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Old 03-20-2023, 04:52 PM
 
7,351 posts, read 3,534,792 times
Reputation: 13972

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Quote:
Originally Posted by Lizap View Post
I’ve been thinking about your last 2 questions, and unfortunately, I think the answer might be no. If this had happened at a smaller regional bank in the Deep South, I’m afraid depositor’s funds might have only been protected up to the FDIC guarantee of $250k. The rebuttal, of course, is going to be that the fallout wouldn’t have been as bad; however the fallout for individual clients who had deposits exceeding $250k would have been devastating. There needs to be some consistency in how things are handled, regardless of who’s in office.
I suspect you're right. It is all speculation of course.

At least in part, it points to the need for some type of FDIC specialized insurance for segregated bank accounts dedicated to payroll expenses. A typical high-tech small business startup with 50 employees issuing paychecks twice/month would have a payroll over $250,000 each pay period -- and they would keep many pay periods in the bank. I think these small companies would be willing to pay an appropriate insurance premium for insurance on their funds.
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Old 03-20-2023, 04:58 PM
 
Location: Texas
820 posts, read 457,402 times
Reputation: 2094
Quote:
What, exactly, are these "hijinks" you speak of?
I'm talking about this perception we're evidently supposed to have that Member Banks helped stabilize First Republic. It would have been better to just let this play out without all the drama.
Quote:
Would this administration have done the same thing for a bank located in Texas that primarily loans to Oil & Gas companies? Or for a mid-sized bank in Utah that primarily loans to small & medium-sized businesses?
No Yellen has already made it clear a bank must be "systemically important" whatever that means this week.
Whatever happens it should be an exciting next few weeks. What with bank troubles here in U.S. and Credit Suisse jilting some of its bond holders. Gonna be a lot to take in.
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Old 03-20-2023, 05:41 PM
 
7,351 posts, read 3,534,792 times
Reputation: 13972
Quote:
Originally Posted by YorktownGal View Post
Well, First Republic Bank is respected brand. I heard that Jimmy Diamond is working out a deal for them.
Perhaps you mean JP Morgan Chase's Chairman & CEO Jamie Diamond.

Quote:
Originally Posted by YorktownGal View Post
BTW - First Republic Bank has HFT (high frequency traders). See Post #72.
I suspect the source you read meant that First Republic Bank has government bonds held under the accounting designation HFT - Held For Trading.

Quote:
Originally Posted by YorktownGal View Post
The 2021 Canadian census enumerated a total population of 36,991,981. The 2021 USA census enumerated a total population of 331.9 million. Nine times the population of Canada.

Canada is the second largest country worldwide. Canada's population is in four largest provinces by area (Ontario, Quebec, British Columbia, and Alberta) together they account for 86.5% of the country's population. US is the third largest country worldwide. The US's larger population, unlike Canada's, is spread out across the entire country.

What works in a small population clustered in a smaller areas isn't going to work in a nine times larger population across an entire country.
I didn't say the US could make do with 35 banks. But what we currently have - 5600 banks or bank-like institutions doesn't seem to be working very well.

Quote:
Originally Posted by YorktownGal View Post
A close relative is an examiner at the NYSE. Examiners rotate companies to prevents friendships and prevent bribes. So there isn't one examiner assigned to a company. Some examiners are better than other. Regardless, the NYSE examiner checks the members books once a year or less. Can't imagine the Fed is all that different.
It is very different.

Even IRS auditors work differently from what you describe at the NYSE - most every Fortune 1000 company in the US has IRS auditors on-site permanently in their own secure spaces inside the company being audited. They audit continuously. They never stop auditing - 5 days/week, 52 weeks/year. When they finally close the audit for, say, tax year 2017 on a Friday, they then move on to auditing tax year 2018 first thing Monday morning. Regulations require that the company being audited provides all office infrastructure - electricity, internet access, furniture, access to the employee cafeteria, etc.

And yes, the auditors and managers are periodically rotated out, both for employee skill enhancement and to prevent a hypothetical too-chummy relationship with the company being audited.

As an aside, I recall where I worked near my retirement some Director of IT came to the company's VP of Tax to complain that some contractors underneath the supervision of the VP of Tax (unbeknownst to him, these contractors were IRS employees) were abusing the "reasonable use" policy regarding internet access. It appears some of the contractor's computers were logged in to eBay and Amazon all the time, and to online overseas gambling sites, and even to porn sites. The Director of IT came to inform the VP of Tax that if she needed to better manage her contractors or he was going to shut down internet access. The VP of Tax said, "You can't touch them. That's the IRS."

Quote:
Originally Posted by YorktownGal View Post
Perhaps the Federal Reserve Examiners viewed SVB before Spring 2022, a little less than a year ago & everything seemed fine.
It appears you are posing a hypothetical. I think you'll find that wasn't the case if you dig a bit.

Let me quote from the FDIC's "Basic Examination Concepts and Guidelines Document"

Quote:
For certain institutions that are larger, more complex, or
present a higher risk profile, full-scope examinations are
performed continuously over the course of a year.
...
The continuous examination process includes onsite
targeted reviews of areas the examiner determines are
necessary to complete a full-scope examination; ongoing
monitoring and assessment of institution risks, policies,
procedures, and financial condition; and frequent
communication with institution management. A dedicated
or designated EIC oversees the continuous examination
process and may be supported by additional dedicated
examination staff and other staff depending on the size,
complexity, and risk profile of the institution being
examined. In addition to frequent communication with
institution management, supervisory letters are issued to the
board and institution management after each targeted
review that convey the findings (including supervisory
recommendations when appropriate). Other, ad hoc written
communications to institution management may also be
issued based on ongoing monitoring activities or other
intervening supervisory events or activities. Additionally,
at the end of the continuous examination cycle, an ROE is
issued to the institution that aggregates and summarizes
findings from examination and other supervisory activities
performed throughout the cycle and assigns the UFIRS
ratings.
Quote:
Originally Posted by YorktownGal View Post
The interest rate increases were the wild card. An examiner wouldn't have been able to anticipate this turn in the economy.
The Federal Reserve signaled interest rate increases were coming.

