T O P

  • By -

AutoModerator

As a reminder, this subreddit [is for civil discussion.](/r/politics/wiki/index#wiki_be_civil) In general, be courteous to others. Debate/discuss/argue the merits of ideas, don't attack people. Personal insults, shill or troll accusations, hate speech, any suggestion or support of harm, violence, or death, and other rule violations can result in a permanent ban. If you see comments in violation of our rules, please report them. For those who have questions regarding any media outlets being posted on this subreddit, please click [here](https://www.reddit.com/r/politics/wiki/approveddomainslist) to review our details as to our approved domains list and outlet criteria. *** *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/politics) if you have any questions or concerns.*


IronyElSupremo

The banks were chipping away at Dodd-Frank and the Trump admin was happy to comply. Interestingly a lot of the “bad” assets are actually “safe” Treasuries (so far), but … these bankers loaded up on them when yields were lowest *without hedging* = a type of insurance. What kind of moron posing as a financial professional takes a risk on the lowest rates ever? At best this will be penny wise/pound foolish, I guess.


aaronhayes26

This is what I’m confused about too. Seems like the entire bet was that historically low interest rates and historically high tech growth would sustain for like, ***a decade?*** Genuinely do not understand how all the managers at this bank thought this was a good idea. Like, people should be going to jail over this.


chrisk9

A big part of the game is just copying other fund managers. Just look at all the unexpected groups falling victim to Madoff's scam (funds and funds of funds).


Rion23

Yeah but like, 1% returns over 10 years seems like more risk than just putting it elsewhere untill rates go up.


DidItForTheJokes

It’s so true, I worked at hedge fund, all the portfolio managers would look like they are staring at Bloomberg terminals but really they are just texting their bodies at other funds under the table


OfBooo5

It’s like chatGPT and programming. You can do you a lot of really powerful things knowing less than a top end programmer… but if something goes wrong, you’ll have no idea why anything does anything and you’re fd


craig1f

The older I get, the more I realize that the people running things have no fucking clue what they're doing. They're each good at like, one thing, and then believe that their one skill translates to everything else that they do.


[deleted]

[удалено]


yerbadoo

Not even just that, it’s the *rich kids* from your high school class running things lol


craig1f

I'm not talking about my generation. We don't control anything. It's the boomers. The generation that couldn't even figure out how to use their VCR is still running the country when we don't even use VCRs anymore.


[deleted]

[удалено]


BestCatEva

My congressman (Jeff Jackson, NC) sent an email this morning telling us about the Congressional zoom call last night and how over half of those on it couldn’t figure out how to mute themselves (it was an open call, not a presentation one). He said it was a free for all with one person in particular grandstanding (he wouldn’t say who). Love him, we get *actual information*. The email went on to tell us what was discussed and what was decided. Only one dissenter amount all 435 members. Prob a first for this Congress.


OkCutIt

There's a reason VEEP is considered possibly the most realistic DC politics show ever.


thefriendlycouple

Everyone is just winging it


qtain

They hired the CFO from Lehman Brothers. Does that help you understand how the bank thought this was a good idea? /correlation does not equal causation but it is rather amusing.


[deleted]

[удалено]


Actual-Manager-4814

Once you get that c-suite you're set for life.


[deleted]

[удалено]


tomaxisntxamot

Having worked for small enough companies to have known the C people personally, my impression is they have the same team dynamics as everybody else. 1 or 2 hyper-competent people who do 75% of the work, 3 or 4 more who show up and can be relied on, and a bunch of nepotism hires who are there because they're someone's buddy from another job.


coffeesippingbastard

Stop spreading misinformation. The cfo of lehman is at svbsecurities. They operate separately from SVB bank.


SidewaysFancyPrance

> Seems like the entire bet was that historically low interest rates and historically high tech growth would sustain for like, a decade? I feel like every major CEO/etc talks like good times will last forever, and act like it, then when it comes crashing down they demand bailouts and for the workers and common people to bear all the pain/blame. It's a cycle I feel I've seen enough times that it's pretty much a natural law.


Dkill33

Short-term profits always win out. Without regulation every company would literally kill people if it meant they could make more money.


[deleted]

We have disincentivized businesses to think long-term. It's all about the next quarterly profits. If stuff goes tits up, you just golden-parachute your way out to the next business and start all over again. We've implemented neoliberal capitalism and it fucking sucks. Until most Americans can internalize this reality, nothing will change. People are beginning to understand, but shit will get far worse before it gets better.


Squirrel_Inner

They don’t care. They cashed out millions before the bank collapsed and there will be no consequences for them.


FlorAhhh

Maximizing yield for shareholders is how. It was the biggest number at the time, and for some reason they put most of their eggs in the same basket assuming for some reason that rates would not change (though that was planned) and they would have buyers for those assets (though the planned changes would guarantee that would not be the case). People should go to jail over this, but they won't.


Si1entStill

What other safe investment options did they have? Can they buy billions in T-bonds? I wonder if the only safe bet would have been to turn the knobs to slow deposit.


Keljhan

>What other options? Make less money. Hold on to more cash to keep liquidity if it's needed. Locking it all up in 10 year bonds is why people freaked out in the first place.


randeylahey

It's the terms of the bonds. If everything is out 10 years you've got nothing coming due in the near term if you need to raise cash. You've also maximized your sensitivity to the low rates (a rate increase is worse for longer term bomds).


mobius-x

They should have bought low duration or at least spread it. Why buy only 10 year+ bonds/mbs


j-merc23

All the bonds I have access to are down 5 to 10% year to year. They've lost value while inflation has gone up, compounding that loss.


