Fed Admits Blame for Silicon Valley Bank Failure

Should the FDIC insure more than $250,000 per depositor per insured bank?

  • 41.8k
    jimK
    03/14/2023

    What happened? Greed happened.

    These large regional bank argued that they need not have the same regulatory oversight that the big national banks are required to have. They spent millions in lobbying efforts to get the 2018 rollback on regulatory oversight passed by the Republicans and the trump as well as a few of the Democrats.

    These large regional banks no longer had to submit to stress tests to assure that they maintained adequate liquidity to prevent a bank run, They used this release to engage in speculative investments which dramatically increased their valuations from 2018 until today - in some cases by 300% or 400% by speculative investments.

    Repealing the 2018 trumpulican legislation would put some of these protections back in place and that is the first thing that needs to be done.

    Increasing the FDIC limit on protection for depositors is another step that can help. It would require that the FDIC to raise the insurance rates for banks who have depositors protected by the FDIC, so that depositors with more than $250K can be fully insured as well.

    Further, the regulatory rules will have to change to address the recent banking changes that allow immediate access to depositors accounts which can greatly increase the rate and severity of a bank run due to any number of economic actions.

    Banks need to be safe repositories of depositor assets and not investment enterprises willing to risk depoistor assets for the banks fainacial growth.

    I appreciate that the FDIC actions were made to prevent a cascading loss in confidence of the banking industry generally, as this would have been much more consequential.

    I also appreciate that Biden made it clear that investors in the failed banks are not being protected by these actions as they are the ones intentionally engaged in speculative investments which always have inherent risk.

  • 90.2k
    LeslieG
    Voted No
    03/13/2023

    Its not the responsibility of the US Government or tax payers to underwrite companies to take risks in their investments. Instead the regulations requiring sufficient cash on hand be available and not invested in financial instruments with interest rate risk need to be reinstated. The 2008 financial failure, and more recently Silicon Valley & Signature Bank (go to lender for Trump & Kushner families) failures are proof.

    "A package of regulations put in place after the financial crisis (called Dodd-Frank) was not nearly as strict as the banking laws and regulations of the 1930s. It required that the banks submit to stress tests by the Fed and hold a certain minimum amount of cash on their balance sheets to protect against shocks, but it didn’t prohibit banks from gambling with their investors’ money. Why not? Because Wall Street lobbyists, backed with generous campaign donations from the Street, wouldn’t have it."

    "Which brings us to Friday’s failure of the Silicon Valley Bank. You didn’t have to be a rocket scientist to know that when the Fed raised interest rates as much and as fast as it did, the financial cushions behind some banks that had invested in Treasury bonds would shrink. Why didn’t regulators move in?"

    "Because even the thin protections of Dodd-Frank were rolled back by Donald Trump, who in 2018 signed a bill that reduced scrutiny over many regional banks and removed the requirement that banks with assets under $250bn submit to stress testing and reduced the amount of cash they had to keep on their balance sheets to protect against shock. This freed smaller banks – such as Silicon Valley Bank (and the Signature Bank) – to invest more of their deposits and make more money for their shareholders (and their CEOs, whose pay is linked to profits)."

    https://www.businessinsider.com/signature-bank-ivanka-jared-kushner-michael-cohen-trump-org-2018-7?amp

    https://amp.theguardian.com/commentisfree/2023/mar/13/svb-collapse-2008-financial-crisis

  • 45.0k
    Brian
    Voted Yes
    03/14/2023

    I would support increased limits due to inflation and how much $250,000 is worth these days, but I don't know that it should be unlimited.

    I understand the risks posed by the failure of these SVB depositors to get their monies, but I don't think the FDIC can go around protecting all depositors at all banks going forward.

    I would support increased limits for small businesses and individuals, up to a point, but the rest should be handled in bankruptcy court. Those of us who worked for small businesses that went broke and couldn't make payroll didn't have the FDIC come along and bail us out when our paychecks stopped coming.

    As for saving SVB, I think the FDIC made the right call here and am glad the government didn't save the bank itself. They needed to learn their lesson and be a role model for when financial institutions do not practice safe investing.

  • 13.1k
    MrGeer
    03/16/2023

    typical...the profits belong to the banks, but when thier risks fail, its up to the tax payer to ''bail'' them out...who bails me out if I start a business and it fails? or if I can't afford a life saving medical procedure?

    in the words of Bernie Sanders ''

    In America today, if you're a wealthy vulture capitalist with over $250,000 in uninsured deposits at a loosely-regulated bank, the federal government will guarantee that your money is safe in a weekend.

    If you’re a struggling working person with no health insurance and get cancer, you're on your own.

    That’s what Martin Luther King Jr. would call "socialism for the rich and rugged individualism for the poor."

    It outrages me to watch wealthy bankers and their lobbyists repeatedly endanger the American economy, fight common-sense efforts to regulate them, and then expect the government to bail them out when they create a crisis.

  • 3,247
    Surender
    Voted No
    03/14/2023

    If bankers were smart & ethical they wouldn't be bankers

    If your product costs less than 5% and you are earning a weighted gross margin of 20% or more and you still lose money then you have to be dumb

    perhaps its time to create a 'repository' where you simply pay a fee for safekeeping and transfers - a 'warehouse'

    We already have trading platforms to take any portion of funds to 'gamble' with! Why would I authorize a 'bank' to use my deposits for flying kites? 

    if you combine the two - as we have now it becomes a defacto 'ponzi' house and no taxpayer should have to bail them out! 

