71 Comments

Profits are for us, losses are for you.

-- Banks

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Could bailouts for the “pull yourself up by the bootstraps but always make sure you have plenty of other people’s money and political power at the ready in case you need it” awaken any of the misguided souls who bathe daily in right wing paranoia anger stew long enough to see who is really swiping the butter from their bread? Dare to hope. Much as I like President Biden and appreciate the political pressure he must be under, increasing FDIC coverage beyond the (agreed upon by every account holder) $250,000 misses the moment, destructively so. We continue to favor “innovators” who love risk (as long as it’s not their money, and it’s not real risk, and they are ultimately not responsible for any downside), while we make the poor beg for scraps. This is not how a great, or decent country acts. I understand those with money and influence are powerful and have many ways to put uncanny amounts of pressure on any President so they would cave to full bailout/systemic risk pressure campaign, but it’s a real political miss for the Democratic Party.

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In 2008, the government could have bailed out the banks by paying off all those home mortgages, perhaps at an appropriate fraction of their face value. Instead of giving the money directly to the banks and stiffing home owners, the money could have gone to the banks on behalf of the home owners. All those people who lost their homes, could instead have become safely owners of them. If that's too generous for ordinary folks, they could have been given modest, affordable replacement mortgages payable to the federal government. I never have understood why that approach was never even discussed.

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A country for and by Wealthy White Male “Christian” Oligarchs. “How the South Won the Civil War.”

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To be fair, the Biden administration acted correctly here. Bank runs are contagious and left unchecked can completely wreck the economy for everyone, not just Silicon Valley tech bros. That said, there needs to be a solid investigation of just what went on at SVB, because nothing about that situation smells normal. (And lets not even get started on that mess in New York). Regardless of your feeling about the wealthy, nobody should want banks to fail without protecting their customers. (Unless you're one of those accelerationist idiots who believes the only way to fix the system is to completely smash it first, in which case let me remind you that revolutions ALWAYS eat their own and rarely end up where you want them to.)

Helping out poor families will, unfortunately, always be a tougher sell because the economic benefits are harder to see. Which means you end up appealing to basic humanity and empathy, traits noticeably in short supply in large swathes of the public.

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Those poor kids just should've wanted it more, am I right?

(No, I am not. It was sarcasm and it's disappointing to see that we've learned absolutely nothing from the crash of the 2000s and the ensuing fallout.)

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Thank you for putting this in such a clear perspective. Yes, this message needs to be heard by many others. When will we straighten out our priorities?

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founding

I bet Thiel shorted SVB before he called the alarm.

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This article sums up EVERYTHING that is wrong with the U.S.. And I’m sure Peter Thiel is profiting off of this somehow and will gleefully buy another island or citizenship in some other country with it

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The banks in 2008 should have been forced to accept the lowered value of the homes they wrote mortgages for so no one got foreclosed on. I say this as someone who didn't get sucked into the interest only BS that many did. I used to think, hey, if you were stupid enough to think that while working as a cleaning maid, you could afford a $350k home, too bad. But why should the predators get rewarded and the marks penalized? Every bank executive whose bank got a bail out should have paid a penalty: loss of job, ban from banking for a year. Many should have sat in jail. As to SVB, their executives, who blithely ignored the implications of Fed interest rate hikes for months: they too should be banned from working in the banking industry for at least 2 years, with their names widely publicized. There needs to be moral hazard for these predators, because that's what they are.

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Peter Thiel’s Founders Fund pulls all of its money out of SVB and tells its minions to do the same. Who’s at fault?

The CEO of SVB both lobbied for looser regulations in 2018 and sat on the board of the SF fed that is supposed to provide oversight of the banks in their jurisdiction.

Marc Andreessen reportedly required anyone to whom they provided VC funds to bank with SVB.

The Silicon Valley Libertarians spent the weekend freaking out on Twitter and begging for intervention. Did this add to the crisis?

There are going to be a million of these *anecdotes* that will come out in the coming weeks and months. Who will ultimately be held responsible is anyones guess. But, personally, I’m really tired of the*tech bros* (because they’re pretty much ALL “bros”!) and the “we are masters of the universe” mentality. How many of these companies are now just going to be shows for what they always were, LIRPs? (“Low interest rate phenomenons”)

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Them thats gots, gets but what if there had been no paychecks for months? Peter Theil and Bank Execs would suffer less than employees. It would have negative effects to more middle class and on the edge of poverty workers than the 1%. The roll backs in the industry under Trump had play in this as well. Lastly. How would it play out if a domino effect occurred in the industry? 2008 or worse? Surely that had more play than Y tweet with the Biden Admin.

As for children in Poverty.

Yesterday I read a Minnesota state GOP legislator's words that there are no hungry children in the state. It is this mentality disproven by facts, that carries the day among 43 states run by Republican legislatures.

As for Silicon Bank depositors.

I heard on NPR that Roku had over 400 million in Silicon Bank. What the hell. Had they never heard about diversify your assets? Another fav. A 3rd party payroll company couldn' t make payroll for client due to depositing the company's money in Silicon. Bet the company wished they had kept or formed their accounting depts. It's one thing if you have 10 employees for a 3rd party payroll provider, another if you have250- 500 employees. IMHO, those accounting employee benefits couldn't have been more costly. No one looks after your company better from the outside except at Silicon where they fumbled in their own end zone at the end of a tied game. The Federal gov't recovered it for the depositors and won the day. You can't make this crap up in America, today. We are swinging over a gorge hoping not to fall into the abyss.

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This article needs to be broadcast from the rooftops and the streets, but that’s probably what the oligarchs want so they can get their minions in Congress to demand full Orban-Putin rules…

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Please send this to the editorial board at the WSJ, so that all of my Republican friends (who believe in bootstrap-pulling economics) will read it.

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"save innovation in the American economy."

Translation: "As long as you keep the grift going, we will shower you in campaign contributions."

After all, our beloved representatives are deeply invested and profiting handsomely from the same grift.

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Yes, here in corporate America we PRIVATIZE our profits and SOCIALIZE our risk/debt.

It's just good business and we SAVE MONEY!!!

It's the American Way!!!

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