'That's How Capitalism Works,' Biden Says of SVB, Signature Bank Investors Who Lost Money in Failed Banks 256
President Joe Biden sought to assure customers of Silicon Valley Bank and Signature Bank on Monday that their money was safe -- insured by the Deposit Insurance Fund -- but said investors in the failed banks' securities aren't going to get the same guarantee. From a report: "Investors in the banks will not be protected," Biden said in a White House speech. "They knowingly took a risk and when the risk didn't pay off, the investors lose their money. That's how capitalism works." The nation's top bank regulators on Sunday announced the Federal Deposit Insurance Corp and Federal Reserve would fully cover deposits at both failed banks and rely on Wall Street and large financial institutions -- not taxpayers -- to foot the bill. Signature Bank in New York, which was shuttered Sunday over similar systemic contagion fears as SVB, had been a popular funding source for cryptocurrency companies.
"The FDIC on Friday took control of SVB's assets and over the weekend Signature's," Biden said. "All customers who had deposits in these banks can rest assured they will be protected and they'll have access to the money as of today." The Treasury Department designated both SVB and Signature as systemic risks, giving it authority to unwind both institutions. The FDIC's Deposit Insurance Fund, not taxpayer money, will be used to cover depositors, many of whom had significantly more than the $250,000 deposited at the banks that is normally covered by the FDIC. "No losses will be borne by the taxpayers," Biden stressed Monday. "I'm going to repeat that -- no losses will be borne by the taxpayers. Instead the money will come from the fees that banks pay into the Deposit Insurance Fund."/i?
"The FDIC on Friday took control of SVB's assets and over the weekend Signature's," Biden said. "All customers who had deposits in these banks can rest assured they will be protected and they'll have access to the money as of today." The Treasury Department designated both SVB and Signature as systemic risks, giving it authority to unwind both institutions. The FDIC's Deposit Insurance Fund, not taxpayer money, will be used to cover depositors, many of whom had significantly more than the $250,000 deposited at the banks that is normally covered by the FDIC. "No losses will be borne by the taxpayers," Biden stressed Monday. "I'm going to repeat that -- no losses will be borne by the taxpayers. Instead the money will come from the fees that banks pay into the Deposit Insurance Fund."/i?
Dark Brandon (Score:5, Funny)
Trolling with the best.
Why the exception? (Score:5, Insightful)
FDIC already covered up to $250k... blowing our FDIC fund to reimburse wealthy people who would have merely gotten back more wealth from their account than most ever see hardly seems like a move to help the little guy and if this really is a 'systemic' problem that is exactly who is going to be screwed when the fund runs dry.
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EXACTLY - The FDIC should only make good on 250k as the law dictates. Larger deposits should simply be treated as most senior obligations. That is the depositors should be made whole before holders of other types of notes. Once all the depositors are paid, than the banks lenders can get in line and if there is still anything left after that shareholders.
That is how it should work. As far but but what about business that might fail.. Look those business had shit for treasury management if they had all thei
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Re:Why the exception? (Score:5, Informative)
These banks actually have enough assets to cover its liabilities *if* not forced to sell long-term bond holdings at fire-sale prices. So the FDIC will actually not have to stump up much net capital, it's about providing immediately-needed liquidity. Of course, the Fed should have foreseen this effect of the rate rises, and put into place something like the new Bank Term Funding Program *before* three banks had failed, instead of *after*. But the Fed doesn't seem to be very good at foresight. Remember when inflation was "transitory"?
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You can't have it both ways .. you can't have the government keeping hands off financial institutions to let them do their thing, but at the same time preemptively fund bailouts for funds that are explicitly at risk due to amount of funds or the type.
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Comment removed (Score:5, Informative)
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Say what? That is exactly what is happening [go.com].
"After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary [Janet] Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors," the said in a joint statement. "Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer."
Re:Why the exception? (Score:4, Interesting)
Any small business with a couple of dozen employees will have more than $250K in whichever bank account it is doing payroll out of.
