bmcgonig
Thinks s/he gets paid by the post
- Joined
- Aug 31, 2009
- Messages
- 1,578
Depends what she means by bailout. There’s no agreed definition.
Just what we need. More bank runs. Just what I would expect from Vulture Capitalists. The administration should declare a bank holiday to prevent this from happening. Most of these banks will be fine unless there is a run on their assets.Face the Nation on CBS is reporting that tech companies are being told in emails by VC partners to pull money out of regional banks and open accounts and deposit funds at the big four banks.
Please remind him that he still owes me $20 on that bet I won from him!
Depends what she means by bailout. There’s no agreed definition.
Say the baby boomers that have gotten the country into 30 trillion dollars in debt. Current and future generations thank you.
I disagree. If you have raised $10, $30 or $50 million then you sould be able to afford a decent CFO who would know enought to assess the risk. To me this goes to prove that brokered money market funds are safer than bank deposits in excess of the FDIC limit. With the former, at least there are rules that result in prudent asset/liability matching via the various don't break the buck rules. As we now know and should have known, deposits in excess of the FDIC limit are at risk. Besides, there are products out there where you have you money deposited at one bank but the underlying deposits are spread out to stay within the FDIC limits.
NFW we taxpayers should be guaranteeing deposits greater than $250k or bailing out depsositors who ignored the coaverage limits.
Now all of that said, I think that many of the uninsured depositors will be made whole or close through the runoff of SVB's assets after then insured depositors are paid.
Me either but stranger things have happened. In order for that to happen Congress would have to change the law that governs the FDIC which is not at all likely to happen. The FDIC cannot simply decide to hand out money over the $250K limit.I can't see a scenario where account holders who exceeded the FDIC limits will be made whole.
Just what we need. More bank runs. Just what I would expect from Vulture Capitalists. The administration should declare a bank holiday to prevent this from happening. Most of these banks will be fine unless there is a run on their assets.
A very short stroll through FB this morning implies that tomorrow/next week is going to be a $h!+ show. Everybody and their dog is moving their money from "little" bank A (SVB was the 15th? largest bank) to big bank B. Sounds benign but that is a run on the little banks. SVB is just the fuse.
Who's placing bets on another Black Monday and a banking holiday by Weds/Thurs in celebration of St. Patricks Day?
I can't see a scenario where account holders who exceeded the FDIC limits will be made whole. That did not happen in 2008/2009. I can't see treasury infusing capital and making SVB a viable bank again. The assets SVB are holding are safe treasuries but they never counted on the duration risk in a rising rate environment. While most individual investors would never lock 1.79% for 10 years or 1.25% for 30 years, it's pretty tragic that a Bank would lock tens of billions in low coupon debt without interest rate hedges at those long durations. These were not exactly low wage employees making those decisions.
I would argue that the $250k FDIC limit should be raised or at least be indexed to inflation. $250k in 2011 (when the limit was permanently raised) is not the same as $250k today.
So...........I read this as a "buying opportunity" coming in the next three or six weeks. Wait for the smoke to clear in the next two weeks and then go shopping?
I did quite well three years ago this month during the Covid dip.
There is an easy, cumbersome fix. The fed cuts interest rates to 0 %. Do a risk assessment of bonds in all the banks balance sheet and identify those who are weak. Let them re-caliber for a rising interest rate environment and then slowly raise them again.
This is in jest, right?
Same.I agree, and when Chairman Powell calls me to ask if they should bail out the depositors, my answer will be “no”.
There is an easy, cumbersome fix. The fed cuts interest rates to 0 %. Do a risk assessment of bonds in all the banks balance sheet and identify those who are weak. Let them re-caliber for a rising interest rate environment and then slowly raise them again.
This is similar logic to the linked article, and Ally is flagged as one of the banks with a high risk.If I were looking to short, I might look at Ally. As of their December 31, 2022 10K (https://d18rn0p25nwr6d.cloudfront.net/CIK-0000040729/f4eb4064-f7ec-4ee1-962f-fe4b69d8a58d.pdf), their unrealized losses on "available for sale" securities appear to be about 25% of their Tier 1 capital (compare the AFS delta 2021 to 2022 on page 117 to Tier 1 capital on page 101. (- $4 billion/$19.2 billion)
That is worse than SIVB, where unrealized AFS losses were about 10% of Tier 1 capital (https://d18rn0p25nwr6d.cloudfront.net/CIK-0000719739/f36fc4d7-9459-41d7-9e3d-2c468971b386.pdf) (compare Footnote 3 on page 49 to Tier 1 capital on p.84 (-$1.7 billion/$17.5 billion)
The depositor profile between the two may be sufficiently different that it is not a problem, but it could drive the market on Monday.
Or I could be all wet in my interpretation of the numbers.
Me either but stranger things have happened. In order for that to happen Congress would have to change the law that governs the FDIC which is not at all likely to happen. The FDIC cannot simply decide to hand out money over the $250K limit.
I would argue that the $250k FDIC limit should be raised or at least be indexed to inflation. $250k in 2011 (when the limit was permanently raised) is not the same as $250k today.
Me either but stranger things have happened. In order for that to happen Congress would have to change the law that governs the FDIC which is not at all likely to happen. The FDIC cannot simply decide to hand out money over the $250K limit.