Quote:
Originally Posted by YorktownGal View Post
Many people are hoping that the Fed stops interest rate hikes until the bank crisis settles down.

However, the Fed Reserve/NYSE needed to start to monitor the selling of stock by bank officials more closely. It seems that is a sign of a pending bank failure and should be illegal.
I think there will be some regulatory and even legal changes coming.

Regardless, NO CEO or senior executive can just decide to sell shares on the spur of the moment because the CEO and senior executives are always privy to inside information and insider trading laws preclude selling when you know inside information.

So, how can a corporate insider EVER sell stock? I mean they always know material inside information. So, the SEC has a rule called the 10b5-1 Trading Plan. See https://www.investopedia.com/terms/r/rule-10b5-1.asp . Rule 10b5-1 permits insiders to sell a predetermined number of shares at a predetermined time in the future. Many corporate executives use 10b5-1 plans to avoid accusations of insider trading.

An insider files a plan that might read something like "I'll sell XXX shares on the last trading day of the 2nd month of the quarter for the following 2 years." It is planned selling regardless of what inside information surfaces, and is independent of the inside information.

But the case of Silicon Valley Bank, it appears it was about expiring stock options granted to the CEO years before by the Board of Directors as part of his long-term compensation.

On 2/27/2023, he BOUGHT 12,451 shares of stock at a price of 105.18 in three separate transactions, by exercising expiring stock options.

Also on 2/27/2023, he SOLD those same 12,451 shares of stock in three separate transactions at an average price of about $287.25.

Exercising expiring stock options and executing a same-day sale is not dumping stock.

After these transactions, the CEO still owned 98,867 shares of SVIB stock. He lost about $30 Million when the company collapsed.

***
I expect the SEC and DOJ will examine every move the named insiders made over the past year, and initiate litigation against the CEO and other insiders if they suspect any trading on inside information took place. Heck, I expect they will scrutinize EVERY transaction by EVERY employee at SVB over the past year or so, and will sue anyone they suspect was trading on inside information, even if they were a lowly paper-pushing grunt in the bowels of the company.

Last edited by moguldreamer; 03-20-2023 at 05:58 PM..
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Old 03-21-2023, 11:38 AM
 
2,512 posts, read 1,090,925 times
Reputation: 3208
If what I posted is not a good move please tell me why.
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Old 03-21-2023, 11:39 AM
 
Location: Way up high
22,192 posts, read 29,184,054 times
Reputation: 31253
It's mismanagement. Fire them all and take back their bonuses, etc.
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Old 03-21-2023, 01:26 PM
 
Location: A coal patch in Pennsyltucky
10,286 posts, read 10,519,901 times
Reputation: 12584
Quote:
Originally Posted by 16 Acres View Post
How long will banks keep bailing out other banks?
As long as it makes good business sense.

Quote:
Originally Posted by mathjak107 View Post
you got to love. how those with such little knowledge of the inner working of the banking system or skin in the game as in millions of your companies money ,have such strong opinions on how things should have been handled
You mean like members of Congress?
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Old 03-21-2023, 04:38 PM
 
Location: Wonderland
67,654 posts, read 60,300,578 times
Reputation: 101015
I worked in banking for many years.

1) The bank is not going to lose money unless there is an entire collapse of our economy.

2) $250,000 per SS number AND type of deposit, for instance, a married couple could have two accounts at $250K each and then have a joint account at $250K and that would equal about $750K of coverage.

3) $250K includes the cost of things like office furniture, etc. Just so you know. So you could get paid back in used office furniture.
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Old 03-21-2023, 04:40 PM
 
105,824 posts, read 107,820,907 times
Reputation: 79437
Quote:
Originally Posted by villageidiot1 View Post
As long as it makes good business sense.



You mean like members of Congress?
no , i mean like most here
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Old 03-22-2023, 03:21 PM
 
1,191 posts, read 647,980 times
Reputation: 1568
Quote:
Originally Posted by moguldreamer View Post
Perhaps you mean JP Morgan Chase's Chairman & CEO Jamie Diamond.
Lol... Perhaps you mean JP Morgan Chase's Chairman & CEO Jamie Dimon
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Old 03-23-2023, 11:56 AM
 
5,901 posts, read 4,390,439 times
Reputation: 13416
Quote:
Originally Posted by KathrynAragon View Post
I worked in banking for many years.

1) The bank is not going to lose money unless there is an entire collapse of our economy.

2) $250,000 per SS number AND type of deposit, for instance, a married couple could have two accounts at $250K each and then have a joint account at $250K and that would equal about $750K of coverage.

3) $250K includes the cost of things like office furniture, etc. Just so you know. So you could get paid back in used office furniture.
For point #3, are you implying the bank could provide assets (not even already liquidated assets) to get you your fdic insured money?

If that’s what you mean, and if that’s true, that’s some clown world level reality. I assume that’s never been put into practice considering that wouldn’t exactly instill confidence.
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