I would classify a company with a couple dozen employees as a "little guy".
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Not in SV I wouldn't.
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Because there are lots of businesses that would fail this week if they didn't have access to their cash to pay their employees and other bills. The impact of that would cause increased unemployment payouts and decreased tax revenue far in excess of what the FDIC is likely to ultimately pay out, especially considering that the bank did have assets to cover at least most of the deposits.
The plan is to eliminate most of the hit to the economy while not protecting those who created the problem (the bank manage
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"This is exactly how the bailouts in the previous financial crisis should have worked."
No, the way they should have worked is not at all.
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You are completely ignorant of how this works. Small Etsy makers are not getting payed because of this failure. Talk about little guys being screwed. https://www.techradar.com/news... [techradar.com]
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Yes, sometimes innocent people have to wait longer for their breakfast when a carton of eggs gets dropped in the kitchen. It is less than 0.5% and their payment is merely delayed. Also not all etsy sellers are 'little guys.' In any case that is all on Etsy and nobody else, Etsy owes them money and Etsy should make them whole even if it means issuing some bonds.
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The answer is really simple: one of the major groups hit with a lot of money left in SVB was (drumroll): the Democratic National Committee, aka the Democrat Party.
Clearly they weren't going to allow themselves to lose money, not if they could recover it at taxpayer expense.
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It might be semantics but it's not really a tax, more of a forced insurance program. The FDIC is funded by the very banks that it covers. It's there because history has shown if you just leave it to the banks themselves plenty of people got screwed by bad management.
If the FDIC fund gets withdrawn for this the banks are on the hook to get it back up to the levels it needs.
Some relevant numbers (Score:5, Informative)
As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. [google.com]
Re:Some relevant numbers (Score:4, Insightful)
Does SVB have $0 in assets and funds?
Unless the answer is yes what's the point of this?
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"It might be semantics but it's not really a tax, more of a forced insurance program."
It is. It doesn't matter how you spin it or dress it up. At the end of the day if people are forced to pay money for community use or to offset community taxes (at any level of community) that is a tax. Pay the IRS, tax. Pay a fee at the DMV to get a license, tax. Have to pay a higher amount of interest (or get a smaller one) to offset the bank's FDIC payments, tax.
That isn't to say there are or aren't situations where a t
Re:Why the exception? (Score:4, Interesting)
They might not need to use the FDIC fund at all. According to others commenting on this story, in a bankruptcy depositors are first in line, and the liabilities will hit the bank's stockholders and bondholders while possibly leaving enough assets to cover the depositors.
Why bail out depositors, though? (Score:5, Insightful)
What's the point of having an FDIC cap if it's not enforced?
If depositors don't do their own due diligence about the places where they park millions of dollars, then that's their problem.
Comment removed (Score:5, Insightful)
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Sure, if they liquidate SVB's assets and those cover depositor's, then everything's cool. But they seem to be saying that depositors will be covered regardless, and that's irresponsible.
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Comment removed (Score:5, Informative)
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The $250K is a hard limit on what the FDIC insures. Of course, if a bank has assets that can be sold to cover deposits, then that should be done. But a blanket guarantee regardless of whether the bank has sufficient assets is irresponsible.
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Re:Why bail out depositors, though? (Score:5, Informative)
Because it's no cap.
The 250k is a guarantee. 250k is what you'll get if the bank is liquidated, no matter what. Even if the bank doesn't even have enough assets anymore to pay that to every creditor. Think of it as some kind of insurance.
If the liquidation ends up with more than the guaranteed amount, whatever is left will be used to pay the rest. If you have 300k in the bank, you may get 250k, you may get 280k, you may even get 300k if enough liquid assets are left after liquidation. But you will not get back less than 250k (provided you had that much in the first place, you won't get 250k if you only have 100 bucks in your account).
Correction (Score:5, Informative)
> President Joe Biden sought to assure customers of Silicon Valley Bank and Signature Bank on Monday that their money was safe -- insured by the Deposit Insurance Fund
There's a fundamental misunderstanding here on what happened with SVB.
