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Silicon Valley Bank depositors will have access to 'all of their money,' regulators announced

  

Category:  News & Politics

Via:  perrie-halpern  •  last year  •  74 comments

By:   Brian Cheung and Rob Wile

Silicon Valley Bank depositors will have access to 'all of their money,' regulators announced
Silicon Valley Bank depositors will have access to "all of their money," federal regulators announced on Sunday.

S E E D E D   C O N T E N T



Federal regulators stepped in Sunday to back all Silicon Valley Bank deposits, resolving a key uncertainty surrounding the second-largest bank failure in U.S. history hours before global stock markets resumed trading.

The U.S. Treasury, the Federal Reserve and the Federal Deposit Insurance Corp. said the government would back Silicon Valley Bank deposits beyond the federally insured ceiling of $250,000. The decision addressed concerns around the fate of uninsured funds held at the Santa Clara, California-based bank — the country's 16th largest — which had $209 billion in assets and more than $175 billion in deposits.

"Depositors will have access to all of their money starting Monday, March 13," the agencies said in a joint statement Sunday evening. "No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer."

Senior management of SVB will be removed, the statement said.

The announcement marks an extraordinary step by federal regulators to calm financial markets before Monday trading resumed in Asia and Europe, followed by North America. Dow futures jumped more than 150 points Sunday night following news of the backstop plan.

Major markets in the Asia-Pacific region were mixed on Monday morning, with Japan's Topix recording the biggest loss at about 2%. Banks such as HSBC, Standard Chartered and DBS were down as much as 1.06% as of midday amid fears of contagion.

President Joe Biden said late Sunday that he was pleased.

"The American people and American businesses can have confidence that their bank deposits will be there when they need them," he said in a statement. "I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again."

He said he would speak more about banking security Monday morning.

Some Silicon Valley Bank customers and staffers breathed sighs of relief after the regulators' announcement.

Vanessa Pham said she was preparing for the possibility that Omsom, the Asian food products business she co-founded that banks with SVB, might run out of money within anywhere from two weeks to three months.

"I will be patiently, eagerly waiting the actual deposit in our bank and our access with it," Pham said.

A source inside Silicon Valley Bank who worked as a managing director in a regional office before Friday's shutdown said he was happy for his clients. He welcomed what he called a "favorable resolution," adding that he feared tens of thousands of jobs could have been lost if uninsured deposits were not covered.

A second SVB employee said Sunday, "The feeling that clients were going to lose money and that they were facing all this disruption on our behalf I think crushed people. So now they're at least going to be made whole for their deposits, which is a huge sense of relief."

The employee added that while depositors have been guaranteed, the bank's employees — who SVB has said number more than 8,500 — face doubts about their jobs: "There's still a lot of uncertainty. Management was just fired as a part of that, and we still might get bought."

Federal regulators also said Sunday that they took control of a second bank, New York's Signature Bank, which is roughly half the size of SVB and had become a hub for cryptocurrency financing. They said a similar guarantee for Signature Bank depositors would be instituted in the process of shutting it down.

A senior Treasury official told reporters Sunday that regulators are watching other banks that may have similar issues. As part of coordinated interagency efforts to backstop any further bank failures, the Fed has set up an emergency lending program to give banks expanded and quick access to funds "in times of stress."

The official also did not rule out the possibility of finding a buyer for either SVB or Signature Bank.

A federal guarantee for SVB depositors was the hoped-for solution among tech industry players and pundits calling for a rescue of the bank's corporate and startup clients, many of whom had all but frozen their operations in anticipation of what would come next for a bank that held much of their assets.

The intervention forced Washington officials to invoke a "systemic risk exception," an extraordinary measure allowing financial regulators to step in without congressional action. The move required joint approval from the Federal Reserve, the FDIC and the Treasury in consultation with Biden.

Banking officials in the United Kingdom were watching the situation with thoughts of their own technology economy.

"You know, there's been a lot of concern because Silicon Valley Bank in the UK, like in the U.S., is very important to a large number of technology companies, which obviously employ many people in high skilled jobs," British Prime Minister Rishi Sunak told NBC News's Lester Holt on Sunday evening.

He said his government was determined to support the well being of the UK tech sector and "hopefully, we'll announce those plans relatively soon. "


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Sean Treacy
Professor Principal
1  Sean Treacy    last year

Thankfully Biden  took care of of the venture capitalists and tech moguls. 