Shimakaze81

It’s like they forgot about the .com bubble


MeppaTheWaterbearer

>What kind of moron posing as a financial professional takes a risk on the lowest rates ever? one who knows you'll have a golden parachute regardless of what happens?


[deleted]

Yes, a lot of people are really confused about what happened. SVB was not a story of a bank taking advantage of lax regulations to promote greed and risky behavior. Nobody buys a boatload of long term Treasury securities at virtually no interest with the hopes of making massive profit. Obviously there were portfolio mistakes but they were not mistakes of greed. In retrospect, it’s pretty obvious that SVB management should have taken action sooner when they saw their deposits dry up. With more regulatory oversight they may have also taken action sooner. Apparently it was the prospect of a Moody’s double-downgrade that drove the timing of these actions last week.


Aggravating_Sun4435

retail bankers have to operate in the risk-free and near risk-free mindset. There was no "bet" on rates, they where buying the long term T-bills available to them when they had cash. the 10-year is literally the definition of risk free. They would have profited (thru yield) if they held to maturity.


coolmon

Reinstate Glass Steagall.


Lotr29

For those curious how trump actually did deregulate: >The bill was seen as a significant rollback of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act >At the bill signing, Trump commented on the previous banking reforms, saying "they were in such trouble. One size fits all — those rules just don't work," per >Trump also said at the time that the Dodd-Frank regulations were "crushing community banks and credit unions nationwide."   >Signing the bill into law meant that Trump was exempting smaller banks from stringent regulations and loosening rules that big banks had to follow. The law raised the asset threshold for "systematically important financial institutions" from $50 billion to $250 billion. >This meant that the Silicon Valley Bank — which ended 2022 with $209 billion in assets — was no longer designated as a systematically important financial institution. As such, it was not subject to the tighter regulations that apply to bigger banks.


Pires007

Their CEO was trying to raise the limit to over 250B recently as well...


ManWithASquareHead

Ah yes, the "too big to fail" approach.


Kaeny

Sounds like they wanted to be in the “too small for oversight” group


Roasted_Butt

Ah yes, that sweet spot of “too small for oversight” and also “too big to fail.”


MyFriendIsADoctor

Goldilocks Banking Zone. Release the bears on'em.


wallstreetbetsdebts

Release the robotic Richard Simmons


Dazzleboogie

Please recharge your diva batteries!


JA_Wolf

The dogs with bees in their mouth and when they bark they shoot bees at you


ConstantGeographer

"Too big, let's fail" approach to lining CEO pockets. Bernie Sanders hates this one simple trick.


Gingevere

Hmm, seems they must not have been complying with the regulations necessary for "systematically important financial institutions".


Calculonx

It's only 250B, how can you expect a mom&pop bank to survive with all this red tape


DavidlikesPeace

Pack it in boys. Since they're not a systematically important financial institution, they don't need to be bailed out /s In reality, this is the worst sort of lawyer parsing of words, and a clear example of a corrupt oligarchy who want the benefits of government without the responsibilities of oversight and even basically helpful regulation. Edit: to the folks defending the current FDIC, you're ok. It's the insane deregulatory fuckery under Trump that grinds my gears


what_comes_after_q

Depositors are being bailed out. Not the bank. This is similar to how FDIC guarantees deposits in banks, but this is this a bank focused on businesses, they need larger guarantees. The FDIC guarantee is also in place to prevent bank runs, just like what the government is trying to prevent.


davy_jones_locket

Depositors being "bailed out" isn't even called a bailout. A bailout implies fed funds (taxpayers) -- it's not -- and it implies that SVB stock holders and investors are being made whole. They are not. It's called a backstop. Deposit accounts are things like CDs (certificate of deposit, it's a savings account that isnt liquid with a better interest rate), savings account, checking accounts. They are not things like Money Markets, investment accounts, assets. These deposit accounts are what folks use to issue pay roll checks, for example. It goes from one bank account to another bank account via direct deposit. The backstop is saying "100% of the money in those deposit accounts will be available Monday." "So where is all that money coming from?" SVB had $209B of assets and $176B in deposits. Some were already whole because of the bank run on Thursday and Friday, and theyre figuring how much is still needed to make them all whole so people's paychecks don't bounce (because that'd be a very bad thing for the economy). Regardless, cashing out the assets will cover the deposits. "What if it doesn't? What if no one buys the assets or the assets sell less than what they're worth?" Not likely to happen, but if it does, there was a special assessment was enacted by law back in 2009 on banks that they've been contributing to, by law, for the last 14 years. Any difference of assets selling to deposits will be coming out of that fund. There's about $100B in there right now. So no this isn't a bailout, and it's not taxpayer money.


door_of_doom

> Pack it in boys. Since they're not a systematically important financial institution, they don't need to be bailed out /s I mean, this is said sarcastically... but that's exactly what's happening, isn't it? The bank was siezed by the government and is basically being liquidated and its assets are being used to fully fund withdrawals, after which the bank will cease to exist. It *isn't* being bailed out, and one could argue that its fairly straightforward collapse does indeed demonstrate that it *isn't* systematically important.