The Federal Deposit Insurance Fund insures up to $250k. There was never a question on if that money was safe. Everyone knew it was the entire time.
The question was what would to accounts & funds over $250k? Those *aren't* insured by the FDIC. A lot of companies had balances far in excess of $250k to pay bills & make payroll. Would *those* uninsured funds be protected?
The news on Friday was the FDIC said, yes, it would make sure those funds are covered too. (They also made clear it won't be covered via taxpayer dollars, but that's a different topic.)
What Biden is trying to make clear is that:
- If you were a bank *customer*, your money -- insured or not -- is fine
- If you were a bank *investor*, you lost your money
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No, it's not supposed to destroy depositors above $250k too. Uninsured depositors are immediately after insured depositors when the assets are dissolved. Maybe they're destroyed, maybe the aren't, but they're pretty close to the front of the line. General creditors and stockholders are the most screwed.
This bank didn't collapse with "nothing" left.
Re:Correction (Score:4, Informative)
Depositing is not investing, never was investing, and never will be investing.
YELLING IT LOUD DOES NOT MAKE IT A FACT.
Depositing is explicitly -not- investing, according to all legal code. That's why you're not taxed on bank withdrawals as an investment. It is, if anything, a loan to the bank. That's why you get a 1099-INT from your bank at the end of the year for taxes - it's for interest paid to you, a debtor.
It's simply your ignorance and gullibility which leads to that rate being less than inflation.
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News this morning is that HSBC UK bought them and all investments and deposits are whole.
https://techcrunch.com/2023/03... [techcrunch.com]
No. HSBC bought the UK branch and the UK dealings alone. They did not buy the entire bank. Incidentally SVB UK wasn't even covered by the FDIC, it was covered by the Bank of England which guarantees only 85,000 pounds, far less than the FDIC.
If you're not a UK based business then this HSBC announcement is completely irrelevant to you.
This is How Government Intervention Works (Score:2)
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Very unlikely. Capitalism still tries to protect itself. Instead of the FDIC bailing out customers, a similar mutual insurance fund would exist. For a very simple reason: Why would I put my money in a bank if it could be gone tomorrow? To have people agree to that kind of deal, you'd have to pay insane interest. Or people would have to be able to compare banks and know which ones are reliable. Large investors may know that. Small bank customers, which is the bulk of the money a bank usually holds, would sim
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They are letting it burn to the ground. This is the standard order of precedence for the dissolution of assets. Insured depositors, uninsured depositors, general creditors, stockholders. The only nuance is that if it becomes needed (and it probably won't be), uninsured depositors will be treated slightly better than normal. But after that, anybody left can fight over the scraps.
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Uh, no. They did have to have a reserve, and they did have one. Changes to Frank-Dodd made under Trump meant they didn't have to file paperwork and be under tighter regulation. The short-term value of their long-term bond holdings went down, causing them to try to raise capital, causing big depositors to lose faith and withdraw money (
Rich people will revolt. (Score:3)
Glad to hear it .. (Score:3)
For the longest time its been socialize the risks, capitalize the profits.
From what I've read, this bank lobbied successfully to ensure they were not held to the same stress test and capitalization requirements as other banks.
So, they reap what they sewn.
As far as Biden commenting on it, largely irrelevant in the scheme of things.
Legal order of precedence (Score:2)
By law, after insured depositors are paid, uninsured depositors are paid next, followed by general creditors and then stockholders. In most cases, general creditors and stockholders realize little or no recovery.. - https://www.fdic.gov/consumers... [fdic.gov]
So the only thing new here is the guarantee that the all depositors can expect to be made whole. Otherwise, this is business as usual, and by the book.
Naturally stockholders are last. That's completely normal.
It would be really good (Score:2)
...if Republicans applauded this as a sound approach. Maybe even a gesture to show that when responsible governance is displayed, we can even reach across the political gulf to affirm it.