 
 
 
JohnRussell
Professor Principal
1.1  JohnRussell  replied to  Sean Treacy @1    last year

Proving once again that Biden is not a leftist or a progressive. 

But your pipedream that a Republican president would have done differently is humorous. 

 
 
 
Sean Treacy
Professor Principal
1.1.1  Sean Treacy  replied to  JohnRussell @1.1    last year
roving once again that Biden is not a leftist or a progressive. 

He's a national socialist, which is why progressives and leftists  seem to almost uniformly support this. This is corporatism in action.  

 
 
 
Vic Eldred
Professor Principal
1.2  Vic Eldred  replied to  Sean Treacy @1    last year

Nope. These banks were selling off their shares before going belly up.

They were woke companies, Thus the question:

Will Biden's woke DOJ go after them?

 
 
 
Ozzwald
Professor Quiet
1.2.1  Ozzwald  replied to  Vic Eldred @1.2    last year
They were woke companies

Define "woke" in this context.

 
 
 
SteevieGee
Professor Silent
1.3  SteevieGee  replied to  Sean Treacy @1    last year

It's a pretty simple idea really.  You liquidate the $209B in assets, pay the depositors their $175B that is theirs, and the rest goes to pay creditors.  It's a win for everybody except for the bank execs who caused this mess to begin with.  Thanks to Joe and Janet.

 
 
 
Sparty On
Professor Principal
1.3.1  Sparty On  replied to  SteevieGee @1.3    last year

Yep, unless of course you were a customer with more than 250k in deposits.    Which is a lot of small businesses.

I read somewhere that 94% of their deposits were uninsured by FDIC where most banks are closer to 50%.

Not good, not good at all.

 
 
 
SteevieGee
Professor Silent
1.3.2  SteevieGee  replied to  Sparty On @1.3.1    last year

Did you read the same article that I did?

The U.S. Treasury, the Federal Reserve and the Federal Deposit Insurance Corp. said the government would back Silicon Valley Bank deposits beyond the federally insured ceiling of $250,000.
 
 
 
Sparty On
Professor Principal
1.3.3  Sparty On  replied to  SteevieGee @1.3.2    last year

Promises, promises.    They’ll  say anything to avoid a panic, which is good but I’ll believe the over 250k thing when it actually happens

 
 
 
Texan1211
Professor Principal
1.3.4  Texan1211  replied to  SteevieGee @1.3.2    last year
The U.S. Treasury, the Federal Reserve and the Federal Deposit Insurance Corp. said the government would back Silicon Valley Bank deposits beyond the federally insured ceiling of $250,000.

Didn't Biden say that no taxpayer dollars were going to be used on this?

Where does the government get the money?

 
 
 
SteevieGee
Professor Silent
1.3.5  SteevieGee  replied to  Texan1211 @1.3.4    last year
Where does the government get the money?

From premiums.  Do you know how insurance works?

 
 
 
Texan1211
Professor Principal
1.3.6  Texan1211  replied to  SteevieGee @1.3.5    last year
From premiums. 

The premiums that capped liability at 250K?

Do you know how insurance works?

Yes. Do you know how taxes work?

 
 
 
Drinker of the Wry
Junior Expert
1.3.7  Drinker of the Wry  replied to  SteevieGee @1.3.5    last year

From premiums.  Do you know how insurance works?

Do the premiums include those deposits that exceed the $250,000 insured deposits?

 
 
 
SteevieGee
Professor Silent
1.3.8  SteevieGee  replied to  Texan1211 @1.3.6    last year

For anything over the 250k the government will make them sell off their assets to repay depositors.  They have $250 billion in assets.  It will cover the depositors.  It will also cover some of their liabilities.  In a perfect world it would leave the rich assholes that caused this mess penniless.

 
 
 
Texan1211
Professor Principal
1.3.9  Texan1211  replied to  SteevieGee @1.3.5    last year
Do you know how insurance works?

Yes, I do.

I know that if you take out a life insurance policy on your wife for 250K and she dies, you ain't getting 750k from the insurance company.

 
 
 
Jack_TX
Professor Quiet
1.4  Jack_TX  replied to  Sean Treacy @1    last year
Thankfully Biden took care of of the venture capitalists and tech moguls

More accurately, he took care of their workers. 

