Pirate's Cove

Yeah, yeah, we’ll see

Here’s who is paying to restore Silicon Valley, Signature Bank deposits

The federal government mobilized immediately in response to the collapse of Silicon Valley Bank (SVB) and Signature Bank, working over the weekend to insure depositors who had more than $200 billion of venture capital and high-tech start-up money stored in the two banks.

But unlike the 2008 financial crisis, during which Congress passed new legislation in order to salvage the country’s largest banks, the current rescue plan is smaller in scale, pertains to only two banks, and isn’t additional taxpayer money — for now.

In order to make sure depositors can still withdraw funds from their accounts — the vast majority of which exceeded the $250,000 limit for standard insurance from the Federal Deposit Insurance Corporation (FDIC) — regulators say they’re pulling from a special fund maintained by the FDIC called the deposit insurance fund (DIF).

“For the two banks that were put into receivership, the FDIC will use funds from the deposit insurance fund to ensure that all of its depositors are made whole,” a Treasury official told reporters on Sunday night. “In that case the deposit insurance funded is bearing the risk. This is not funds from the taxpayer.”

“For now.” The rest of the piece highlights that the money is coming from insurance premiums banks pay into the fund along with interest from various investments. So, we’ll see. For now. Which could create issues when other banks crash, and hooks up the rich who did not properly diversify their assets.

And now some ass-kissing from Politico

How Biden saved Silicon Valley startups: Inside the 72 hours that transformed U.S. banking

On Sunday afternoon, an exhausted group of Biden administration officials gathered to put the finishing touches on a hastily composed plan to stave off a nationwide banking crisis.

Just a little more than 72 hours had passed since Silicon Valley Bank suddenly collapsed, rocking the tech industry and igniting fears that the U.S. was on the verge of a financial meltdown. (snip)

The swift and forceful action to rescue depositors at the two failed midsize lenders rewrote crucial banking guardrails in ways that could reverberate for years. It put the Biden administration’s stamp — for good or ill — on the sector’s future financial stability, while sending a message about the government’s willingness to rescue private businesses in new ways. It also was done without passing a single new act of Congress or holding hearings among elected officials in recent days.

Yeah, well, we’ll see how the week goes, because the stock market was an utter mess Monday, and trading on many bank stocks had to be halted. In Europe, as well.

If you're wondering how the Biden Administration completely missed the looming banking crisis in America. Well, this is what the United States Treasury Secretary was doing 2 weeks ago pic.twitter.com/zy3K7sjlP0

— Vince Langman (@LangmanVince) March 13, 2023

Remember, everyone was saying that SVB was an awesome bank just two weeks ago. What were the regulators doing? All the Biden sycophants are Blaming Trump, but

Silicon Valley Bank had more red flags than a CCP meeting but regulators cared about climate not bank risks

Despite skeins of bank regulations supposed to prevent another financial meltdown, Silicon Valley Bank, the country’s 17th-biggest bank, went down in flames last week. It was the second-biggest bank failure in U.S. history and has prompted a lot of finger-pointing.

Management messed up by not addressing a serious cash shortage until it was too late.  Some blame Peter Thiel, saying the venture capital investor’s call for small tech firms to withdraw deposits from SVB   accelerated its demise. Others are critical of Goldman Sachs, SVB’s adviser who signed off on their ill-advised decision to try to sell equity, thus alerting investors to their capital shortfall.

There’s plenty of blame to go around, but when a financial institution goes under, you have to wonder: where were the regulators? After all, there were more red flags than you see at a CCP convention. (snip)

Thanks to trillions of dollars in government spending during and after the pandemic and to massive money printing by the Federal Reserve, banks nationwide enjoyed a massive influx of deposits beginning in 2020. Most, including Silicon Valley Bank, put much of that money into investments like Treasury bonds and other fixed-income securities that nosedived when rates went up. Federal Depository Insurance Company (FDIC) filings show that US banks took over $600 billion worth of unrealized losses last year…a major red flag.

And the regulators?

They were not. Consider the Financial Stability Oversight Council, the body created in 2010 after the financial crisis, which was meant to avert just this sort of collapse.  The council is chaired today by Treasury Secretary Janet Yellen and includes 9 other voting members including Fed Chair Jay Powell, the heads of the FDIC and the Bureau of Consumer Financial Protection (CFPB), Gary Gensler, head of the SEC.

The council last met on February 10 via videoconference. The readout of that meeting shows the group previewed its 2023 priorities, which included “climate-related financial risks, nonbank financial intermediation, Treasury market resilience, and risks related to digital assets.”

Perhaps they should have been looking at the financial stability of banks in a market where rising interest rates were causing issues, along with lots of red flags in crypto. Regardless, let’s hope things do not go downhill, and this is a momentary blip.