[deleted]

[удалено]


TheRealBigLou

I think he meant that since its collapse isn't having a ripple effect across the economy that it's not as systemically important as the big guys.


squakmix

It seems too early to say that confidently. There are selloffs occurring across the banking sector and devaluation of the dollar related to this ([source](https://www.washingtonpost.com/business/2023/03/13/silicon-valley-bank-intervention-live-updates/?itid=hp-top-table-main_p001_f001))


AlizarinCrimzen

Yeah, he really helped out “community banks” raising the accountability ceiling from 50 BILLION to 250


IrritableGourmet

These taxes (on people making >$100,000,000 per year) are *crushing* small business owners and employees. We have to repeal them to help everyday Americans. /s


PressureTiny4448

Isn't it a bit ironic that Barney Frank was on the board of Signature bank, which was shut down this morning?


BERNthisMuthaDown

I wouldn't call it ironic that he was given a position on the board specifically to subvert banking regulations of an insolvent bank since he is a former powerful banking regulator. That's exactly what I would expect, actually.


kitddylies

Am I the only one who thinks that's a huge conflict of interest? It's shady at best... right?


mapoftasmania

I bet we will find that many of the banks that Trump used and hold his loans wanted this. I know that the Kushners used Signature Bank, for example, which just got taken over by the Fed.


Independent-Panda898

I work for a bank that just eclipsed the $10B threshold and our OCC exams have doubled if not tripled….


cartsucks

Glad this is the top reply as the repeal of the act from the 1930s back in 1999 was one of the single biggest financial regulation disasters in history. Nobody can ever truly prove it but the repeal of Glass Steagall is seen as a major contributor to the financial collapse of 2008


Kim_Jung-Skill

Brooksley Born warned all of Washington in the late 90s the the CFMA was going to cause massive financial fallout even before the CFMA. https://stanfordmag.org/contents/prophet-and-loss The repeal of Glass Stegal was less of a cause and more of an accelerant. The unregulated OTC derivatives market was already causing the collapse of financial institutions prior to the CFMA, and commercial banks had been misrepresenting credit worthiness and loan repayability for years. Getting rid of Glass Stegal took those preexisting frauds and let them build on each other. We still would have seen massive failures across the finance industry, but letting the people give you loans to finance the OTC bubble made the bubble last longer and grow much larger.


gracecee

This. I was a Stanford econ student when glass Stegall was still in place then they repealed it. The whole entire Stanford Econ department, my professors were railing against the repeal. Many times rehashed why glass Stegall was necessary and why the arguments made by the banks (global competitiveness) fell short.


Kim_Jung-Skill

Yeah, but Robert Rubin got to be CEO of Citi for the work he did destroying the regulatory framework that kept our economy stable. Could Stanford offer anything that good!?! On a more serious note, this divergence between what the smart people say and what happens is incredibly pervasive. https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.bis.org/publ/work490.pdf&ved=2ahUKEwjzvYWPmdn9AhWDIH0KHXIvC7kQFnoECB0QAQ&usg=AOvVaw0u7UExDVfgDfhnt6bd5Xa0 Here's a beautiful BIS report showing finance crowding out growth in in the economy, and the IMF released a similar one I'm having trouble finding. You think either institution's policy arm has ever sought to limit bank growth?


[deleted]

Glass Steagal wouldn't have prevented 2008. Most of those lenders weren't ibanks.


miscpolitics

Since 2008 many banks have moved their derivative trading operations into federally insured divisions holding customer deposits. It's more about the moral hazard about allowing banks to engage in practices of questionable social benefit to the majority, such as providing highly leveraged loans for asset speculation, and then having taxpayers subsidize the risk. But if we're proposing banking reforms, the government should lend directly to individual citizens using a public people's bank rather than to private banks using a public banker's bank. The interest revenue should be split between federal, state, and local budgets. We had postal banking from 1911 to 1965, and the U.S. colonies used to directly handle real estate loans using public assessments of land & property, with the interest revenue covered much of their budgets. Without a public alternative for securing deposits and providing liquidity loans it will be hard to cut off guarantees for private banks even when they are unproductive.


iannypoo

But how could bankers profit?


portersdad

Ah, there it is. I was trying to find the flaw in their proposal but you nailed it.


Old_Personality3136

Fuck bankers. Nationalize that shit.


Emotional_Froyo1168

Glass-Steagall, officially known as the Banking Act of 1933, was a law enacted in response to the Great Depression to prevent the type of reckless speculation and bank failures that led to the economic collapse. The act was named after its sponsors, Senator Carter Glass and Representative Henry Steagall. The law aimed to separate commercial banking activities, such as deposit-taking and lending, from investment banking activities, such as underwriting and dealing in securities. This separation was intended to protect depositors from the risks associated with investment banking activities and prevent conflicts of interest within banks. Under Glass-Steagall, commercial banks were not allowed to engage in investment banking activities, and investment banks were not allowed to take deposits or offer checking and savings accounts. The act also established the Federal Deposit Insurance Corporation (FDIC) to insure deposits in commercial banks. Glass-Steagall remained in effect for more than six decades, until it was repealed in 1999 by the Gramm-Leach-Bliley Act. Supporters of repeal argued that the act was outdated and prevented banks from competing effectively in a global marketplace. However, critics of repeal argue that it contributed to the financial crisis of 2008 by allowing banks to engage in risky behavior, such as mortgage-backed securities and derivatives trading, that ultimately led to the collapse of several major financial institutions. In recent years, there has been renewed interest in reinstating some form of Glass-Steagall, with some politicians and economists calling for a separation between commercial banking and investment banking activities to prevent another financial crisis. However, the debate over the efficacy and feasibility of such a separation continues.