This is how capitalism should work - no taxpayer safety net for investors.
Comment removed (Score:5, Insightful)
The big shareholders (Score:5, Insightful)
What I'd like to see is insider trading prosecutions, but good luck with that. The real problem is some people are above the law. Elon Musk got sued for manipulating stock market prices with Tweets and got away with it. And he did it brazenly.
Again, some people are just above the law. The only solution I've found to that is to stop them from breaking laws by punishing the people under them so that they can't find anyone willing to help them do it.
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Cramer is a clown. Don't ever listen to him as anything other than farce.
The fine people running this SVB scam sold stock before the crash and also paid themselves big bonuses.
They've been lobbying for lax regulation and Trump removed the last of the Dodd-Frank regulations which let them get away with this fraud.
Fed chair Powell triggered this run on the bank by raising interest rates so that SVB "investments" dropped in value. (They were stupid to take long term low interest rate bond investments.)
Of cours
Re:The big shareholders (Score:4, Interesting)
There must be a web page tracking him and every other talking head on business channels, to see what a theoretical someone who listened to him would be doing financially.
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https://www.thestreet.com/etff... [thestreet.com]
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Can you point to which provision you are talking about? My understanding here is that this was a run on the bank and they went down when it hit about 25% of assets withdrawn in a few days. My understanding of Dodd-Frank isn't showing me anything that would have protected against that.
Re: The big shareholders (Score:3)
These banks didn't have to undergo stress tests which was required by Dodd-Frank and which they lobbied to get rid of in legislation promoted and signed by Trump.
Stress tests would have exposed their shaky financial condition and they would have been required to fix it
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You might wanna check the channels you're watching....Cramer is on CNBC.
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Elon Musk basically had to buy Twitter to avoid charges of lying to manipulate stock values.
He may not have gone to jail, but now Twitter isn't worth what he paid for it.
Not exactly (Score:5, Informative)
The one I'm talking about was the Tesla pump & dumps, like when he said he'd have full self driving in a few years even though his engineers knew that was a lie. He got away with that one.
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The company is liquidated, and you end up with a proportion of the liquidated assets.
This is true, in theory. In practice, not only are common stockholders the lowest priority claim in a liquidation, but bankruptcy services are expensive, and the vultures that provide those services will almost certainly dissipate the estate. This was showcased a by the SCO v. IBM et al. fiasco we reminisced about a few weeks ago. SCO actually entered chapter 11 completely solvent but the expenses for the trustee and administrative services ensured that not even the existing creditors received a fair por
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Re:Not quite (Score:5, Informative)
And that's exactly what's going to happen. It's not that the shareholders get nothing - it's that they get what's left, and nobody is guaranteeing there will be anything left.
Re:Not quite (Score:5, Insightful)
>> That leads customers to have to CARE about whether their bank is good or not.
Figuring out whether a bank is good or not is the job of regulators, not customers (who have neither access to the banks records nor expertise in the banking industry).
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Sniff test. Let's see, they told me that these were AA rated bonds. So I bought Lehman Bros, a few months before they crashed.
How was I supposed to know? Oh, and a few years later, I learned that a number of years before the whole rating business changed, and companies *paid* to be rated. And the head of Lehman LIED TO THE RATING COMPANIES.
Tell me again how the ordinary person's supposed to know.
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Sniff test. Let's see, they told me that these were AA rated bonds. So I bought Lehman Bros, a few months before they crashed.
How was I supposed to know? Oh, and a few years later, I learned that a number of years before the whole rating business changed, and companies *paid* to be rated. And the head of Lehman LIED TO THE RATING COMPANIES.
Tell me again how the ordinary person's supposed to know.