The fact that most of them tend to vote Democrat is entirely beside the point, I'm sure.....

 
 
 
Kavika
Professor Principal
2  Kavika     last year

It was the correct thing to do and the US taxpayer isn't on the hook for any of the monies. The execs and shareholders in SVB will suffer the loss and the FDIC will recoup the monies through increased premiums on the banks.

The Bank of London has made an offer to take over the SVB London operation.

 
 
 
Sean Treacy
Professor Principal
2.1  Sean Treacy  replied to  Kavika @2    last year
t was the correct thing to do a

Right. If the US government won't look out for the Mitt Romney's of the world, who will?  We can all sleep better knowing Bain Capital won't suffer any losses.  Just like the US Government steps in to ensure Tom the Carpenter doesn't suffer any losses when he doesn't have enough insurance to make him whole. 

e US taxpayer isn't on the hook for any of the monies

Yeah, creating  a new precedent of unlimited guarantees on deposits no matter how certainly won't come back to bite. If there's one thing we know, its bailouts teach businesses to avoid risk. 

recoup the monies through increased premiums on the banks

So not taxpayers, just the few Americans who use banks.

 
 
 
SteevieGee
Professor Silent
2.1.1  SteevieGee  replied to  Sean Treacy @2.1    last year
Right. If the US government won't look out for the Mitt Romney's of the world, who will? 

If Mitt Romney puts his money in the bank shouldn't he be allowed to withdraw it if he wants to?

 
 
 
SteevieGee
Professor Silent
2.1.2  SteevieGee  replied to  Sean Treacy @2.1    last year

So not taxpayers, just the few Americans who use banks.

 

I don't use banks.  Back in 2008 during the last greed fed banking fiasco, when banks were taking taxpayer money and using it to pay bonuses to their executives, I withdrew all my business from the bank and deposited it into small, local, depositor owned and non-profit credit unions.  Now instead of paying fees for everything I get dividends.

 
 
 
Jack_TX
Professor Quiet
2.1.3  Jack_TX  replied to  Sean Treacy @2.1    last year
Yeah, creating a new precedent of unlimited guarantees on deposits no matter how certainly won't come back to bite. If there's one thing we know, its bailouts teach businesses to avoid risk. 

I'm not sure it's actually a bailout. 

It's almost surely going to end up as a forced sale/merger.  HSBC has already been lined up to take over the UK division.  We will probably see Chase or BoA or some huge US bank take over US operations within the next few days. They have more assets than deposits, so it's not like there isn't any money to distribute.

It's reportedly more of a cash flow crisi, brought about in part by owning too many US Govt bonds, which are generally not considered risky assets.

The management has already been fired.  

So it seems more like a "you fucked up, so we're going to feed you to your larger competitors before you cost us money" situation.

 
 
 
SteevieGee
Professor Silent
2.1.4  SteevieGee  replied to  Jack_TX @2.1.3    last year

I think you got it right Jack.

 
 
 
Split Personality
Professor Guide
2.1.5  Split Personality  replied to  SteevieGee @2.1.4    last year

We can add Signature Bank to the list and blame then for being too heavy in "crypto assets".

 
 
 
Sparty On
Professor Principal
2.1.6  Sparty On  replied to  Split Personality @2.1.5    last year

And a very familiar name on that Board.

Barney Frank ... Mr congressional bank regulator.

Doh!

 
 
 
Texan1211
Professor Principal
2.1.7  Texan1211  replied to  Sparty On @2.1.6    last year

Barney will become a pariah to Democrats now that he has said the 2018 law had no effect on what happened to these 2 banks, contradicting some prominent Dems.

 
 
 
Kavika
Professor Principal
3  Kavika     last year
Right. If the US government won't look out for the Mitt Romney's of the world, who will?  We can all sleep better knowing Bain Capital won't suffer any losses.  Just like the US Government steps in to ensure Tom the Carpenter doesn't suffer any losses when he doesn't have enough insurance to make him whole. 

Did Tom the Carpenter lose any money?

Yeah, creating  a new precedent of unlimited guarantees on deposits no matter how certainly won't come back to bite. If there's one thing we know, its bailouts teach businesses to avoid risk. 

