Thank you for the example you provided. A few points: The "bailout" funds are not taxpayer backed from what the Treasury has stated. Of course, their intent now is meaningless if the contagion spreads.
In my view, Trump also would have allowed this "bailout". This is the "D.C. Uniparty" doing what they do best. Due to the speed that a decision was needed yesterday, Congress was not involved. Ultimately this is a moral question - Should customers lose millions of dollars through no fault of their own? The depositors did not make the bad investment decisions of SVB. Their management needs to pay, not the depositors.
I suppose you could argue that they took unnecessary risks by placing more than $250,000 in their accounts. I agree in principle, but when real life intervenes doing the right thing is more important than abstract principles.
As stated in the Wall St. Journal: "The Treasury and Federal Reserve stepped in late Sunday to contain the financial damage from Friday’s closure of Silicon Valley Bank, guaranteeing even uninsured deposits and offering loans to other banks so they don’t have to take losses on their fixed-income assets. This is a de facto bailout of the banking system, even as regulators and Biden officials have been telling us that the economy is great and there was nothing to worry about. The unpleasant truth—which Washington will never admit—is that SVB’s failure is the bill coming due for years of monetary and regulatory mistakes."
So what ever happened to "moral hazard?" Haven't we learned the lessons of Bear Stearns, which ended up failing anyway even after a bailout? At the very least, the salaries and stock sales of SVB's execs should be clawed back.
Thank you for the example you provided. A few points: The "bailout" funds are not taxpayer backed from what the Treasury has stated. Of course, their intent now is meaningless if the contagion spreads.
In my view, Trump also would have allowed this "bailout". This is the "D.C. Uniparty" doing what they do best. Due to the speed that a decision was needed yesterday, Congress was not involved. Ultimately this is a moral question - Should customers lose millions of dollars through no fault of their own? The depositors did not make the bad investment decisions of SVB. Their management needs to pay, not the depositors.
I suppose you could argue that they took unnecessary risks by placing more than $250,000 in their accounts. I agree in principle, but when real life intervenes doing the right thing is more important than abstract principles.
As stated in the Wall St. Journal: "The Treasury and Federal Reserve stepped in late Sunday to contain the financial damage from Friday’s closure of Silicon Valley Bank, guaranteeing even uninsured deposits and offering loans to other banks so they don’t have to take losses on their fixed-income assets. This is a de facto bailout of the banking system, even as regulators and Biden officials have been telling us that the economy is great and there was nothing to worry about. The unpleasant truth—which Washington will never admit—is that SVB’s failure is the bill coming due for years of monetary and regulatory mistakes."
So what ever happened to "moral hazard?" Haven't we learned the lessons of Bear Stearns, which ended up failing anyway even after a bailout? At the very least, the salaries and stock sales of SVB's execs should be clawed back.