You're absolutely right about ALL of that. It's unethical, it isn't fair, it's downright dishonest. But you've also just proved that, among all the other harms, bailouts harm the Sniff Test as well, by encouraging risky behavior and dishonesty in rating businesses. The Sniff Test is still needed.... reality is a bitch, it doesn't care about "fairness"... and we can only have a real Sniff Test if we start allowing these places to fail, and yes, for investors and depositors to lose money (over the FDIC limit,
Re:Not quite (Score:5, Informative)
I mean its worse than that, even. I worked for a large bank that also happened to own one of the major stock brokerages. Turned out the CEO of another publicly traded company was on our board of directors. Our CEO needed this guy's board vote for something or other. So, long story short, our CEO made a quid pro quo arrangement with the analyst at our brokerage who covered the industry that the other CEO's company was part of. One day our brokerage announces its boosting its rating on that company's stock from like AA to AAA, even though (unbeknownst to the public) the underlying analysis didn't support such a boost. Same day that company's stock rises a fair bit on the NYSE, no doubt resulting in millions in (at least paper) gains for the other company's CEO.
I have no clue how the average joe is supposed to have any idea that stuff like this is happening. Of course, there's inherent risk in trading stocks etc., but on the other hand there should be some degree of minimum protection to ensure that market manipulation of this sort can't happen, and that at least some bare minimum ethical standards are upheld. .
Re:Not quite (Score:5, Interesting)
There is a difference between day traders and speculative investors, for whom putting money into a bank is basically a gamble, and the regular people who just want to put their paycheck somewhere instead of stuffing it under the mattress. For the former, they gambled and they lost, that's how it goes. For the latter, if they are not protected against banks failing, and thus have no confidence in the banks, they will end up putting their savings under the mattress instead. And that is not something anybody wants.
Re:Not quite (Score:5, Insightful)
>> That leads customers to have to CARE about whether their bank is good or not.
Figuring out whether a bank is good or not is the job of regulators, not customers (who have neither access to the banks records nor expertise in the banking industry).
That's never been true. Good Lord, "Let the Buyer Beware" goes back to Roman Times. Caveat Emptor, folks. The customer is never free from the sniff test.
There's time when rules like that make sense, there's times when they don't.
Buying a knock-off product off Amazon? Sure, buyer beware.
Putting your money in a bank that multiple investors, institutional and otherwise, have already investigated and vetted?
There's no practical way for the bank customer to evaluate the bank's viability, meaning there's zero value in implementing "buyer beware" for the bank either.
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People putting their money in a bank account aren't buying anything. AT ALL. They are asking the bank to hold their money, allowing the bank to use it in return for interest, but with the ability to get their money back immediately whenever they may need it. For example to ACTUALLY buy something.
Yes they are. They're supposedly buying security for their money. That's the whole point of a bank.
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Re: Not quite (Score:5, Informative)
They're supposedly buying security for their money. That's the whole point of a bank.
Not really. Security is (supposed to be) ensured by sound banking regulation and the FDIC. As a depositor, I could care less if my bankblows all of its profits on fancy marble facades and cash machines too easily acessible to backhoes. All I care is that my money is available to me on Monday morning when the doors open.
If security were a salable commodity, then I'd see a charge line for it on my monthly statement. As it is, the 'security fee' is deeply embedded in the interest rate I'm paid on my savings. I can't see it and my bank will just point to banking regulations if I ask.
Re: Not quite (Score:4, Insightful)
I could care less
I really hope you couldn't.
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This is vote buying, and sowing uncertainty.
This way the Administration can have it both ways: "No, we're not going to bail out that bank", and "No, we're not going to let depositors lose money".
They don't want to appear as if they're bailing out the the rich, but at the same time they're terrified of "SVB depositor loses home, business" headlines.
Re:Not quite (Score:5, Insightful)
Thank you Mr. Theory. Now let's take a look what this would mean in practice.
Since people are unable to determine which bank is "good" and which one would fail, people would generally fear that their money is lost when they put it in a bank. Now, it's pretty much impossible to do anything without a bank account these days, so people will have some money in that account, but the bulk will be bunkered in their home, hopefully somewhere safe, but certainly not in a bank where it could be lost tomorrow.
