US regulators bail out SVB customers, who can access all their money Monday
cnn.com
cnn.com
This is the exact opposite. Execs and investors are wiped but the average depositor is saved.
I can understand the anger at the bank run orchestrated by "sophisticated" VC group-think. But given that it happened, this is the BEST OUTCOME that the government could have come up with.
How so? Literally the wealthy investors and executives of the bank lost all their stock wealth and compensation.
There is no tax payer money in the bailout because there is no bailout.
Where the remaining amount is coming from, however much that ends up being (an unknown), is an unknown as far as I understand. It could come from a “special assessment” (a way for the FDIC to collect additional money from banks)… of which some could possibly be passed down to consumers eventually I think, indirectly, or just worse terms. If so it might be a relatively small amount of the total assets, but I have no idea - depends on the sale of SVB’s assets.
Sounds like the coverage you are reading is either misleading you or is misled themselves.
Did Mark Cuban mismanage the bank? Why should his deposits get penalized?
There's a reason the FDIC only guarantees $250K. That's enough to cover mom and pop. Moreover, depositors who were over $250K were very likely to get a substantial portion back, sooner (with advanced dividends) or later. It was never going to be a total loss, regardless of bailout.
Making every depositor whole comes at a cost. It's a bit of a copout to say that taxpayers are not funding this, because taxpayers are customers of the more responsible banks who have to pay a fee to cover the cost. The costs will get passed along, just via a more indirect route that attempts to cover the political asses of Biden, Yellen, et al.
The lesson here isn't that individual startups should have chosen a bank more wisely. It's unclear how that was possible, or how they could have predicted what would happen. The lesson is that the entire SV VC community is too small and insulated, both geographically and culturally. There are too many eggs in one basket.
The average depositor might not have $250k in the bank but the average small business does? These small businesses pay their employees from those deposits.
Where do people think payroll comes from?
Even after that, companies could still need the money to make payroll literally on March 15. How would they know which of their spread out accounts will fail tomorrow?
Think about your own accounts. You are paying for your own car loan from one account. Imagine it gets frozen tomorrow. There are 2 scenarios:
First, you miss the first few payments and your car gets repossessed. Isn't it rather unfair that you had the money but your bank fucked up so your car got repossessed?
Second, you switch your bank for loan payments but that you were already using the other account for mortgage payments. Now your deposits are leaving faster than your savings are building. Why should you, the depositor, be put in this precarious situation - if the failure was from the bank management?
A bank failure cannot be prepared for in the best of times, for a simple individual. And you are asking large companies with accounts payables and payrolls to switch asap before market opens on Monday and these companies get crushed - for not fault of their own?
Imo, the outcome of saving no-fault depositors but not saving the bad management is more than fair.
It is hard to have sympathy for a company like Roku in this situation.
I also imagine that if some of these massive deposits were spread out it would create for a healthier environment where smaller banks could compete better.
Fair? Where will the money come from -- the tax payers? Other depositors ? That is not a fair outcome.
Let's see SVB's board of directors and C-level have all their pay and stock option sales clawed back for the past couple years. Somebody is responsible for having signed the monthly reports to the regulators ... or doesn't that signature come with consequences?
But none of this happened in this specific SVB collapse. You can hate on billionaires but that doesn't mean it is ok for hundreds of thousands of payrolls of average people should go poof.
You don't think that the banks aren't going to be passing along the burden of the FDIC special assessment to customers, do you? That's not at all how finance tends to work.