TProphetYour periodic reminder that bailing out Silicon Valley Bank cost more than the entire US food stamp program, and happened overnight with zero debate.
Tim Y.C 🌐🌍@tprophet but the bank wasnt bailed out, no?
mark@clsytim @tprophet if you want to break down each word like a lawyer, no. If you want to describe the action of covering and restoring uninsured funds that were lost, then yes.
It's impossible to deny that a very large (to me) amount of money was conjured out of thin air, which is very surprising as we are always told that it would be an irresponsible amount of money to conjure up when normal people need it
Peter Butler@clsytim @tprophet @ATLeagle I don’t think we know the full breakdown yet.
"At the end of 2022, the FDIC reported that its deposit insurance fund had a balance of $128bn, or about 1.27% of the total insured deposits, and far less than may be needed.”
…
"Funding for the non-bailout bailout will also come from selling off SVB and Signature assets, pegged at $212bn and $110bn respectively. "
….
"make no mistake – it does have an expected cost to taxpayers.”
https://www.theguardian.com/business/2023/mar/13/silicon-valley-bank-collapse-biden-bailout-question
Hippy Steve@peterbutler @clsytim @tprophet @ATLeagle
"... a balance of $128bn, or about 1.27% of the total insured deposits.”
That's 1.27% of the ~entire US~ insured deposits. 1% isn't an unreasonably sized risk pool.
"As of Dec 31, 2022, #SVB had approximately $209.0bn in total assets and about $175.4bn in total deposits."
Subtract the $42bn withdrawn in the bank run and that's 209bn in assets to cover 133bn in deposits. Even if assets sold at 1/2 price, that's just 28bn out of the 128bn FDIC fund.
@exador23 @peterbutler @clsytim @ATLeagle Asset valuations aren't marked to market which was literally the whole root cause of this issue.
@tprophet @peterbutler @clsytim @ATLeagle
understood. which is why I calculated the cost of covering uninsured deposits based on a 50% loss on the assets. I seriously doubt the haircut will be that bad, though.
@tprophet @peterbutler @clsytim @ATLeagle
We have official estimates from the chair of the FDIC now:
“The FDIC estimates that the cost to the DIF [Deposit Insurance Fund] of resolving SVB [Silicon Valley Bank] to be $20 billion. The FDIC estimates the cost of resolving Signature Bank to be $2.5 billion. Of the estimated loss amounts, approximately 88 percent, or $18 billion, is attributable to the cost of covering uninsured deposits at SVB…”
@exador23 @peterbutler @clsytim @ATLeagle Oh, ok, so it ended up being the entirety of what the US spends addressing climate change (which was a subject of approximately zero debate, right?) https://www.whitehouse.gov/wp-content/uploads/2022/03/budget_fy2023.pdf
@exador23 @tprophet @clsytim @ATLeagle The FDIC claims there will be a “special assessment” to force big banks to help pay for it
FDIC Considers Forcing Big Banks to Pay Up After $23 Billion Hit
The Federal Deposit Insurance Corp., facing almost $23 billion in costs from recent bank failures, is considering steering a larger-than-usual portion of that burden to the nation’s biggest banks, according to people with knowledge of the matter.
@peterbutler @exador23 @clsytim @ATLeagle Yes, they'll raise their fees and pay less interest to pay for it. You don't think that's coming out of shareholder returns and executive bonuses, do you?
@tprophet @peterbutler @exador23 @clsytim yep. There were promises made that some small banks may get exceptions to the new increased charge to cover this. So friends and well connected people get breaks. Will this stress small banks? Probably. Will it end as an advantage to big banks? Definitely
And it's precedent that the rules aren't actually rules.
@peterbutler @tprophet @exador23 @clsytim I've been in local credit unions for a very long time. Ever since bank of America kept buying every small local bank who actually tried to care about customers. It became impossible to run from those jerks
@ATLeagle @peterbutler @exador23 @clsytim The rules would totally have been rules if the depositors were ordinary people rather than Silicon Valley billionaires.