I kinda doubt that this would be in the interest of capitalism.
Re:Not quite (Score:5, Insightful)
If the economy suffers, the economy model has flaws that need to be corrected, ok?
Capitalism fails as a system for the same reason Communism failed as a system: Neither takes into account the human factor. Communism ignores greed, Capitalism ignores ignorance.
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I'm unsure what exactly you mean, the center for drug evaluation and research or crossdressers... either may be fun, depending on your idea of fun, but I don't consider either a wise investment.
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Re:Not quite (Score:4, Interesting)
The flip side of that is that a diverse investment portfolio means that your money is not tied to a bank but a number of varied assets. This is the disadvantage in having all your investments in investment funds owned by the bank.
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In Capitalism, investors, a class which depositors (ESPECIALLY those above $250k) are included in... lose their money when the bank makes bad bets. That leads customers to have to CARE about whether their bank is good or not.
How are depositors also investors? When the bank does well, do the depositors receive a dividend or asset value appreciation? Depositors are obviously not investors. Investors want the banks to fleece depositors as much as possible (e.g., give depositors the worst possible deals for interests and fees) so that the investors can gain money. Bank depositors are like Google users; they are cattle, not investors.
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What a load of horse hockey. Oh, right, you care about your bank, and move whenever you don't trust it.
Sure you do.
Let's see, my accounts are safely in, un, nope, they were bought, they're calling themselves *what*, right, what I figured, they were bought. And you trust yours completely....
Re:Not quite (Score:5, Interesting)
In Capitalism, investors, a class which depositors (ESPECIALLY those above $250k) are included in... lose their money when the bank makes bad bets
Depositors almost never lose any money, not even those with balances above $250k. None of them will lose any money in the SVB failure, either. All of the investors (actual investors, not depositors) will lose all their invested capital. Most of the creditors who lent money to SVB will lose, too. After investors and creditors have been soaked, that's almost certainly enough to zero the bank's balance sheets and keep all of the depositors whole, without the FDIC having to pay out a penny. And with the HSBC deal, the FDIC has ensured that the depositors will be serviced quickly and won't be inconvenienced.
That leads customers to have to CARE about whether their bank is good or not
The FDIC works hard to ensure that depositors do not have to care, because lack of confidence in banks causes bank runs and harms the stability of the financial system.
This is vote buying, and sowing uncertainty.
WTF are you talking about? There's no vote buying here. This is how the system always works. Banks fail every week. The FDIC closes them on Friday, "sells" the failed bank for nothing to a healthy institution who opens the doors on Monday, and the failed bank's depositors are made whole, indeed they barely notice the transition. The investors lose everything, and creditors also take a bath, but depositors are good and their confidence in banks undamaged. At worst they grumble that they don't like the new management's fee schedule.
This happens all the time, and the FDIC's brutal efficiency means that it hardly ever makes even local news. Ever noticed that all of the branches in some bank near you suddenly have banners up, covering their old signs with a new name? Nine times out of ten it's because the old bank crashed and burned, just like SVB did.
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> Depositors almost never lose any money, not even those with balances above $250k.
In 2008 they sure did. re: IndyMac - https://en.wikipedia.org/wiki/... [wikipedia.org]
Thank you for demonstrating my point.
The fact that you had to reach back 15 years and into the biggest global banking crisis in a century to find an example of depositors losing money demonstrates just how rare this is.
Re:Not quite (Score:5, Insightful)
"investors, a class which depositors (ESPECIALLY those above $250k) are included in"
A business holding cash so they could cut payroll checks on Friday is in no way investing that money.
An employee whose employer cut payroll checks from an account of a particular bank is in no way a customer of that bank, and it is infeasible that regular employees must be required to track the capitalization of the banks where their employers do business to greater degree than the banks themselves track it.
Re:Not quite (Score:4, Interesting)
Business Owners: We don't need regulations because the Invisible Hand of Capitalism will self correct.
The Invisible Hand of Capitalism self corrects.
