"As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer," the statement added.
Looks like the feds and the Fed are using the latter's money so far. Someone who better understands economics can correct me if I'm wrong but so far so good as far as not using taxpayer money to bail these scumbags out.
I think things start to get interesting though if the regulator can't raise enough money from the sale of SVB's assets to offset the deposits. Then the government will have to cover the deposits with "tax-payer dollars"; however, this was always going to be the case with the $250k deposit insurance. That is be definition tax-payers covering deposit losses.
I think things start to get interesting though if the regulator can't raise enough money from the sale of SVB's assets to offset the deposits.
The Fed can cheat on that by taking the bank's held-to-maturity securities onto its own balance sheet. It's a bailout "in the present" but will pay itself off because the Treasury never defaults.
They're providing funds based on the face value of the bonds purchased which won't reach maturity for 10 years instead of the actual market value of said bonds.
Imagine if you went into a bank to refinance and said you wanted the value of your home ten years in the future, would any bank accept such a deal?
In a capitalist system, everything is worth what the market values it at. That's why in the housing collapse in the mid-2000s people were upside down on their mortgages. The market correction caused the market value of those homes to drop below the amount owed on the existing mortgages.
What's going on with the fed and SVB is a distortion of capitalism and will only create bigger problems in the future.
Yep. That's what caused this in the first place, at least partly. But in this case apparently the funds being used for the bailout 1. come from a fund the banks themselves fund, and 2. only protect depositors, everyone else is being wiped out.
Saw speculation online that letting tech-connected banks fail is a lead-up to implementing fedcoin and getting rid of crypto. Will be interesting to watch.
"The Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors."
Interesting, they are expecting a run? I wonder how much they are floating.
According to CNBC, "Signature is one of the main banks to the cryptocurrency industry. As of Dec. 31, Signature had $110.4 billion in total assets and $88.6 billion in total deposits, according to a securities filing."
Lee Fang reported, "The bank that was just closed, Signature Bank, is the one that Barney Frank joined after retiring from Congress."
Hmm. Banks are bulletproof. Taxpayers assume all risk, all the time.
Looks like the feds and the Fed are using the latter's money so far. Someone who better understands economics can correct me if I'm wrong but so far so good as far as not using taxpayer money to bail these scumbags out.
I think things start to get interesting though if the regulator can't raise enough money from the sale of SVB's assets to offset the deposits. Then the government will have to cover the deposits with "tax-payer dollars"; however, this was always going to be the case with the $250k deposit insurance. That is be definition tax-payers covering deposit losses.
I’d be shocked if they did, but they could go the Covid route and simply print more money
The Fed can cheat on that by taking the bank's held-to-maturity securities onto its own balance sheet. It's a bailout "in the present" but will pay itself off because the Treasury never defaults.
It's only cheating if the fed overpays for them, isn't it?
That's exactly what's happening.
They're providing funds based on the face value of the bonds purchased which won't reach maturity for 10 years instead of the actual market value of said bonds. Imagine if you went into a bank to refinance and said you wanted the value of your home ten years in the future, would any bank accept such a deal?
In a capitalist system, everything is worth what the market values it at. That's why in the housing collapse in the mid-2000s people were upside down on their mortgages. The market correction caused the market value of those homes to drop below the amount owed on the existing mortgages.
What's going on with the fed and SVB is a distortion of capitalism and will only create bigger problems in the future.
Keep in mind, printing another trillion is "not using taxpayer money."
Yep. That's what caused this in the first place, at least partly. But in this case apparently the funds being used for the bailout 1. come from a fund the banks themselves fund, and 2. only protect depositors, everyone else is being wiped out.
Saw speculation online that letting tech-connected banks fail is a lead-up to implementing fedcoin and getting rid of crypto. Will be interesting to watch.
Interesting, they are expecting a run? I wonder how much they are floating.
Another crypto tied domino. More to come.
That's two. I've seen the names of two more floated.
I've seen what happened last time. I don't think anyone's going to learn this time, either.
First Republic?