Yes, it is unprecedented but what is your solution? Do you have one?

So not taxpayers, just the few Americans who use banks.

That has been part of FDIC for decades. 

 
 
 
Sean Treacy
Professor Principal
3.1  Sean Treacy  replied to  Kavika @3    last year
Did Tom the Carpenter lose any money

Of course he can.  Do you think insurance covers every loss? If Tom had a policy for $250,000 on property that costs $300,000 does the government make him whole?

If he had 300,000 in say the First Topeka Bank when it failed  will the government make him whole?

Why does it for Venture Capitalists? 

Yes, it is unprecedented but what is your solution? Do you have one?

Let the system work as it was designed to. 

. That has been part of FDIC for decades. 

I have no idea what you are talking about. 

 
 
 
Kavika
Professor Principal
3.1.1  Kavika   replied to  Sean Treacy @3.1    last year
Of course he can.  Do you think insurance covers every loss? If Tom had a policy for $250,000 on property that costs $300,000 does the government make him whole?

If he had 300,000 in say the First Topeka Bank when it failed  will the government make him whole?

Why does it for Venture Capitalists? 

I asked if he did lose money not if he can. In this instance, everyone got protected, from $1 dollar on deposit to all above $250,000. So Tom got covered.

Let the system work as it was designed to. 

Excellent, Sean. Feel free to contact Yellen et all and put forth your idea.

I have no idea what you are talking about. 

That the feds have been having the bank deposit premiums for FDIC coverage.

Since this isn't near the coverage that would occur if say and JP Morgan went under I am sure that your reaction to their rescue would be ''hair on fire''.

 
 
 
SteevieGee
Professor Silent
3.1.2  SteevieGee  replied to  Sean Treacy @3.1    last year
If he had 300,000 in say the First Topeka Bank when it failed  will the government make him whole?

You think this bank only serves venture capitalists?  This plan will help Tom the carpenter too.  Just like it's helping Vanessa Pham who is mentioned in the article.  This was clearly a crisis for many of these depositors for whom even waiting for the insurance payout could be catastrophic for their businesses.  It looks like it's going to be resolved relatively painlessly now.  I know you were hoping for a train wreck to blame Biden for but he's outsmarted you again.

 
 
 
Sean Treacy
Professor Principal
3.1.3  Sean Treacy  replied to  Kavika @3.1.1    last year
So Tom got covered.

And  that's a strawman!

Feel free to contact Yellen et all and put forth your idea

My bad. You asked a question and I answered it.  

hat the feds have been having the bank deposit premiums for FDIC coverage.

No shit. You keep responding with statements that have nothing to do with what I wrote. Do you imagine I claimed something else? Or do I need to explain every assumption that I think informed people already understand? 

 
 
 
Sean Treacy
Professor Principal
3.1.4  Sean Treacy  replied to  SteevieGee @3.1.2    last year
his plan will help Tom the carpenter to

Really? How would it have helped the small businessmen at the last regional bank that closed (happens regularly) with deposits in excess of insurance. 

 Imagine arguing that its mainly small businesses banking at a Bank for venture capitalists.  It's amazing how well cherry picking a single client works to misinform people. 

So the Feds are going to pay back all the small businesses who performed services for the bank and are owed money? 

I know you were hoping for a train wreck to blame Biden for but he's outsmarted you again.

I know you were hoping for a train wreck to blame Biden for but he's outsmarted you again.

I get all BIden cares about is propping up the economy for another 18 months. If you think creating yet another moral hazard counts for massive corporations counts as "outsmarting" someone you are being bamboozled. I actually care about what this precedent means for our country going forward, unlike yourself who just wants to "own the cons"

 
 
 
Texan1211
Professor Principal
3.1.5  Texan1211  replied to  SteevieGee @3.1.2    last year
I know you were hoping for a train wreck to blame Biden for but he's outsmarted you again.

Said no one, ever, truthfully.

 
 
 
Kavika
Professor Principal
3.1.6  Kavika   replied to  Sean Treacy @3.1.3    last year
Or do I need to explain every assumption that I think informed people already understand? 

LOL, are you counting yourself as one of the ''informed''?

 
 
 
evilone
Professor Guide
3.1.7  evilone  replied to  Kavika @3.1.1    last year
I asked if he did lose money not if he can. In this instance, everyone got protected, from $1 dollar on deposit to all above $250,000. So Tom got covered.

