Bloomberg

CNBC

All depositors will have access to their money on Monday

  • flan [they/them]
    ·
    2 years ago

    rich people are going around scaring themselves like kittens in front of mirrors

  • neo [he/him]
    ·
    2 years ago

    i can't believe the fed is just backstopping uninsured deposits. they are trying so hard to dance around the word that explains exactly what's going on right now: BAILOUT

    fuck these people, fuck joe biden, and death to amerikkka

    • thethirdgracchi [he/him, they/them]
      ·
      2 years ago

      It's not a bailout, the investors in this bank are getting fucked. What's happening is they're liquidating the bank and using all its assets to fully cover deposits, then returning the rest to investors. No money is being given by the government to anybody. Same deal as SVB.

      • neo [he/him]
        ·
        2 years ago

        No money is being given by the government to anybody.

        please correct me if i'm wrong but that is exactly what is NOT happening. The shareholders aren't covered as you say, but there are no current buyers for these assets. Therefore, the fed announced the depositors will be receiving all their money from the deposit insurance fund i.e. the treasury, i.e. the taxpayer ultimately if the DIF dips to 0. And the Fed basically indicated in their statement that this applies to every bank, meaning every bank's FDIC insurance is now up from $250k to unlimited. But they don't pay for that insurance, meaning we are now creating a huge moral hazard situation where all these banks can just do anything they want, because even if they use their deposits to buy the riskiest securities ever, it doesn't matter! The depositors will not have to worry. The VC backed companies will never have to worry, they will never lose because they will always play with house money.

        If I am understanding this correctly, this is just one degree of indirection from bailout.

        • EmmaGoldman [she/her, comrade/them]
          ·
          2 years ago

          Not everything is crypto assets, so as far as I can tell they're going to sell off the good assets, hold onto ones for which there is not currently a market (and sell when and as there is a market) and, yes, use the DIF to make whole the depositors.

      • captcha [any]
        ·
        2 years ago

        What happens if there's not enough money to cover depositors? Or would that be illegal and therefore unlikely?

        • mkultrawide [any]
          ·
          edit-2
          2 years ago

          Because the FDIC has lifted the $250K ceiling, that means that Deposit Insurance Fund will be covering everything. It is an insurance fund that all FDIC member banks pay into to cover these situations. This means that all of the banking industry will pay for this failure, and that premiums will be going up. If there isn't enough in the DIF to cover the deposits, the FDIC has the ability to borrow directly from the Fed or to issue debt.

  • Melitopol [none/use name]
    ·
    2 years ago

    This is good for crypto. Both the American banks that were used by exchanges are now gone. One bankrupt and another forcefully shut down.

  • shiteyes2 [any]
    ·
    edit-2
    2 years ago

    Lol usually they don't bother shuttering banks on a Sunday wonder what's gonna happen Monday exdee

  • Assian_Candor [comrade/them]
    ·
    2 years ago

    We’re going down baby down down the roller coaster sweet sweet baby never gonna let you go :coaster:

  • captcha [any]
    ·
    2 years ago

    So what's the narrative here? Banks that invested in crypto are now going under. But these banks aren't too big to fail so the feds are liquidating them. Is there a way this could spread to banks who did not invest in crypto?

  • TheOwlReturns [comrade/them]
    ·
    2 years ago

    I don't understand how the fed is going to seize the illiquid assets and sell them if any significant portion of it is crypto currency or holdings related to crypto currency. What are the chances the FDIC folks walk into 400gb of monkey pictures? How will they turn that into money?

    • Changeling [it/its]
      ·
      2 years ago

      Is there a precedent for the seizure of an asset crashing the market that that asset is traded within? I’d imagine there is.

    • TreadOnMe [none/use name]
      ·
      2 years ago

      Always was after a certain point in a manufacturing economy. We are quite literally at a point of post-scarcity in the U.S., but profit has to be made.