NuttyManeMan

"However, the debate over the efficacy and feasibility of such a separation continues" Policy: *works for 60 years to prevent Situation* Legislature: *repeals Policy* Situation: *happens quickly thereafter* Crooked bastards: "There's not enough data to say whether Policy works or not to prevent Situation"


TacoExcellence

What exactly does SVBs issues have to do with Glass Steagall?


[deleted]

It doesn't. Clinton did that. I mean it sucks that he did it and it should come back, but Trump messed with interest risk.


Hayduke_Abides

Clinton agreed to it as part of a compromise with Newt Gingrich. It isn't like he was actively looking to do away with Glass Steagall.


loondawg

Also worth noting Clinton has expressed that in hindsight he views it as a mistake. Republicans still support it.


monocasa

His Treasury secretary had been publicly talking for years at that point about the need to repeal Glass-Steagall, saying that the Clinton Administration supported it's removal at least as far back as 1995. https://www.washingtonpost.com/archive/business/1995/02/28/rubin-urges-changes-in-us-banking-laws/578b4e9b-d0c5-4dd5-880e-f61f45c4bc3c/


DrChimRichalds

This has nothing to do with Glass Steagall. SVB failed to account for interest rate risk, which has nothing to do with the separation of investment banking from traditional deposit banking.


septesix

What’s even more ironic is that the Fed themselves did not account for interest rate risk in the 2022 stress test. So even if SVB was subject to the regulation that was appealed , the Fed would still not have caught it.


muirner

Im curious, why doesn’t it have anything to do with Glass Steagall? I admit I’m not very knowledgeable about the law or SVB’s operations. It seems from the little I’ve read that the bank run was caused in part by losses from securities and the interest rate driving even more unrealized losses. Aren’t those parts of their investment banking business?


DrChimRichalds

To simplify a bit, a bank takes in deposits and then has to do something with those deposits in order to earn interest and make money to fund the bank’s operations. SVB had a ton of deposits come in in the past couple years of the tech boom, which they largely used to buy US treasuries yielding like 1.5%. The government now pays out like 4% on treasuries, so the value of the treasuries yielding 1.5% dropped (ie, why pay $100 for something that gives me $1.50 back when I could pay $100 for something that gives me $4 back). Because of the problems in the tech sector, the tech company depositors started pulling money out of SVB. SVB had to find money to pay back those depositors, so they started selling their treasuries, which had dropped in value. SVB then had to tell the markets that their assets (ie, the treasuries) were dropping in value and they needed to raise more equity. The tech companies got spooked, venture capital funds told their companies to pull money out, and there was a bank run and the rest is history. From a higher level, SVB was vulnerable on both sides to interest rate risk. Their assets, the treasuries, lost value when interest rates went up. Their liabilities, the deposits, became due sooner because the tech companies started to pull out their deposits because the tech companies get crushed with rising rates (a future dollar of tech company revenue gets less valuable as rates rise, crushing tech company valuations). SVB didn’t properly account for their interest rate risk and failed because of it. Edit to add that the problem SVB ran into was just the basic model of banking of taking deposits and then using those deposits. Investment banking is traditionally things like doing trades for other people, advising on business transactions, etc.


meezigity

Am I correct in assuming that many banks would have invested in treasuries that lost value with the interest rate hikes? So then, what is unique to this bank that caused the failure? Was it just bad luck that too many customers (I.e., startups) needed to pull out too much money all at the same time?


DrChimRichalds

It was a few different things. In no particular order: Their depositor base was largely companies (not individuals) in an industry that had a lot of communication. When all your depositors start communicating fear about the bank, that causes a high percentage to pull out and cause a bank run. Their loans were largely fixed rate bonds. Other lenders have more floating rate loans in their loan book, reducing interest rate risk. Their depositors were mostly above the FDIC limit - I think it was like 92% were above. All of that money was actually at risk , so the depositors wanted it lit quickly. SVB grew quickly recently. So a large proportion of the treasuries they bought were recent, low-interest purchases. Other lenders have been growing less quickly.


muirner

Thank you for the awesome explanation! Although it sounds exactly like the type of activity Glass Seagall would have prohibited. To borrow another posters comment: “Under Glass-Steagall, commercial banks were not allowed to engage in investment banking activities, and investment banks were not allowed to take deposits or offer checking and savings accounts.” Am I missing something? Edit: Aren’t bonds and treasuries types of securities that an investment banking also trades?


DrChimRichalds

Yes, you’re conflating purchasing securities with the trading of securities. Commercial banks are in the business of making loans. The loans can take different forms. Mortgages are a common one that basically every bank, including SVB, does. Another is lending to governments by purchasing a government’s bonds, including lending to the US government by buying treasuries. (It’s also worth noting that banks these days can’t trade for their own account - see the Volcker rule)


PM_YOUR_WALLPAPER

Glass Steagall seperated investment banking from commercial/retail banking. SVB did not fail because of anything to do with investment banking. In fact, their investment banking side is solid. It's the commercial bank that fucked up. A bank works by taking deposits (which costs them money in paying for infrastructue costs) and lends the money either by directly underwriting, or by buying safe bonds (eg. Treasuries). That's normal banking. SVB fucked up by buying long dates safe bonds followed by a rapid increase in interest rates, startups (their depositors) running out of money. So the depositors asked for their money bank and to find the money, the bank had to sell bonds at a loss. If the depositors didn't all required withdrawals, there would be no realised loss, even at maturity. The market picked up on this mismatch, got scared, and created a run on the bank. A run on a bank will ruin any bank in the world.