  • 182
    Maureen
    Voted Yes
    03/14/2023

    We need to bring bac ban regulations like Dodd-Frank and the Glass–Steagall act, that protected customers of banks, instead of allowing banks to invest our money with no restraints.

  • 310
    Kate
    Voted Yes
    05/04/2023

    All deposits should be fully federally insured, and all banks should be prohbitd from gambling with my money.

  • 70
    George
    Voted Yes
    05/02/2023

    Consumers and workers over the Wall Street and the Banksters

  • 8,881
    Charles
    05/02/2023

    Hold the bank's CEO's accountable,take back bonuses , stock they sold prior to failure.

    Any congress member who held stock in this bank and sold prior should be held accountable as well.

  • 632
    Stephen
    Voted Yes
    05/02/2023

    I am Treasurer of a suburban library with an annual budget of $550k+ and reserves for capital improvement and operating expenses that exceed $200k.  In order to meet my fiduciary responsibility, I am forced to deal with three banks to insure that no single bank’s deposits exceed the $250k insured deposits limit.  Increasing the insurance to at least $500k would be helpful.

  • 632
    Stephen
    Voted Yes
    05/02/2023

    As Treasurer of a suburban library with an annual budget of

  • 1,259
    justiceforamerica
    Voted Yes
    05/02/2023

    The banking in America needs to be torn down and taken out of the hands of politicians.  Go back to the precious metals standard, get the politics out of lending, food processing, farming, go to flat tax and audit the hell out of every sitting and former politician that is still alive. Prosecute by taking that money and put some ethics into that decision like any insider trading and a mandatory - Loose everything and go to Gitmo for 10 years no matter your age. 

    Banking is collapsing because of overspending like drunken fools, supporting Ukraine like drunken fools and hating free enterprise like communists. 

    Basically, most of you are doing a s..t job at best.

  • 710
    Dan
    Voted No
    05/02/2023

    Why should the law be changed for a bad managed liberal bank? The FDIC protects up to 250,000. If this bank investors invested higher amounts in individual accounts, that's their loss, not taxpayers. 

  • 227
    Phil
    05/02/2023

    Stop bailing out the big Banks.

    If they fail, let them fall.

    Government needs to stop the heavy intrusion on the public economy.

    Government needs to stop picking winners and losers. 

  • 1,927
    Paul
    Voted Yes
    05/01/2023

    We're told to trust banks, and then banks get stupid. It's not the depositors' fault; banks have made themselves essential; we may not like them, but unless we live all-cash, we need them. We deserve protection.

  • 2,899
    Arlys
    Voted No
    05/01/2023

    The lack of ensuring regulations over banking practices is a good excuse as any for this mess.  However, the blame is still on the shoulders of the banks "board of directors".  The everyday customer should be reimbursed for the amount they had in their account and not a penny more.  The person who has their name on the account can always find a much safer place to open a new account.  Bad choices made by the bank executives are those same executives responsibility---not the government and definitely not my tax dollars.

  • 1,092
    Tammy
    Voted Yes
    05/01/2023

    yes its time to raise the amount to ensure

  • 854
    Larry
    Voted No
    05/01/2023

    There should be some sort of optional insurance, you take a reduced interest rate if you want it, and the difference covers the insurance, not taxpayers.

  • 2,934
    Gdbondii
    Voted Yes
    05/01/2023

    This is an old limit it should go up to a more representative 

  • 2,171
    JERRE
    Voted No
    05/01/2023

    They did for SVB and should not have done it. It was they were Woke and friends with the current administration. If "regular bank", probably would not do it and would give it the Palestine OH treatment as they are white Republicans. Like unequal justice!

  • 7,717
    PLZ
    Voted No
    05/01/2023

    It's a shame that our government had a huge part in allowing this to happen.  O'bama did it once and apparently Biden learned how to swindle millions from the American people.  
    I am so sick and tired of these continual crisis brought on by this administration.  We need to start holding them all accountable. Jail them all! 

  • 1,714
    Lesley
    Voted No
    03/21/2023

    More money than that? Spread it around. 

  • 8,881
    Charles
    03/21/2023

    Just say NO! Ahead of the colaspe stocks were cashed in , bonuses given another case ocf tender loving GREED .

  • 632
    Stephen
    Voted Yes
    03/21/2023

    I answered “Yes” to increasing FDIC insurance.  However, I would suggest raising it to no more than $500k.  As the treasurer of a town library with an annual budget and reserves of less than $750k, this would allow our library to have all of its funds fully insured in the two banks we currently use, rather than having the funds currently in excess of the $250k that we keep in one bank uninsured or requiring that we go to a third bank and do a three way juggle to manage our funds.

  • 632
    Stephen
    Voted Yes
    03/21/2023

    I answered

  • 116
    Tim
    Voted Yes
    03/21/2023

    Since both savings and IRA funds are in a lot of banks the fdic should ensure the banks don't loose any funds.