One of the bank depositors was Etsy - they stopped paying their customers on Friday. Hopefully now those mom and pop stores will be made whole again.

 
 
 
SteevieGee
Professor Silent
3.1.8  SteevieGee  replied to  Sean Treacy @3.1.4    last year
Really? How would it have helped the small businessmen at the last regional bank that closed (happens regularly) with deposits in excess of insurance.

That's why I use more than 1 credit union.  Money in credit unions is also insured, not by the FDIC but by the NCUA.  It's a similar setup with a $250k limit.

 
 
 
Sparty On
Professor Principal
4  Sparty On    last year

And another woke gone and another woke gone

Another woke bites the dust .....

 
 
 
pat wilson
Professor Participates
4.1  pat wilson  replied to  Sparty On @4    last year

Another cerebral contribution ?

 
 
 
Sparty On
Professor Principal
4.1.1  Sparty On  replied to  pat wilson @4.1    last year

Thx, I thought so as well.

It’s always nice to get helpful feedback from our friends on the left.

 
 
 
Hallux
Masters Principal
4.1.2  Hallux  replied to  pat wilson @4.1    last year

He's giving DeSantis competition for most utterances of "woke' in the Guiness record book.

 
 
 
Sparty On
Professor Principal
4.1.3  Sparty On  replied to  Hallux @4.1.2    last year

More press from my friends on the left.    

Thx again for making me the topic.

 
 
 
Hallux
Masters Principal
4.1.4  Hallux  replied to  Sparty On @4.1.3    last year

Anytime, just keep posting those unimaginative 'gems'.

 
 
 
Sparty On
Professor Principal
4.1.5  Sparty On  replied to  Hallux @4.1.4    last year

Opinions do vary but haters always gotta hate so ..... carry on .....

 
 
 
Tessylo
Professor Principal
4.1.6  Tessylo  replied to  Hallux @4.1.2    last year

jrSmiley_86_smiley_image.gif

 
 
 
Sean Treacy
Professor Principal
5  Sean Treacy    last year

Speaking of moral hazards, Bitcoin is up 18.6% in the last 24 hours.  

The market knows what lesson to take from this bailout.

So with the US Treasury now backstopping 20 trillion dollars in deposits there's no way something can go wrong.

 
 
 
Sparty On
Professor Principal
5.1  Sparty On  replied to  Sean Treacy @5    last year

Regardless, Biden will still blame Trump for any bad news while taking all credit for the good.

 
 
 
afrayedknot
Junior Quiet
5.1.1  afrayedknot  replied to  Sparty On @5.1    last year

Welcome to any election ever. 

 
 
 
Sparty On
Professor Principal
5.1.2  Sparty On  replied to  afrayedknot @5.1.1    last year

Can’t argue with that but Biden takes it to a new level.

 
 
 
Tessylo
Professor Principal
5.1.4  Tessylo  replied to  Split Personality @5.1.3    last year

Just like the 'relaxing' of regulations and that derailment, there was also another derailment recently by the same company.

They're all so eager to blame Biden yet this all happened on the former 'president's' watch.

 
 
 
Snuffy
Professor Participates
5.1.5  Snuffy  replied to  Split Personality @5.1.3    last year

Does it also put a spotlight on the Democrats who co-sponsored the bill?  It was a bill started in the Senate, had 26 total co-sponsors and passed both the House and the Senate with bipartisan votes.  But hey, why break a good playbook.  When it looks bad for your re-election blame the prior administration.

 
 
 
Tessylo
Professor Principal
5.1.6  Tessylo  replied to  Snuffy @5.1.5    last year

Always defending the indefensible.

Were the several Democrats Sinema and Manchin?

 
 
 
Texan1211
Professor Principal
5.1.7  Texan1211  replied to  Snuffy @5.1.5    last year
Does it also put a spotlight on the Democrats who co-sponsored the bill?

Not if they can just blame Trump for the bipartisan legislation.

 
 
 
Drinker of the Wry
Junior Expert
5.1.8  Drinker of the Wry  replied to  Split Personality @5.1.3    last year

Mark doesn’t know how to use hyperbole:

One of those Democrats, Sen. Mark Warner of Virginia, defended the legislation Sunday when asked if he regrets supporting it.

