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SVB to be Bailed Out with Zelensky’s Money
Apparently, FDIC now covers 100% of everything, based on adjective-ridden criteria. So no more rule of law, no more contracts, we’re all on the hook when a Friend Of Joe is inconvenienced, and the taxpayer is for some reason supposed to foot the bill.
Zelensky hardest hit.
I’ll see if I can find where I complained about Obama’s nationalization of Chrysler and GM. Note — it looks different here than it does in Venezuela.Published in General
Once again, the “full faith and credit” clause will be used to compel the taxpayer while giving the administration a blank check.
From a treasury.gov press release:
Even assuming that the part I bolded is trivially true — say, a restructuring to be paid for by the beneficiaries — the real systemic risk here is moral hazard. Once again, bad decisions are bailed out, which has the exact effect of pricing good decisions out of the market. The minor, trivial price may not be paid by taxpayers, as the government still has cards to hide the nut under. Soon enough, it becomes one-card Monty, and they just punch us in the face then run off with the money.
Is the Big Guy still getting his 10%?
The utter and complete corruption of the Republic.
Healthy markets require a balance of greed and fear. Too little fear just encourages banks to do dumb things. Deposit insurance causes bank customers to suspend any critical faculties regarding the safety of the bank they choose.
I did dig into this. The FDIC has a bailout fund that was started after 2008. All banks pay a fee based on total liabilities (times a risk factor). That fund has enough money to cover all the depositors of SVB and Republic bank. Surprisingly, no tax-payer funds.
Now the Fed loan program to all other banks is a subsidy for sure and will likely result in some money printing.
I’m reading that the “special facility” allows troubled banks to post US Treasury securities at face value as collateral for loans from the Fed. So low coupon , long term Treasuries worth 80 cents on the dollar can be used to borrow the full face amount. The Fed is basically just creating money and handing it out. MMT at work.
Per FDIC chairman Martin Gruenberg…
Are there any banks with an ESG score of 0? Someone who lends to frackers, tar sands extractors, and discount firearms stores? That might be an underserved market.
“X Years of financial stability and making Klaus Schwab cry in his Kartoffelsuppe.”
Also, they are allowed to have 100% margin. Which I think means banks can borrow twice the mature value of the bonds (any govt. or psuedo-govt debt). If a mortgage backed security is worth half its value, then banks can borrow at 4X the market value, which is generous. The interest rate is 10bp above 1 year Tbill (4.4%+0.1%), which is better than any rate a bank can borrow at on the market. This kicks the can of zombie banks down the road for a year. Giving banks below market rate loans is a way the Fed has been subsidizing banks for decades. Zombie banks are very bad for a countries productivity, since they lock capital in failing ventures.
Not a bank but there is The Vice Fund…ticker symbol VICEX A US mutual fund.
They invest in Booze, Butts, Bets & Bullets
First Bank of Percival. I like it!
No – it will be the taxpayers and our children’s children who will be paying for this Administration.
This will not stop Biden from spending.
FDIC is supposed to be called at 250k. Now the Treasury has waived that limit and will ensure all the deposits. However, that creates a two tier system of favoritism just like with Justice. SVB got this deal because they are the “right” people. If it was…say… the Community Bank of East Palenstine, OH, then the 250k cap would have been enforced. The laws and regulations mean nothing as long as the Fed can just waive them at a whim for their favorite people.
Is this happening somewhere right now?
I wonder how many of the bailed-out depositors of SVB will own (or currently own) a Hunter Biden original painting?
I was listening to Hugh Hewitt this morning – there are rumors that Gov Brylcreem out of CA (Newsom) had three businesses that had large deposits in this bank, and he lobbied Burima Joe for the bail out.
That’s brilliant! Pay them off in collectible art!
It’s quite valuable, you know.
Here is what these executives were focused on rather than fiscal responsibilities.
Tucker Carlson takes a look at what execs at collapsed banks were focusing on (this is unreal!) – twitchy.com
We have to kill the ESG movement.
which is illegal in CA.
Here is more on SVB
SVB Pledged Nearly $74 Million To Black Lives Matter Causes (thefederalist.com)
Do you think they will give it back to help out their old donors?
A small amount compared with the bailout. That $74M was a wise investment with Biden choosing who gets bailed out and not. Why spend money on hedging investments, risk analysis, and economic forecasts; when you can just buy woke points from the Uncle Sam?
You mean Uncle Joe.
“And that’s Uncle Joe, he’s a movin’ kinda slow, at the White House.”
nationalizing the downside, am-i-right?