Reply to SVB Bank Run: Fed Calling Emergency Meeting

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]So there are all of these libertarians etc calling on the Fed/FDIC to basically take over and secure the bank.

Keep in mind, this i only happening because Trump totally gutted regulations that would have prevented this from happening. So we are going to get a massive bailout for Silicon Valley Bank and yet people complain about a few thousand dollars in bailouts for student loans.[/quote]

For one, the FDIC already took over the bank around 24 hours ago

Two, this is not caused by Trump gutting regulations. The cause was interest rate risk- recall people deposit money at banks and they turn around and lend money, in this case in the form of MBS and treasuries. The fed kept interest rates too low for too long and then they hiked rates precipitously, which caused huge losses for the bank on those securities that were purchased when interest rates were much lower[/quote]

SVB would have been subject to a Dodd-Frank requirement for a stress test that likely would have uncovered this risk, but Trump and GOP congress removed that requirement for banks of this size in 2018.[/quote]

Uncover risk? How about we uncover that FDIC can only cover 3 to 4 percent of holdings if many banks go at once? Is Dodd-Frank going to fix FDIC?[/quote]

What are you babbling about?  The risk was that they were covering deposits with long dated bonds that were dropping in value,  this is exactly the kind of scenario that stress tests are designed to discover.[/quote]

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