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0 pointsJohnFen3y ago0 comments

It means that the bank was gambling, lost, and wants to externalize those losses onto the rest of us who weren't gambling.

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drstewart3y ago

Funny that in threads about crypto companies failing everyone cries about "this is why we have regulations and safety valves in the financial industry!" but now when these are in force people cry about the safety valves and regulations existing, and how the companies should just be allowed to fail

JohnFenOP3y ago

Who's doing that?

Part of the issue here is that SVB was able to get into trouble because important regulations and safeguards were removed years ago.

The ones that exist to minimize the wider impact of a bank failure are working, and I don't see anyone upset about that fact.

cplusplusfellow3y ago

They bought treasuries and triple A rated mortgages. what else do you expect a bank to do to when seeking yield?

They aren’t just a vault for your money - they would charge you handsomely if so.

drstewart3y ago

>Part of the issue here is that SVB was able to get into trouble because important regulations and safeguards were removed years ago.

Which important regulations and safeguards were removed?

JohnFenOP3y ago

I'm thinking of the Glass-Steagall Act that was put into place after the great depression. It prevented banks from engaging in both commercial and investment banking at the same time. You had to choose what sort of bank you wanted to be. The effect of this was to prevent banks from being able to take depositor's money and put it in risky investments.

It was effectively repealed in 1999 by the Gramm-Leach-Bliley Act. Its repeal is one of the things that allowed the 2008 crash to happen.

worik3y ago

Yes

An alternative is to bankrupt the partners, cancel the shares, then take action for depositors

That is what did not happen in 2008

boeingUH603y ago

This is exactly what's happening here. Equity investors have lost their shirts. The government protection is only for depositors.

worik3y ago

I hope so. But we have not seen that yet.

Have the shares been canceled? Are the partners bankrupted?

Too soon to tell. Remember AIG

j / k navigate · click thread line to collapse

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drstewart3y ago

JohnFenOP3y ago

Who's doing that?

Part of the issue here is that SVB was able to get into trouble because important regulations and safeguards were removed years ago.

The ones that exist to minimize the wider impact of a bank failure are working, and I don't see anyone upset about that fact.

cplusplusfellow3y ago

They bought treasuries and triple A rated mortgages. what else do you expect a bank to do to when seeking yield?

They aren’t just a vault for your money - they would charge you handsomely if so.

drstewart3y ago

>Part of the issue here is that SVB was able to get into trouble because important regulations and safeguards were removed years ago.

Which important regulations and safeguards were removed?

JohnFenOP3y ago

It was effectively repealed in 1999 by the Gramm-Leach-Bliley Act. Its repeal is one of the things that allowed the 2008 crash to happen.

worik3y ago

Yes

An alternative is to bankrupt the partners, cancel the shares, then take action for depositors

That is what did not happen in 2008

boeingUH603y ago

This is exactly what's happening here. Equity investors have lost their shirts. The government protection is only for depositors.

worik3y ago

I hope so. But we have not seen that yet.

Have the shares been canceled? Are the partners bankrupted?

Too soon to tell. Remember AIG

j / k navigate · click thread line to collapse