"I do think these midsized banks needed some regulatory relief," Warner said on ABC's "This Week," adding that the law "put in place an appropriate level of regulation on midsized banks."

Warner said there would be "a lot of time to look back on what the regulators did and didn’t do, and why the bank management didn't get this right." He called it a matter of "banking 101, managing interest rates risks."
 
 
 
Split Personality
Professor Guide
5.1.9  Split Personality  replied to  Tessylo @5.1.6    last year

Yea, one was Sinema but she was a House Rep then.

Another proponent of the bank deregulation measure was Sen. Kyrsten Sinema, I-Ariz., who was a member of the House and running for Senate at the time.

Rep. Ruben Gallego, D-Ariz., who   is running for Sinema's seat in 2024 , voted against the 2018 legislation and issued a statement Monday   attacking   her.

“What’s the difference between Senator Sinema and me?” Gallego said. “When bank lobbyists asked me to weaken bank regulations, I said no. When they asked Senator Sinema, she asked how much —and voted yes. Now we are all going to pay for her mistake.

Silicon Valley Bank collapse puts new spotlight on Trump banking law (msn.com)
 
 
 
Texan1211
Professor Principal
5.1.10  Texan1211  replied to  Split Personality @5.1.9    last year

Bipartisan legislation.

No spinning will ever make this Trump's fault.

 
 
 
Split Personality
Professor Guide
5.1.11  Split Personality  replied to  Snuffy @5.1.5    last year
Does it also put a spotlight on the Democrats who co-sponsored the bill? 

Why, yes, yes it does.  they appear to have all caved to Wall Street's belief that Frank Dodd was a knee jerk reaction to 2008.

 
 
 
Right Down the Center
Junior Guide
5.1.12  Right Down the Center  replied to  Tessylo @5.1.4    last year

Maybe they don't buy into "the buck stops with the last guy".

 
 
 
Jack_TX
Professor Quiet
5.1.13  Jack_TX  replied to  Texan1211 @5.1.10    last year
Bipartisan legislation. No spinning will ever make this Trump's fault.

You're talking about people who still blame W for the 2008 housing crisis... enabled by a bipartisan law Clinton signed.

 
 
 
Jack_TX
Professor Quiet
5.1.14  Jack_TX  replied to  Split Personality @5.1.3    last year

What specific provisions in the "Trump banking law" would have prevented this bank failure?

 
 
 
Texan1211
Professor Principal
5.1.15  Texan1211  replied to  Jack_TX @5.1.14    last year
What specific provisions in the "Trump banking law" would have prevented this bank failure?

Barney Frank is defending the law he voted for even still today. He said it had no effect on the two bank closings.

 
 
 
Jack_TX
Professor Quiet
5.1.16  Jack_TX  replied to  Texan1211 @5.1.15    last year
He said it had no effect on the two bank closings.

Really?  Well that IS interesting.

I'm wondering if any of the folks here who seem convinced this was all Trump's fault can tell us what exactly happened that would have been prevented.  Or indeed what the law said.  Or what Dodd Frank said.  Or what Gramm Leach Bliley said.  Or how a bank can lose money invested in US Treasury bonds.  Or the difference between a savings account and a money market fund.  Or how much their brokerage accounts are insured for, by whom, and against what.

I'm sure they understand all of those things, given their fervent opinions on this situation.

 
 
 
Split Personality
Professor Guide
5.1.17  Split Personality  replied to  Jack_TX @5.1.16    last year

Silvergate Bank failed first.  Heavily invested in the next big thing, crypto.

Then SVB. The Tech industry bank.

Then Signature.  Also too invested in Crypto.

None of them would have been allowed to take on great risk under Dodd Frank.

They did not diversify.

They gambled with investors and depositors $$ violating the first rule of banking.

President Trump on Thursday signed a bipartisan bill to loosen key portions of the Dodd-Frank Act of 2010, cementing the first major changes to President Obama’s landmark banking law.

Trump enacted the legislation during a White House ceremony two days after the House of Representatives passed the bill to exempt dozens of banks from strict federal regulation.

Trump had pledged to “dismantle” Dodd-Frank, a law long targeted by Republicans, and touted the bill he signed as the first step in that process. While the bill will release dozens of banks from stronger Federal Reserve oversight, it falls well short of the president’s vow to repeal and replace Dodd-Frank.

