Ah. I mean, I'll spot you that the FDIC not keeping reserves is a shit way to run an insurance system in a market where chain-reaction failures have a storied history and Congress is notoriously slow to respond to shortfalls in cash.
That said, the only real way this is a "bailout" in the traditional sense is that (I presume) SVB isn't also eating the fines levied on the rest of the financial system (because they're bankrupt). This is effectively a debt SVB owes to the FDIC by way of deferred payments that other banks are picking up.
There’s no way this fine is not just passed on to consumers.
Meh. That's not a problem with FDIC premium collections. Its a problem with capitalism writ-large. Even then, it presumes other banks weren't extracting every possible penny from their client bases already. If you're hanging on the Efficient Market Hypothesis by claiming every expense is inherently a consumer expense, you're already conceding that the optimal price for all consumer goods has been reached. In that case, raising prices further can only negatively impact profits (which would functionally mean investors take a bigger lose than consumers pay in price increases).
If you're assuming optimal pricing hasn't been reached and banks only just now realized they need to better-optimizing their pricing because of a new wave of expenses, then... idk, man. What are you really claiming, here? The FDIC fines are making bankers less lazy and stupid? Seems like a stretch.
You're also kinda ignoring who has the preponderance of wealth tied up in the banking system. At the absolute worst, this is effectively just passing the cost of the bailout to Other People With Big Bank Balances (ie, rich people). I just can't lose sleep over that shit.
It will be paid out by fines levied on it’s customers.
If it was possible to extract more money from customers without impacting the bottom line, banks would have done it already.
Oh no my long term bonds are now underwater. Please mister government help me out.
The root of the problem was that SVB (and the hundreds of other FDIC insured banks) weren't paying large enough premiums to carry the load if any one of them failed. Not that they're currently forced to make catch-up payments. Individual clients aren't catching any specific fine or fee that I've seen. Or, if they are at risk of it, maybe they should pick up and move to a Credit Union instead, since they're more likely to be insured by the NCUA.
Just the lack of out rage is pretty pathetic.
There's no straight line from My Student Loans to Your SVB Deposits, sadly. You can't do the "Wonderful Life" bit where you point and say "Your debt's in Tim's House and Jerry's House!" in order to rally the community into collective action, because it isn't inherently clear who owns what. Rage is easily stoked but very ineffectively galvanized at any specific point.
If SVB hadn't failed, my debts wouldn't be any smaller. We all know it. If anything, debtors would be better off with more bank failures, as a systemic bank collapse would heavily disrupt the collections process.
The root of the problem was that SVB (and the hundreds of other FDIC insured banks) weren’t paying large enough premiums to carry the load if any one of them failed.
The value of the Deposit Insurance Fund, which will be used to cover the gap between SVBs assets and liabilities, is currently ~$100B according to the FDIC. The gap between SVB's assets and deposit liabilities is larger than the DIF is designed to cover, but there is enough to money in the fund to gover the gap.
Ah. I mean, I'll spot you that the FDIC not keeping reserves is a shit way to run an insurance system in a market where chain-reaction failures have a storied history and Congress is notoriously slow to respond to shortfalls in cash.
That said, the only real way this is a "bailout" in the traditional sense is that (I presume) SVB isn't also eating the fines levied on the rest of the financial system (because they're bankrupt). This is effectively a debt SVB owes to the FDIC by way of deferred payments that other banks are picking up.
Meh. That's not a problem with FDIC premium collections. Its a problem with capitalism writ-large. Even then, it presumes other banks weren't extracting every possible penny from their client bases already. If you're hanging on the Efficient Market Hypothesis by claiming every expense is inherently a consumer expense, you're already conceding that the optimal price for all consumer goods has been reached. In that case, raising prices further can only negatively impact profits (which would functionally mean investors take a bigger lose than consumers pay in price increases).
If you're assuming optimal pricing hasn't been reached and banks only just now realized they need to better-optimizing their pricing because of a new wave of expenses, then... idk, man. What are you really claiming, here? The FDIC fines are making bankers less lazy and stupid? Seems like a stretch.
You're also kinda ignoring who has the preponderance of wealth tied up in the banking system. At the absolute worst, this is effectively just passing the cost of the bailout to Other People With Big Bank Balances (ie, rich people). I just can't lose sleep over that shit.
The cost of the new funds will not be paid out by other rich banks. It will be paid out by fines levied on it's customers.
The whole thing is a joke. Student loans you gotta pay those off guys you decided to take them out
Oh no my long term bonds are now underwater. Please mister government help me out.
Just the lack of out rage is pretty pathetic.
If it was possible to extract more money from customers without impacting the bottom line, banks would have done it already.
The root of the problem was that SVB (and the hundreds of other FDIC insured banks) weren't paying large enough premiums to carry the load if any one of them failed. Not that they're currently forced to make catch-up payments. Individual clients aren't catching any specific fine or fee that I've seen. Or, if they are at risk of it, maybe they should pick up and move to a Credit Union instead, since they're more likely to be insured by the NCUA.
There's no straight line from My Student Loans to Your SVB Deposits, sadly. You can't do the "Wonderful Life" bit where you point and say "Your debt's in Tim's House and Jerry's House!" in order to rally the community into collective action, because it isn't inherently clear who owns what. Rage is easily stoked but very ineffectively galvanized at any specific point.
If SVB hadn't failed, my debts wouldn't be any smaller. We all know it. If anything, debtors would be better off with more bank failures, as a systemic bank collapse would heavily disrupt the collections process.
The value of the Deposit Insurance Fund, which will be used to cover the gap between SVBs assets and liabilities, is currently ~$100B according to the FDIC. The gap between SVB's assets and deposit liabilities is larger than the DIF is designed to cover, but there is enough to money in the fund to gover the gap.
Lol