The Biden Administration Just Bailed Out A Bunch Of Rich Silicon Valley Venture Capitalists - With Taxpayer Money ... We've Seen This Before
The rich VCs do their best to hurt the middle and working classes when their own interests are threatened, it's the total bankruptcy of not only SVB and Signature, but of corrupt Dems and Reps...
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These regulations were signed into law by a Republican Administation - and pushed by bought-off Democrats.
”No sooner does a firm keel over than calls for a bailout or some other government rescue ring out. The effrontery that attends the call to hurl taxpayers beneath the wheels of the business failure bus is perhaps the most enduring dividend of a chain of government rescues beginning with the Penn Central loan guarantees in 1970. While the early, official comment from Treasury Secretary Janet Yellen is that there will be no bailout [there was in fact a total bailout], as of this writing (5pm Sunday March 12, 2023) various sources are reporting depositors lining up at a number of other banks in SVB’s geographic and commercial ambit. While SVB is not a systemically significant financial institution, it’s worth mentioning that vast numbers of banks have large holdings of long-bonds purchased at record high prices and rock-bottom interest rates. Although the majority of them are not likely to be as precariously situated as SVB and its dubiously viewed neighbors are, a systemic problem of some magnitude may still lurk below the surface.
A few additional words which, in a few days or weeks may, and hopefully do, prove irrelevant.
Government rescues are frequently marketed as having been profitable or, at the very least, not losing taxpayer money. Those claims are best taken with the proverbial grain of salt. First, because if that’s true, it’s purely accidental. However marketed, bailouts usually occur under duress and little (if any) economic calculation accompanies them. They tend not to be cost-effective in light of the risk taken. And even if they are, it doesn’t matter. It’s not as if I will receive a check for my portion of the rewards reaped. There’s no conceivable reason why I, living 3,036 miles from Silicon Valley, should contribute even the meagerest financial support to a regional bank, much less to one that had an extraordinarily concentrated deposit base and was negligently slow to attempt to immunize its bond portfolios.
Some Silicon Valley start-ups may not be able to make payroll? That’s unfortunate. Certain VC portfolios may suffer damaging writedowns? That, too, is a shame. Many non-tech firms that service high tech clients — caterers, cleaning services, headhunters, accounting practices — may see their businesses irreparably harmed? Possibly. Hopefully these are all temporary setbacks. In some cases, they will not be. Yet I am aware of nothing under the sun that obligates anyone, anywhere, to sacrifice so little as a Continental dollar to alleviate their circumstances, whether they were aware of the possibilities or not.
Too-big-to-fail has arguably become a competitive advantage, if the number of times that SVB being the “13th largest bank in America” was repeated over the weekend is any indication. Moral hazard is sewn into the fabric of American business culture now. And that’s all the more reason to let these banks fail sloppily, invite better-run competitors to acquire their remnants, and allow depositors to feel the full ramifications arising with the indefinite restitution of funds beyond the FDIC guarantees. It is in that way, and that way alone, that lasting lessons are learned. For a few generations, anyway.” https://www.aier.org/article/silicon-valley-bank-bespoke-woke-and-restoked/
“Part of what former President Donald Trump signed into law in 2018 raised the asset threshold to $250 billion, meaning Signature and other regional banks no longer needed to comply with the extra regulation set out in Dodd-Frank.
After the bill was signed, New York-based Signature more than doubled in size to $110 billion in assets, and $88.6 billion in deposits as of the end of 2022. The stricter requirements, had they been in place, might have prompted bank executives and their overseers to move more quickly to place the lender on sounder financial footing, some industry observers say.
Mr. Frank, who has earned more than $2.4 million in compensation from Signature Bank since 2015, rejected the idea that the regulatory change abetted Signature’s collapse.
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Jeff Hauser, who analyzes corporate influence on government for the Revolving Door Project, a progressive group in Washington, said Mr. Frank’s position with Signature Bank after years of working on banking regulation was “a classic case of having your cake and eating it, too.”
“Democrats like to develop story lines about institutions it is supposedly OK to revolve into,” Mr. Hauser said. “It always comes back to bite.”
Both Signature Bank and Silicon Valley Bank, which failed and was taken over by regulators Friday, have close ties to policy makers.” https://www.wsj.com/articles/barney-frank-pushed-to-ease-financial-regulations-after-joining-signature-bank-board-e5c8819c
“Instead the regulators offered solutions that bail out even uninsured bank depositors and other banks at unknown costs that Mr. Biden isn’t acknowledging. Take Mr. Biden’s pledge that “no losses will be borne by the taxpayers.” He said “the money will come from the fees that banks pay into the Deposit Insurance Fund.” That’s not nearly the full story. The FDIC’s Deposit Insurance Fund normally guarantees up to $250,000 in deposits, which protects small retail customers including mom-and-pop businesses. Banks pay for this guarantee with insurance premiums, but the insurance fund isn’t intended to backstop deposits of bigger customers with more capacity to weather losses if a bank goes under.
Yet after venture capitalists (Democratic donors) and Silicon Valley politicians howled, the FDIC on Sunday announced it would cover uninsured deposits at SVB and Signature Bank under its “systemic risk” exception. Apparently, Silicon Valley investors and startups are too big to lose money when they take risks. They benefited enormously from the Fed’s pandemic liquidity hose, which caused SVB’s deposits to double between 2020 and 2021. SVB paid interest of up to 5.28% on large deposits, which it used to fund loans to startups.
But now the FDIC is guaranteeing a risk-free return for startups and their investors. Uninsured deposits normally take a 10% to 15% hair cut during a bank failure. Some 85% to 90% of SVB’s $173 billion in deposits are uninsured. The cost of this guarantee could be $15 billion.
The White House says special assessments will be levied on banks to recoup these losses.
That means bank customers with less than $250,000 in deposits will indirectly pay for this through higher bank fees. In other words, this is an income transfer from average Americans to deep-pocketed investors.
Mr. Biden also claimed “investors in the banks will not be protected. They knowingly took a risk and when the risk didn’t pay off, investors lose their money. That’s how capitalism works.” Yes, ordinarily. But the Federal Reserve’s new emergency lending facility will ensure banks don't have to take losses liquidating their bonds to meet deposit redemptions.
Many banks have hedged their interest-rate risk and diversified their deposits, which comes at a business cost, but some like SVB and Signature didn’t. The Fed is now saying that’s OK—we’ve got your back.” https://www.wsj.com/articles/president-biden-bank-failures-silicon-valley-bank-signature-bank-markets-white-house-fdic-deposit-insurance-fund-a5538900
When does government become so destructive to the interests of the great majority of the country, and so expensive, that it becomes impossible to continue to support it?
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SILICON VALLEY BANK HAS EPSTEIN CONNECTION (AND MORE)
https://www.bitchute.com/video/jxSDqdA2MUB7/