Anonymous wrote:Anonymous wrote:How does one mismanaged bank cause confidence in the entire banking system to collapse?
Because it's the psychology of being a small business owner seeing the headlines that you could instantly lose all money for your business over $250k in bank. You could wake up the next day and have $0 to pay your employees, buy supplies, and pay your rent. It only takes one domino to fall to start the panic. Then another bank fails, and then another. Soon we have a full on nation wide bank run that sends us back to 40% unemployment like the Great Depression. Does fear and greed ever make rational sense? It doesn't have to, but it can happen when people start to panic.
Anonymous wrote:Anonymous wrote:Anonymous wrote:How does one mismanaged bank cause confidence in the entire banking system to collapse?
Because it's the psychology of being a small business owner seeing the headlines that you could instantly lose all money for your business over $250k in bank. You could wake up the next day and have $0 to pay your employees, buy supplies, and pay your rent. It only takes one domino to fall to start the panic. Then another bank fails, and then another. Soon we have a full on nation wide bank run that sends us back to 40% unemployment like the Great Depression. Does fear and greed ever make rational sense? It doesn't have to, but it can happen when people start to panic.
Did the small business owners think that FDIC insurance was just pretend?
Why should these people get a bail out over any other group of people who have last money for some other reason.
It's amazing to me that some of the most vocal people i have seen out there loudly demanding handouts are people who I have also seen being completely hostile towards other forms of government assistance. I guess it's different when the money goes to them.
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Jesus, they're predicting bank runs on Monday. What is this, 1929?
Hold on to your butts folks. This could get ugly quick. What company in their right mind who does business with smaller/regional banks would keep funds over $250k in them now that they're watching SVB fail? It is scary to think how this could spread and cause a nation wide bank run.
That’s why depositors need to be made whole. It’s fine if equity holders in SVB lose out. But if people don’t have faith in smaller banks, this could spiral out of control extremely quickly.
No - they do not need to be 'made whole'. They were aware of FDIC when they opened their accounts (and were able to buy insurance for deposits that exceeded FDIC limits if they chose to do so.
If you think that depositors in any bank need to be 'made whole' if the bank collapses then we are into a completely different regulatory scenario.
If the feds are required to make depositors 'whole' if their bank collapses - then we really don't need private banks at all. Instead, the feds can just turn itself into a public-offering bank, accept all deposits and the associated liability.
Sorry but 'private banks accept the deposits + the profits, the feds pay back when that fails" isn't actually a thing.
Great way to collapse the entire country and economy and we can live in Hoovervilles all over again. Where exactly can businesses store their money then just to function and to do things like pay payroll, buy supplies, and pay bills? If your small company has $10-20M, you cannot spread it out over multiple banks at $250k a clip. It is absolutely not feasible. The economy only works when people have faith the banking system works. No banking and we go back to the stone age.
That is true but at the same banks need to do a better job scrutinizing their high value depositers. No bank could have survived the sudden withdrawal of $40 billion that happened to SVB. It was an organized and intentional attack on the system by a vulture capitalist.
That's not how this went down. Many venture capitalists had deposits over 250k in that bank.
Typically VC write a startup check for say 30M to fund operations, payroll, etc. They put it all in SVB because who is going to open 700 accounts everywhere?
Dozens of VC's ordered their portfolio companies to withdraw all their money Friday AM per industry word of mouth. They were afraid of a lock on accts (aka capital controls) ghat would render startups and tech companies unable to make payroll or pay vendors for an unknown amount of time.
If things work smoothly, a sale will be forced over the weekend and new owners will honor deposits after a short time.
This is a canary in thd coal mine though. How many other banks have bond portfolios that suck now that interest rates have skyrocketed trying to tame ridiculous inflation.
STOP DEBASING THE DOLLAR
Anonymous wrote:Anonymous wrote:How does one mismanaged bank cause confidence in the entire banking system to collapse?
Because it's the psychology of being a small business owner seeing the headlines that you could instantly lose all money for your business over $250k in bank. You could wake up the next day and have $0 to pay your employees, buy supplies, and pay your rent. It only takes one domino to fall to start the panic. Then another bank fails, and then another. Soon we have a full on nation wide bank run that sends us back to 40% unemployment like the Great Depression. Does fear and greed ever make rational sense? It doesn't have to, but it can happen when people start to panic.
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Jesus, they're predicting bank runs on Monday. What is this, 1929?