{mosads}“We’ve kept a lot of promises,” Trump said. “This is truly a great day for Americans, and a great day for workers and small businesses across the nation.”

The bill signed by Trump was the product of years of bipartisan negotiations between Republican senators opposed to the entire law and moderate Democrats concerned about its impact on community banks and credit unions. The narrow GOP majority in the Senate made it impossible to pass a Dodd-Frank rollback without the support of moderate Democrats.

The legislation was introduced in November by Senate Banking Committee Chairman Mike Crapo (R-Idaho) and a group of moderate Democrats on the panel, including Sens. Heidi Heitkamp (N.D.), Jon Tester (Mont.), Joe Donnelly (Ind.) and Mark Warner (Va.).

Trump on Thursday praised “a lot of great Democrats” who had written the bill, but did not invite most of its Democratic authors to the signing ceremony.

Trump signs Dodd-Frank rollback | The Hill

I am guessing that Tester and others are now grateful they were not invited to the signing.

 
 
 
Split Personality
Professor Guide
5.1.18  Split Personality  replied to  Split Personality @5.1.17    last year

Sometimes it seems like a cycle of financial bubbles that burst and the appearance of GOP led charge decades later to overturn the "onerous laws" only to have another financial crisis repeat the same cycle.

Now Warren, Sanders et al will probably prevail in reinstating some of Dodd Frank, maybe...

What would you rather have, sound financial regulation or book bannings and bathroom laws or drag queen contests banned...

Seems like we need to get our collective priorities together under the protection of the Constitution.

Just my opinion.

 
 
 
Jack_TX
Professor Quiet
5.1.19  Jack_TX  replied to  Split Personality @5.1.17    last year
Silvergate Bank failed first.  Heavily invested in the next big thing, crypto.

None of Silvergate Bank's money was invested in crypto.

Then SVB. The Tech industry bank.

Who experienced a run because their super large, super stable customers were worried about having so much money uninsured.

Then Signature.  Also too invested in Crypto.

Again, not invested in crypto.  Again, caught in a run because another bank had difficulty.

Silvergate and Signature provided bank accounts where people who did invest in crypto could store their money in USD.

They gambled with investors and depositors $$ violating the first rule of banking.

SVB invested depositor money in US Treasuries.  It's not like they were buying credit default swaps on faulty mortgages.  

Barney Frank himself  (the "Frank" of "Dodd-Frank") said Signature was liquid, so I'm not sure Dodd-Frank was the security blanket some people imagine.

 
 
 
Split Personality
Professor Guide
5.1.20  Split Personality  replied to  Jack_TX @5.1.19    last year

Forbes and others disagree.

  • Silvergate and Signature were the two main banks for crypto companies, while Silicon Valley Bank had a lot of crypto startups and VCs as customers.
  • The failure of the crypto banking trifecta rippled into the stablecoin market over the weekend.
  • By Sunday night, when the feds stepped in to backstop deposits at Signature and SVB, cryptocurrencies were rallying and the stablecoins had regained their pegs.

What the failures of Signature, SVB and Silvergate mean for the crypto sector (msn.com)

Silvergate And Signature's Demise May Torpedo A Key Crypto Growth Driver (forbes.com)

You can argue what "too invested in crypto" means,

but bank panics aren't driven by facts

they are driven by misconception and fear.

 
 
 
Jack_TX
Professor Quiet
5.1.21  Jack_TX  replied to  Split Personality @5.1.20    last year
Forbes and others disagree.

Disagree with what, precisely?

Silvergate's business model was to pay depositors almost no interest, then invest those deposits into highly stable assets...like govt bonds.  They attracted depositors because they were one of the only banks that would allow people to move money in and out of crypto exchanges.

None of their money was invested in crypto.  None of their deposits were invested in crypto.  They were the place people kept their money before and after they traded crypto.

When FTX went under, lots of people realized that crypto was only ever a huge scam and took their money out, creating a run on the bank.  When Silvergate went under, tech industry depositors in SVB panicked and created a run on that bank, which then bled to Signature.

There is nothing in Dodd-Frank about crypto.  There is nothing in Dodd-Frank prohibiting banks from investing deposits in US Treasuries.  There is nothing in Dodd-Frank that prohibits a bank from having huge, highly stable clients from the same industry.