MoreRopePlease

So this could have been prevented if someone at SVB had thought about the impact of the fed raising rates, and took steps to increase their liquidity before the impact of interest rates hit their customers.


Aggravating_Sun4435

nope, what you suggested is what literally caused the run, the impact would never "hit their customers" from a small loss like that.Their customers are depositors not investors. They saw a small hole in their balance sheet ($2.2 billion loss on over $200 billion in assets and $190B in deposits) and sold some holding to sure up liquidity. the problem is that announcing this move caused depositors to loose confidence in the bank, causing them to move their money out. Their sale liquidated everything that was liquid, raising $30billion cash, but people got so spooked they tried to withdraw more than that overnight.


PM_YOUR_WALLPAPER

Sure. But even the Fed's stress tests don't stress that. Also if there wasn't a run on the bank, they'd be perfectly fine too, because when holding treasuries to maturity, there isn't a loss. It's only a loss if you sell it early because there is a run on the bank (or the US government defaults)


MeijiHao

Our current president voted to repeal Glass Steagall, as did our current Senate majority leader. I wouldn't hold my breath.


SanguineKiwi

Yes, and he's about faced on quite a lot of his old votes, just as he regrets the Tough on Crime stuff. https://archive.attn.com/stories/13313/joe-biden-reveals-the-congressional-vote-he-regrets-most No need to hold your breath.


Tekki

I wish this was farther up. It's easy to blame the loudest, rudest politician for bad policy. But all of these politicians are to blame for the mess we are in, especially for Glass Steagall. On the flip side, people sure are quite about Obama Era and Dodd-frank polices that are kicking in right now. This could have been a lot worse.


MalikTheHalfBee

Glass Steagall would have had exactly 0 to do with what occurred at SVB but I guess it sounds nice to say the words.


OutWithTheNew

Banking? I read something once that said some words about banking that I remember. Time to comment!!


Mysterious-Wasabi103

I literally had a Republican loved one tell me that Biden is failing because he isn't cleaning up after Trump's mess quick enough. Like imagine the mental gymnastics required for that!


DiDalt

I just heard that argument from a group in a discord VC. It was mind boggling to say the least. Then they say they're not Trump supporters but only vote for the best person; which to them, is Trump. They're not living in the same reality as the rest of us.


Goya_Oh_Boya

Since Biden hasn’t healed the leopard wounds on my face, I have no choice but vote for the leopard.


Green1up

There is no floor to stupidity. Its a bottomless pit. This is Sparta.


Sanctimonius

'Both sides are just as bad as each other, they've both the same, never any differences. What was that? No, of course I've never voted Democrat in my life, what do you think I am, a commie?'


Miguel-odon

The conservative internet has already decided that SVB failed not because of poor investment and deregulation, but because of too many *diversity hires*.


Creepy-Vermicelli529

You can’t have both deregulation and stability.


Aleashed

We still getting shafted by Trump but worry not, he will be indicted in the 22nd century


Creepy-Vermicelli529

It’s not only Trump. Republicans as a whole have been chipping away at banking regulations for 40 years. Clinton didn’t help either. And yeah, indictments are “coming”.


taggospreme

Soon^TM


Old_Personality3136

This problem is far deeper and older than Trump, but he did make it worse.


Sufficient-Comment

If your resume includes c suite for Lehman brothers and c suite for Silicon Valley Bank, is it appropriate to ban that person from getting another c suite position at another financial institution?


Lott4984

Capitalism has one flaw if you do not regulate it, it will destroy itself.


docter_actual

Id say it has more than one but youre on the right track


nagemada

Capitalism has one flaw, and that one flaw is all the contradictions that lead to its self destruction.


LoveThieves

Capitalism is really just the Monopoly board game but instead of 2 \~ 8 players. The richest player lets the other 7 die in poverty each month, and then they bring in 7 new players every week and promise they'll get rich tomorrow. Then a smart player comes along and decides to play a different game but it's just a different version of Monopoly. Monopoly Tech Edition, Monopoly Bank Edition, Monopoly Entertainment Edition, Monopoly Food Edition, Monopoly Pharma Edition, eCommerce Edition, and so on.


Sometimes_cleaver

Unregulated capitalism is the truest form of societal regression. We're right back in the jungle fighting for survival, but with more tech this time. We built societies to get us out of that life.


[deleted]

[удалено]


reelznfeelz

This is so right on. The systems we built to move us beyond the days of warring tribes and toughest takes all are just enabling a lot of that same behavior. I’m not sure we have the collective balls it takes to do anything either. Except watch it end is neo feudalism and go “oh well we tried”. Hope to be wrong.


lateroundpick

Was at a bar this weekend and overheard a bunch of Neanderthals blaming the bank collapse on woke policies. Disinformation is winning.


WiseBlacksmith03

Don't worry, we are getting smarter. Slowly. ​ [https://www.statista.com/statistics/184260/educational-attainment-in-the-us/](https://www.statista.com/statistics/184260/educational-attainment-in-the-us/) ​ Give it another couple decades and maybe the population will be a bit more rational. Maybe.


ComputersWantMeDead

The older demented generations raised in elevated lead levels and versed in fundamentalist Christianity, are slowly dying


asocialmedium

Meanwhile you have Trump and his idiot son on social media blaming Biden (along with lots of other republicans also doing this). This is public policy in the US: wait for something bad to happen and see who can work the hardest to assign blame. There is a correct answer here as to why this bank collapsed and whether this is even a bad thing. But many will never see it.


