The Banking Crisis (insurance, accounting, free market, credit)
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The banks that have been "bailed out," far as I know, faced immediate liquidity crises and SVB had structural issues in its bond portfolio. Without the liquidity crisis, they probably could have ridden this out.
There is an orderly and disorderly way to do things. Many in here and out in the investing world are rooting for total disorder so they can make a bigger profit someday. They are upset you don't get the grave crisis mispricing that used to exist in the world. That's all fine and dandy but the pressures that puts on average consumers and businesses is enormous. As I said a week ago, are you really that in need of additional basis points of profit in your portfolio that you'll gladly see average people who have little or nothing in the stock market forced to go without paychecks because their payroll comes from a bank that got a massive run on it? I'm sure some are but taking that kind of position is easy to do behind a keyboard and screen. I'd love to see some go tell someone put into a tough spot that they deserve this because their employer didn't do enough due diligence on the bank they chose for something as basic as payroll services.
There is an orderly and disorderly way to do things. Many in here and out in the investing world are rooting for total disorder so they can make a bigger profit someday. They are upset you don't get the grave crisis mispricing that used to exist in the world. That's all fine and dandy but the pressures that puts on average consumers and businesses is enormous. As I said a week ago, are you really that in need of additional basis points of profit in your portfolio that you'll gladly see average people who have little or nothing in the stock market forced to go without paychecks because their payroll comes from a bank that got a massive run on it? I'm sure some are but taking that kind of position is easy to do behind a keyboard and screen. I'd love to see some go tell someone put into a tough spot that they deserve this because their employer didn't do enough due diligence on the bank they chose for something as basic as payroll services.
I'm a pretty conservative guy politically. Free markets and all of that. I'm also a realist. If people were rational actors there would be very few bank runs. Truth is in times of stress with incomplete information a symphonic press, short sellers starting rumors etc. etc. people and many business fail the rationality test too often.
If not for:
Mark to market accounting rules, unrealized losses become real when relevant assets are needed even though the same assets are guaranteed at face value by the .gov upon maturity, per SVB's long term bond holdings.
Peter Thiel's big mouth.......(hope someone figures out how to sue the guy).
SVB having no risk manager for almost a year.
Had SVB not seen a massive run up in deposits over the last couple of years - its balance sheet would have been strong with fewer of these long term securities.
______________
The irony is we will likely see both credit availability and credit demand contract from all of this and in short order, allowing The Federal Reserve to either stop or slow discount rate increases..........the very bond pricing issues that brought down SVB will either partially, significantly or completely reverse.
I'm a pretty conservative guy politically. Free markets and all of that. I'm also a realist. If people were rational actors there would be very few bank runs. Truth is in times of stress with incomplete information a symphonic press, short sellers starting rumors etc. etc. people and many business fail the rationality test too often.
If not for:
Mark to market accounting rules, unrealized losses become real when relevant assets are needed even though the same assets are guaranteed at face value by the .gov upon maturity, per SVB's long term bond holdings.
Peter Thiel's big mouth.......(hope someone figures out how to sue the guy).
SVB having no risk manager for almost a year.
Had SVB not seen a massive run up in deposits over the last couple of years - its balance sheet would have been strong with fewer of these long term securities.
______________
The irony is we will likely see both credit availability and credit demand contract from all of this and in short order, allowing The Federal Reserve to either stop or slow discount rate increases..........the very bond pricing issues that brought down SVB will either partially, significantly or completely reverse.
Do you know what it costs the depositor to put $250K in the bank? And do you think the FDIC will raise its limit?
Do you know what it costs the depositor to put $250K in the bank? And do you think the FDIC will raise its limit?
1. I don't know if the FDIC deposit insurance cap will be increased or not. IMO it should be $500,000 at least.
2. If I understand your question. Depending upon how the deposit was made either nothing via check or maybe wire transfer fees.
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