There IS a provision in the FDIC Improvement Act (1991) which allows/requires regulators to step in quickly to keep FDIC claims at a minimum... which they have done... which is why only the shareholders are losing any money.  So the regulations we have are working the way they are supposed to.  

If you want to talk about a failure of regulation, fine.  Talk about the failure to understand or regulate or even acknowledge cryptocurrency as it became a trillion-dollar house of cards, and how we allowed one guy to steal $9 billion.  

Then let's talk about the congresspeople tasked with oversight of banks who can't do basic math on their whiteboard when questioning bank CEOs, or who don't understand the difference between the fed funds rate and the discount rate.  Then let's discuss whether or not we trust people with such limited understanding of their own money to make any sort of effective policy regarding yours or mine.  

 
 
 
Split Personality
Professor Guide
5.1.22  Split Personality  replied to  Jack_TX @5.1.21    last year

Had these banks still been covered by Dodd Frank would they have passed the mandatory stress tests?

Yes or no?

Then let's talk about the congresspeople tasked with oversight of banks who can't do basic math on their whiteboard when questioning bank CEOs, or who don't understand the difference between the fed funds rate and the discount rate.  Then let's discuss whether or not we trust people with such limited understanding of their own money to make any sort of effective policy regarding yours or mine.

Welcome to America where folks like failed restauranters and college bartenders can get elected to Congress and assigned to committees.

 
 
 
Jack_TX
Professor Quiet
5.1.23  Jack_TX  replied to  Split Personality @5.1.22    last year
Had these banks still been covered by Dodd Frank would they have passed the mandatory stress tests? Yes or no?

Yes.

Welcome to America where folks like failed restauranters and college bartenders can get elected to Congress and assigned to committees.

*sigh*  

I know.....  

I know......

WTF are we doing?

 
 
 
Split Personality
Professor Guide
5.1.24  Split Personality  replied to  Jack_TX @5.1.23    last year
Yes.

The article says "probably".  

This article says that they were just about even, maybe, but what killed them was their client base who all had the same habits and the same social networks.

If you’re looking for reasons for the f ailure of Silicon Valley Bank , which was taken over by the FDIC last Friday after one of the biggest bank runs in U.S. history, one obvious culprit is the fact that the bank violated one of the elementary rules of finance: Always diversify. SVB became the 16th-largest bank in the country by turning itself into the financial institution of choice for Silicon Valley venture capitalists and the companies they funded. But in doing so, it also made itself exceptionally dependent on the health of the tech industry and on the choices of a relatively small number of VCs and company founders. That dependence is what made the bank so successful. It’s also what helped destroy it.  Why SVB failed: The bank ignored one of the fundamentals of finance (fastcompany.com)

They catered to the venture capitalists and expected some loyalty in return.

jrSmiley_78_smiley_image.gif

Turns out that techies and VCs panic just like everyone else.

 
 
 
Jack_TX
Professor Quiet
5.1.25  Jack_TX  replied to  Split Personality @5.1.24    last year
This article says that they were just about even, maybe, but what killed them was their client base who all had the same habits and the same social networks.

Exactly.  And Dodd-Frank would not have prevented that.

I'm not saying they made good decisions.  I am saying that blaming Trump for all this is silly. 

There is plenty to blame Trump for.  But this idea that we just blanketly blame the orange boogeyman for anything and everything that ever goes wrong is just ridiculous.  These people sound like a bunch of Southern Baptists blaming the devil for their flat tire.  It's just dumb.

 
 
 
Split Personality
Professor Guide
6  Split Personality    last year
Does it also put a spotlight on the Democrats who co-sponsored the bill? 

Why, yes, yes it does.  They appear to have all caved to Wall Street's belief that Dodd Frank

was a knee jerk reaction to 2008.

SVB and Signature were among the Banks lobbying for relief.

Go figure...

 
 
 
Thrawn 31
Professor Guide
7  Thrawn 31    last year

Once again, banks need to be tightly regulated. Every time the leash is loosened this kinds shit starts happening. 

 
 
 
Sparty On
Professor Principal
7.1  Sparty On  replied to  Thrawn 31 @7    last year

Yep and former congressman should not be allowed to serve on any bank board if they were involved in any major banking legislation.

 
 

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