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Comment by adad95 | Hacker News Reader

Basically... Profit is only mine, but the lost goes to all taxpayers.

False (at least in this case). From the Treasury’s statement: “No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”

Ref: https://home.treasury.gov/news/press-releases/jy1337

Where did the money for the fund is coming from?

Even if its coming from other banks, it means they have to increase fees somewhere.

The FDIC fund.

First from the assets of SVB (IOW, from the shareholders’ equity). After that, there is the possibility of special assessments from other member banks, consistent with the (quite short) Treasury statement: “Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”

I don't think it's nearly clear enough at this point to trust a politically-loaded statement like that, straight from the horse's mouth. There are a lot of ways to obscure this, through inflating the money supply or deferring costs for years or (most insidiously) moving risk around. The money is apparently coming from a special assessment on all other banks in the US; will the customers of those banks see themselves paying more in fees or earning less in interest as a result? Does this drain whatever reserves FDIC has, possibly requiring it to draw funds from the taxpayer in the future when something else bad happens? How does this affect the risk decisions made by other banks, knowing they will be backstopped by the public if, like someone with a bomb strapped to their chest, they promise to take everyone down with them? Apparently SVB was offering loans on very appealing terms to tech companies if they kept deposits at the bank. Companies made the decision to take those terms, accepting the counterparty risk in lieu of paying higher interest on loans from other, more stable banks. Over and over we hear that financial returns are justified because of the risks taken. So is that just a sham, then?

> How does this affect the risk decisions made by other banks, knowing they will be backstopped by the public if, like someone with a bomb strapped to their chest, they promise to take everyone down with them?

This is a key question, and the reason traditional banking and investment banking should not be allowed in one company.

https://finance.yahoo.com/news/yellen-says-no-federal-bailou...

"In a separate announcement, the Fed late Sunday announced an expansive emergency lending program that's intended to prevent a wave of bank runs that would threaten the stability of the banking system and the economy as a whole."

"The Treasury has set aside $25 billion to offset any losses incurred under the Fed’s emergency lending facility."

If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

> The official also said the steps didn’t constitute a bailout, as equity and bondholders of SVB and Signature would be wiped out.

Tell me you didn't read the article without telling me you didn't read the article.

If you have to pay more taxes because of this, it’s a bailout.

You don't have to pay more taxes because of this.

yet.

Right, it's going to be funded as a fee against banks, which will be passed on to bank customers aka taxpayers.

You will lose far far more if the public loses faith in banks. Not wanting depositors to get backstopped is cutting off your nose to spite your face.

Nobody in "the public" is losing faith in banks. FDIC covers everybody up to $250k. If you have more money than that and can't be arsed to split it up into multiple accounts that's on you.

> You will lose far far more if the public loses faith in banks

Maybe so. But I think we should be honest about what this is: a bailout of the banking industry.

Do you know the definition of a government tax?

https://finance.yahoo.com/news/yellen-says-no-federal-bailou...

"The Treasury has set aside $25 billion to offset any losses incurred under the Fed’s emergency lending facility."

If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

I see this a lot but no, profit is actually (double) taxed.

Shareholders are going to 0.

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