Hold on to your butts folks. This could get ugly quick. What company in their right mind who does business with smaller/regional banks would keep funds over $250k in them now that they're watching SVB fail? It is scary to think how this could spread and cause a nation wide bank run.
That’s why depositors need to be made whole. It’s fine if equity holders in SVB lose out. But if people don’t have faith in smaller banks, this could spiral out of control extremely quickly.
No - they do not need to be 'made whole'. They were aware of FDIC when they opened their accounts (and were able to buy insurance for deposits that exceeded FDIC limits if they chose to do so.
If you think that depositors in any bank need to be 'made whole' if the bank collapses then we are into a completely different regulatory scenario.
If the feds are required to make depositors 'whole' if their bank collapses - then we really don't need private banks at all. Instead, the feds can just turn itself into a public-offering bank, accept all deposits and the associated liability.
Sorry but 'private banks accept the deposits + the profits, the feds pay back when that fails" isn't actually a thing.
Great way to collapse the entire country and economy and we can live in Hoovervilles all over again. Where exactly can businesses store their money then just to function and to do things like pay payroll, buy supplies, and pay bills? If your small company has $10-20M, you cannot spread it out over multiple banks at $250k a clip. It is absolutely not feasible. The economy only works when people have faith the banking system works. No banking and we go back to the stone age.
That is true but at the same banks need to do a better job scrutinizing their high value depositers. No bank could have survived the sudden withdrawal of $40 billion that happened to SVB. It was an organized and intentional attack on the system by a vulture capitalist.
Anonymous wrote:How does one mismanaged bank cause confidence in the entire banking system to collapse?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Jesus, they're predicting bank runs on Monday. What is this, 1929?
Hold on to your butts folks. This could get ugly quick. What company in their right mind who does business with smaller/regional banks would keep funds over $250k in them now that they're watching SVB fail? It is scary to think how this could spread and cause a nation wide bank run.
That’s why depositors need to be made whole. It’s fine if equity holders in SVB lose out. But if people don’t have faith in smaller banks, this could spiral out of control extremely quickly.
No - they do not need to be 'made whole'. They were aware of FDIC when they opened their accounts (and were able to buy insurance for deposits that exceeded FDIC limits if they chose to do so.
If you think that depositors in any bank need to be 'made whole' if the bank collapses then we are into a completely different regulatory scenario.
If the feds are required to make depositors 'whole' if their bank collapses - then we really don't need private banks at all. Instead, the feds can just turn itself into a public-offering bank, accept all deposits and the associated liability.
Sorry but 'private banks accept the deposits + the profits, the feds pay back when that fails" isn't actually a thing.
Great way to collapse the entire country and economy and we can live in Hoovervilles all over again. Where exactly can businesses store their money then just to function and to do things like pay payroll, buy supplies, and pay bills? If your small company has $10-20M, you cannot spread it out over multiple banks at $250k a clip. It is absolutely not feasible. The economy only works when people have faith the banking system works. No banking and we go back to the stone age.
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Jesus, they're predicting bank runs on Monday. What is this, 1929?
Hold on to your butts folks. This could get ugly quick. What company in their right mind who does business with smaller/regional banks would keep funds over $250k in them now that they're watching SVB fail? It is scary to think how this could spread and cause a nation wide bank run.
That’s why depositors need to be made whole. It’s fine if equity holders in SVB lose out. But if people don’t have faith in smaller banks, this could spiral out of control extremely quickly.
No - they do not need to be 'made whole'. They were aware of FDIC when they opened their accounts (and were able to buy insurance for deposits that exceeded FDIC limits if they chose to do so.
If you think that depositors in any bank need to be 'made whole' if the bank collapses then we are into a completely different regulatory scenario.
If the feds are required to make depositors 'whole' if their bank collapses - then we really don't need private banks at all. Instead, the feds can just turn itself into a public-offering bank, accept all deposits and the associated liability.
Sorry but 'private banks accept the deposits + the profits, the feds pay back when that fails" isn't actually a thing.
Great way to collapse the entire country and economy and we can live in Hoovervilles all over again. Where exactly can businesses store their money then just to function and to do things like pay payroll, buy supplies, and pay bills? If your small company has $10-20M, you cannot spread it out over multiple banks at $250k a clip. It is absolutely not feasible. The economy only works when people have faith the banking system works. No banking and we go back to the stone age.