally I'll support a democrat over a republican any day of the day.... but precisely because they get my support I expect more from them than simply getting a call from a distressed billionaire asking for favors and bailouts.
I think what I'm saying is it's a necessary evil to help the depositors beyond 250k because this affects people.
Probably it is. Especially if there was any possibility, small as it would be, of having a contagion effect. But that is the ONLY reason. Apart from that one and specific reason, there should not be any reason.
Last, unfortunately, politics creates a situation where if you just view the government as a monolithic entity, you will make sweeping claims like "hypocrite" or whatever, but we always need to look at it a bit deeper. I think most media figures fall here, and most people are conditioned to view it this way, which is wrong IMO.
I don't think this is a monolithic issue or that whatever criticism is assuming a monolithic goverment. Most of the commentators and/or experts that I have seen a report on this issue clearly explain that there is nuance to it. On the other hand, the government gets away with murder when they can justify something because the situation is a bit nuanced. That is what bothers me, the possibility that the real motivation for the officials to act to have been brought forth by self-interest of helping their pals rather than for a genuine concern for a spread of fear and insecurity or for the paychecks of workers. Motivations matter.