Business Owners: We are hurting, we need regulations to make sure this doesn't happen!
At the same time...
Consumers: We want the business to be regulated so I can have confidence in my goods and services.
There is a problems so the government puts in regulations, and bails the company out
Consumers: Why are we spending our tax money on these failing companies.
Everyone wants to Win, Nobody wants to loose. We don't like being in the middle, because we can't win. Where limiting the winners profits, with more safety from loosing, the general middle will go more in an upward direction, most people don't like looking at the big overall picture, and to be truthful, it is hard because we have stake in the game. Sure it is better for the environment to keep your home cool in the winter and warm during the summer. But we like the warm cozy feeling in the winter with the homes above 70f, and in the summer a nice cool 67f is refreshing after walking in from a hot day.
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Capitalism requires the maintenance of some sort of system in which economic players function. The development of stable monetary systems and banks was critical. Insured deposits are part of that.
Capitalism isn't "anything the fuck goes." It's a pretty delicately balanced system of incentives.
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Re:Not quite (Score:5, Informative)
Depositor: a person who keeps money in a bank account.
Investor: a person or organization that puts money into financial plans, property, etc. with the expectation of achieving a profit.
The Difference Between A Depositor And An Investor
Depositor - opens a savings account or time deposit in the Bank and lets his money sleep for a long period of time. His money will grow 0.25% - 1% a year and will be eaten by inflation & taxes.
Investor - still has a Bank acc. (for business/buffer funds) and invests a portion of his funds in long term investment vehicles that has a potential growth of 8-12%/ a year & his money will outpace inflation.
"Depositors don't make money. Only investors make money."
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When you only have two options of party, you probably need to go beyond voting to get stuff done.
A well directed mob doing something legal but terrible like the gamestop thing probably could go very far.
You have *lots* of options (Score:4, Insightful)
And even with that the Dems are much, *much* more constrained when it comes to deregulation. You think those 8 Democrats would've gotten away with killing Dodd-Frank if there were 70 blue senators? They were able to hide behind the 50 or so GOP ones (and Trump) that put the bill up for vote. Without a Republican majority in the House & Senate it never would've gotten out of committee.
Yes, there's stuff like ranked choice that can help. Winner take all voting always creates a 2 party system. And we should look at reforming our government into a parliamentary system at some point (our entire system was set up to protect wealthy landowners). But don't act like there's no differences between the 2 parties.
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I sure would like a low interest loan (Score:2)
Oh, and how about some super low interest loans for my kid to go to grad school so they can actually make a living?
When you give the 1% money at super low interest rates they buy up their competitors and raise prices. It's a taxpay
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So yeah, "That's how capitalism works". Privatize the profits, socialize the losses.
None of the depositors, large or small, will lose a penny. Investors have lost everything they put in. The bank's creditors may lose some money. The FDIC will probably not have to pay out anything. HSBC will reopen the doors right away and depositors won't even be inconvenienced.
This is actually all very normal. Happens every week, and usually doesn't even make the news, not even locally. The FDIC is brutally efficient and effective.
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I get 250k guaranteed back from putting my money in that? From where?
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Care to read the whole subthread?
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Literally, quite literally, look at the very next story in the list.
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Unemployment now: 3.4%
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Not a ridiculous question. It's actually a really smart one, and one that not enough partisan commentators are thinking through. There's a few things going on here.
1. We need to separate individuals from companies. Not all that many individuals have >$250K in a single bank account. LOTS of companies do. You don't need to be a particularly large company to need to have access to $1M+ for regular operations, e.g. payroll and supplies from vendors. Those small companies might not have particularly sophistic
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They already lost ~5% of their assets as far as mark to market value is concerned, that boat sailed.
All this would have allowed them to do is pay out redemptions without realizing the losses immediately. Unless they roll the loan over after a year, they would have had a 10% realized loss on the collateral instead of 5% after a year.
You can't loan yourself out of the red. The only way for the Fed to save them is outright buying their treasuries at par value.