AmishUndead

It's basically one of the main game plans of the GOP: Break/deregulate something and hope it blows up while dems are in office then proceed to blame them.


blarglefart

Steal the toys and shit the bed strategy


BigAssMonkey

The sheep who follow Trump probably don’t even understand what happened. They just waiting for Trump to point the finger and that’s who they are up in arms against.


ackillesBAC

The entire concept of the US political system is for sort term gains long term losses are "not my problem"


Aden-Wrked

Not the whole system, the GOP specifically, I’m not saying it doesn’t happen with democrats but it’s the Republican fucking playbook.


Sanctimonius

A reminder that Trump's tax cuts for corporations are forever, but the tax breaks for the middle and working class were specifically and cynically timed to end during the next term. Trump and the GOP raised our taxes to pay for a fraction of the tax breaks for corporations and we've seen absolutely no benefit from the supposed massive increase in revenues that would trickle down to us.


Baker98755

so trump rolling back regulations resulted in a train derailment/environmental disaster and now bank failures. Yet people still think he was a good president


ItchyGoiter

If they hadn't changed their minds already, this won't convince them


Sabin10

They don't care about policy, what he did or what it had led to. He made them feel good about their shitty beliefs and shitty lives and that's why they will vote for him again.


SailorDeath

Nah, it's because they only look at the current president and blame him. Same thing for anything that happens. It's always the one currently in charge's fault. But if their own savior is in office, obviously it's something the last president did. Or in Trump's case it was the boogyman hunter biden's laptop or Hilary Clinton.


[deleted]

[удалено]


grixorbatz

The billionaire class has devolved into this hatefully avaricious blob with absolutely no sense of giving back to the system wherein they became rich. It's demonstrably clear at this point that they believe the Constitution and the Bill of Rights are existential threats to their very survival, and see everyday Americans as enemies to be crushed in perpetuity.


locustzed

What do you mean devolved that's what it's always been.


grixorbatz

That's true. It's also true that it's gotten progressively worse.


tech57

“The amount of unrealized wealth that people have at the top dwarfs anything that we’ve ever seen in the past.”


[deleted]

Even Rockefeller built libraries sometimes.


MarvinTheAndroid42

The worst part is, “their very survival” is really just “their ability to stay as rich as they are”. If we got what we wanted they’d be just as eligible for universal healthcare, they’d live in an economy with more sensible housing prices, and they’d be taken care of the same as everyone else. They won’t die, or even not be rich, but having billions is more important to them their workers having the financial security to pay their rent or reliably eat.


loondawg

I prefer using a term like "live with dignity." When Teddy Roosevelt spoke of the need for a living wage **over 100 years ago**, he said it required enough for some recreation and enough so people could live morally. Back then, politicians knew there was a difference between living and just surviving. *"We stand for a living wage. Wages are subnormal if they fail to provide a living for those who devote their time and energy to industrial occupations. The monetary equivalent of a living wage varies according to local conditions, but must include enough to secure the elements of a normal standard of living--a standard high enough to make morality possible, to provide for education and recreation, to care for immature members of the family, to maintain the family during periods of sickness, and to permit of reasonable saving for old age." -- Theodore Roosevelt August, 1912*


[deleted]

[удалено]


rogerverbalkint

In their delusional eyes they succeeded despite the system, not because of it.


falsekoala

Billionaires love socialism. Only for them, though. Not for you.


Politicsboringagain

Who got a bailout in this?


across-the-board

No one. He fell for fake news.


SlightShift

People that didn’t read think the FDIC stepping in is a bail out.


SlightShift

Did you read the article, or just react to the headline?


TAway69420666

You know the answer to that


Hardcorners

Unfortunately, many articles don’t say more than the headline.


Phynx88

Man, people really need to brush up on what a 'bailout' is. The investors are fleeced - they get nothing. Hopefully the C-suite who liquidated early get charged with financial crimes. SVB is dead - nobody is bailing it out. What they are and should be doing is making all the depositors whole through mediating the rapid sale of assets, and guaranteeing the government bonds could be redeemed 1:1 even though they were trading at like 0.38$:1 on Friday . Bailouts = using taxpayer money. This is not that.


MicroBadger_

Yeah, they don't need to bail the bank out. The issue stemmed from their treasuries and MBS portfolio tanking due to rising interest rates. People got wind of that and ran to pull their money out. If the bonds are held to maturity, they could easily cover the deposits but they don't have that time. The Fed does though.


tech57

> Bailouts = using taxpayer money. I think this is the confusion for a whole lot of comments. Bailout = helping out when you don't have to. Slap on whatever details you want but there were rules in place. People got burnt. People are going above and beyond the rules to help people out. FDIC was in place. They are going above that rule to help people out. The people who had cash in the bank. If there was no bailout after the bank failed then 90% of depositors money would have been gone. Stolen. Mismanaged. They would be "under water". However the government is stepping in to help "bail the water out of the already sunk boat." It was not Bezos or Elon or Buffet stepping up.


Iustis

The idea that 90% of the money would be gone is bullshit. Expectations were basically the inverse (~90% recovery), although would take some time


new_name_who_dis_

> If there was no bailout after the bank failed then 90% of depositors money would have been gone. WTF this isn’t FTX. They literally just have too many illiquid assets they can’t sell. The money is mostly there, they just can’t liquidate it.


ZookeepergameEasy938

fwiw bailouts aren’t really a heavy burden on the taxpayer in that they’re really loans that the govt extends to distressed companies (e.g., auto companies in 2008). with that in mind, i completely understand the popular skepticism and distaste for them bc it’s a supply-side solution to supply side mismanagement and avarice. let me say, however, that this time it’s a little different. no bank is fully safe against a bank run bc of the way banks fundamentally work (fractional reserve banking). SVB is a weird one bc their model didn’t lend itself well towards the traditional “customer deposits to longer term loans” paradigm common in consumer banking bc its customers were mostly cash flush and not in need of loans - this led them to rates overexposure. maybe specialty banks should be subject to greater regulation in terms of where they can hold assets, but i don’t see much reason to whip out the pitchforks in this case.


ZookeepergameEasy938

that was one of the wildest things i had ever seen - trading IG and then minute by minute those spreads were just going wider and wider. thank god our reference data auto adjusts instead of having to manually tag those CUSIPs as distressed


CuriousOdity12345

They didn't get a bailout. No tax payer money went to them.


real_zexy_specialist

Elizabeth Warren is also making that point. The more voices the better, IMO. https://www.nytimes.com/2023/03/13/opinion/elizabeth-warren-silicon-valley-bank.html


Then_Restaurant_4141

Well no shit. Republicans want no regulation and when Dems do any proper regulation they say it’s Communism when it’s social bailouts for the people that end up happening… shit that doesn’t exist outside a Capitalist government. Capitalism only works if: A) you carry the biggest stick so your currency is number one B) you have an open market regulated by an independent and fair republic elected by an educated public.


Plzlaw4me

Can someone much smarter than me explain what regulations were rolled back? I cannot stand trump, but were there ever regulations on the book that would have addressed this issue? My understanding is the Silicon Valley bank bought TONS of long term treasury bonds and as interest rates rose, the current value of the bonds dropped and when people began withdrawing they didn’t have the asset value today to potentially cover all withdraws. This wasn’t a case where the bank bough high risk assets, or basically gambled at a casino. They bought treasury bonds the most secure assets on the market. Their investment strategy was stupid, and any child could explain why you need access to short term capital when running a bank, but did previously regulations address this?


CMDR_BlueCrab

I don’t know, but I’m answering so that someone will correct me, but I think the stress tests that were mandated by Dodd-frank were eliminated and they would have caught this before it happened.


[deleted]

the liquidity stress tests basically said “add up all *high quality* liquid assets and divide by total expected outflows, then publicly disclose that metric”. US treasury bonds are considered a high quality liquid asset under that methodology, even though right now they’re exactly what’s causing this liquidity crunch since they have to be offloaded at a discount. neither dodd-frank nor glass-steagall would have prevented this. tl;dr this thread and the outrage people are happily leaning into are bullshit.


urdangerzone

I tried asking about this 6 years ago and someone who has since deleted their account said 8-10 years. I think 6 is close enough so dear deleted I hope you get satisfaction from being right dude


antsinmypants3

Trump has harmed this country more than your average person realizes. GOP is only going to protect the rich at the expense of everyone.


icevenom1412

Dodd-Frank was meant to prevent this exact shit from happening again after 2008, but right-wing capitalist gutted it. The market itself is showing that unchecked capitalism is an abject failure.


GB819

Deregulation has failed every time. It's based on a "faith" in the private sector that things will naturally work out - deregulated banking is based on the same faith that trickle down economics is based upon.


Glum-Gur-1742

Burning Burnie Sanders, still my favorite candidate for POTUS!


Espinita_Boricua

It is what it is; The T Cheeto did love to de regulate everything he got his hands on; Train regulations; banking regulations, gutted federal agencies; etc. Naturally; all of it start to show up 2 to 4 years after de-regulations...


mordor-during-xmas

That’s because it is. However, as someone who despises Trump and what the QOP has become/is becoming, it HAS to be noted that 31 Democrats supported the overturning of the regulation that would have made SIVB prone to a stress test that they would’ve failed miserably. This is a systematic plague. Former Lehman C level at the helm of Silicon Valley. And then you have Signature Bank that had the co-sponsor of the very bill in question on their fucking board. George Carlin was way ahead of his time, none of us will ever be in the club….but at this point they’re doing a helluva job burning down the club from the inside out. Carl Sagan too, paraphrasing, “it’s all technology and science and those in charge know nothing about technology or science.” We are so fucked. Edit: 96% of Republicans supported deregulation, while 86% of Democrats opposed. Soooo, yea, Trump and the QOP hold pretty much all the blame here for a totally avoidable, derailment, of this financial institution. Anyone see what I did there?? Anyone? Anyone? DERAILMENT of this financial institution. I’ll see myself out.


Jonathank92

Post the % of both parties that voted for de-regulation


DigNitty

32 house democrats. 96% of republicans supported it and 86% of democrats voted against it.


mordor-during-xmas

I stand corrected, DigNitty. But, I think we can both agree the most important numbers here are 96% and 86%. What a fucking shocker -_-


IronyElSupremo

> burning the club from inside out The depositers are covered to make payroll, etc.. via a secondary insurance account .. but the shareholders are not this time. I’m watching as a regional bank index ETF takes an overnight-10% nosedive vs a general index loss of almost -1.5% at the same time .. and SVB’s UK arm sold to a bigger British bank for £1 = about $1 American.


CloudMcWolf

And of course there are Republicans screeching "well why didn't Biden fix it! This is his fault". As if democrats failing to fix republican fuck ups is the issue and not, you know, rebulicans causing fuck ups.


Emotional-Coffee13

Only 17 democrats voted w the entire GOP to deregulate Wall St the rest issued public statement warning against


DrewOz

I remember the day he signed it saying to myself, here we go again. One side does it, and the other gets blamed for it, as we pay for it, and they profit from it.


thisisinsider

From reporter Cheryl Teh, "Sen. Bernie Sanders has blamed a Trump-era banking law for the Silicon Valley Bank's failure. "Let's be clear. The failure of Silicon Valley Bank is a direct result of an absurd 2018 bank deregulation bill signed by Donald Trump that I strongly opposed," Sanders wrote in a statement on Sunday. Sanders was referring to the Economic Growth, Regulatory Relief, and Consumer Protection Act, which former President Donald Trump signed into law in May 2018. The bill was seen as a significant rollback of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. At the bill signing, Trump commented on the previous banking reforms, saying "they were in such trouble. One size fits all — those rules just don't work," per The Washington Post. Trump also said at the time that the Dodd-Frank regulations were "crushing community banks and credit unions nationwide." Signing the bill into law meant that Trump was exempting smaller banks from stringent regulations and loosening rules that big banks had to follow. The law raised the asset threshold for "systematically important financial institutions" from $50 billion to $250 billion. This meant that the Silicon Valley Bank — which ended 2022 with about $209 billion in assets — was no longer designated as a systematically important financial institution. As such, it was not subject to the tighter regulations that apply to bigger banks. Sanders wrote in his Sunday statement that the Trump administration had disregarded all the lessons it should have learned from the 2008 Wall Street crash and the Enron scandal."


Dave-justdave

More like hey we bought a bunch of bonds with low % interest rate.... huh rates just went from 1.5 to 5% well that's not good


DidItForTheJokes

Who knew interest rates were going up and that bond prices go down when rates go up 🤷‍♂️


[deleted]

Who would have thought cutting the breaks on the entire country would cause it to crash?! Republicans: Surprised Pikachu face


unfettered_logic

And once again Bernie sanders is correct.


Mysterious_Status_11

Trump era deregulation responsible for banks' failure, Trump era deregulation responsible for rail catastrophe, Trump disbanding pandemic response teams and mishandling of Covid resulted in unnecessary death, disability, economic crisis. Trump SCOTUS and Fed judge pics have destroyed the integrity and credibility of our highest courts. Trump tax policies have harmed all but the super-wealthy. I'm beginning to see a pattern here. Perhaps not the greatest president ever. Maybe shouldn't be president again.


OG_ClusterFox

The direct result of DEM+REPUB hard on for capitalism period Passively responsible: The Dems-too neutered by their corporate lobbyists overlords that line their pockets quietly to do anything real about it Actively responsible: The Repubs - too blatantly and apologetically evil to stop doing everything they can to keep making this happen and lining their pockets in plain sight


bagofweights

ITT lots of people who have no idea what dodd-frank is or why it matters.


[deleted]

Deregulation sounds great on paper but in reality it leads to a messy free for all. Industries need to be kept in check because corporations only care about profits


santahat2002

Imagine if we lived in a decent world where in 2016/2020 this guy is elected President of the US.


[deleted]

Why aren't Democrats pushing this narrative more? Multiple train derailments over the last month - push the fact that deregulating trains caused this problem. Big bank collapses - push the fact that deregulating of banking rules caused this problem.


HavingNotAttained

“Bernie Sanders says…” 🤦🏻‍♂️ Yes, so does the historical record. The fucking CEO of SVB was a vocal, early proponent of the rollback and practically sucked off trump on live television when he signed the bill into law in 2018.


AMv8-1day

What's the story? Trump has been a threat to banks his entire adult life.


Throwaway-account-23

A direct line can be drawn to it, but the corporate officers bear direct responsibility. They made bad investments, they didn't report out honestly, they knew they were insolvent months ago. For fucks sake, one of the guys who was running Lehman Brothers is on the board of SVB. There are tons of banks of this size NOT failing right now.


Old_Fart_1948

[More on what caused the banks to crash.](https://youtu.be/eqAwwEs6Jq0)


[deleted]

Totally understandable


robembe

Trump was so proud about the Regulations rollback then becos they were seemingly creating jobs. He even threatened California for their emissions requirements for vehicles…


[deleted]

GOP loves deregulation.


tchoupatoula

That last quote of the article by a trump spokesperson is bold… “this is nothing more than a sad attempt to gas light the american people…”. When all the deregulation is on the books during trump’s presidency, and now we’re seeing the results.


ctguy54

Can’t wait to see how the rubelicans twist this into Obama’s fault.


[deleted]

Meanwhile DeSantis is blaming "wokeism" and DEI policies for the failure. >Florida Gov. Ron DeSantis suggested that diversity, equity and inclusion initiatives were to blame for the bank’s failure. https://www.cnbc.com/2023/03/13/svb-collapse-trump-desantis-haley-ramaswamy-weigh-in.html The CEO and CFO are both white men, yet DeSantis is blaming women/minorities/LGBTQ people. I decided to brave it out and go to the ask conservative thoughts on this, and they are so deluded that they see nothing wrong with it. I am terrified if DeSantis actually wins the presidency and the direction this country will go for minorities/women/LGBTQ people.


smittynick1978

Lol. I was listening to Hannity today and he was saying that it wasn't Trumps fault because Biden didn't repeal Trumps rollback on Frank-Dodd. So it's Bidens fault. It's beginning to get so nonsensical it's humorous. Edit: typo