Biden's statement on SVB

[Variant]

Long-term bonds in a rising interest rate environment is a problem when you have to mark the bonds to market.

Right, so the only risk here is buying too many of them, and then not being able to sell them when needed.

I heard that the banks in question don't have to report them as losses when they consider them "hold till maturity" investments. Which sounds like an accounting gimmick that ought to be done away with, at least, after a certain threshold.

 

[reflechissez]

I also think the Fed might be up against it's limits in terms of usefulness.

If it has to switch policy so radically in such a short timespan in order to try to combat inflation that the banking system becomes unstable then it might be time for politicians of any stripe to start looking for other solutions.

That makes no sense.

 

[CaughtInThe]

has anyone noticed that kevin/mtg/matt/lauren/paul (the brains of the operation) have either fallen silent or have no solutions?

funny that.

 

[reflechissez]

What I posted in 100% accurate. The Fed is departing from the norm in this case.

You never show your work. There is no "departing form the norm."

 

[reflechissez]

Did you read the articles?

Nope.

 

[Variant]

this is one of those days when people are happy that we don't have pure capitalism.

Honestly, capitalists ought to be able to develop something similar, the fact that a system that makes banks much more stable (and profitable) was imposed upon banks by FDR is definitely a strike against pure capitalism.

 

[reflechissez]

Right, so the only risk here is buying too many of them, and then not being able to sell them when needed.

I heard that the banks in question don't have to report them as losses when they consider them "hold till maturity" investments. Which sounds like an accounting gimmick that ought to be done away with, at least, after a certain threshold.

I don't know what you mean by "the only risk."

If you are "hearing" discussion about GAAP accounting, it probably won't help you much if you don't understand GAAP accounting. HTM investments are always handled that way. A person who knows what they're doing can find the info in the financials. It's not hidden.

 

[Variant]

I don't know what you mean by "the only risk."

If you are "hearing" discussion about GAAP accounting, it probably won't help you much if you don't understand GAAP accounting. HTM investments are always handled that way. A person who knows what they're doing can find the info in the financials. It's not hidden.

Get back to me when you get past the need to feel like the smartest person in the room and maybe we can have a discussion.

 

[CaughtInThe]

Honestly, capitalists ought to be able to develop something similar, the fact that a system that makes banks much more stable (and profitable) was imposed upon banks by FDR is definitely a strike against pure capitalism.

i certainly don't want to leave the stability of our entire country/economy up to business people like trump or elon or bernie or todd or scott.

 

[Variant]

i certainly don't want to leave the stability of our entire country/economy up to business people like trump or elon or bernie or todd or scott.

Given the myriad examples of human nature, and what happens when people are left to develop the system purely with greed as a guide, I am inclined to agree.

 

[Lord Tammerlain]

I heard that the banks in question don't have to report them as losses when they consider them "hold till maturity" investments. Which sounds like an accounting gimmick that ought to be done away with, at least, after a certain threshold.

They are called unrealized losses, they are not counted as a loss until they are sold and the loss is realized

 

[Isidore]

What I posted in 100% accurate. The Fed is departing from the norm in this case.

"By law, after insured depositors are paid, uninsured depositors are paid next, followed by general creditors and then stockholders. In most cases, general creditors and stockholders realize little or no recovery."​

​

https://web.archive.org/web/2008091...dic.gov/consumers/banking/facts/priority.html​

Web Archive from 2008​

Creditors and bond holders first, then shareholders, then stockholders, then depositors.

"By law, after insured depositors are paid, uninsured depositors are paid next, followed by general creditors and then stockholders. In most cases, general creditors and stockholders realize little or no recovery."​

https://www.fdic.gov/consumers/banking/facts/priority.html​

Current webpage​

 

[Variant]

They are called unrealized losses, they are not counted as a loss until they are sold and the loss is realized

The value is easily calculated though, so, as per the discussion I was listening to, the bank might be more inclined to mark the bonds as such to avoid unpleasant write downs of their losses.

 

[Lord Tammerlain]

The value is easily calculated though, so, as per the discussion I was listening to, the bank might be more inclined to mark the bonds as such to avoid unpleasant write downs of their losses.

But it would make financial statements very chaotic, as the value of assets could vary drastically over time, even a few weeks. Adjusting and reporting huge losses or gains that are not “ real” ( ie profits, losses taken )

 

[Variant]

But it would make financial statements very chaotic, as the value of assets could vary drastically over time, even a few weeks. Adjusting and reporting huge losses or gains that are not “ real”

Seems real enough to me when the bank has 91 billion dollars worth of assets with a real value of 76 billion.

At a certain point it's not really "accounting" anymore.

 

[Lord Tammerlain]

Seems real enough to me when the bank has 91 billion dollars worth of assets with a real value of 76 billion.

If the bank holds on to those assets to maturity they would be worth the full amount. If they try to sell the assets before maturity they take a loss

As such keeping the asset value at face value makes sense

 

[Variant]

If the bank holds on to those assets to maturity they would be worth the full amount. If they try to sell the assets before maturity they take a loss

As such keeping the asset value at face value makes sense

Yeah pretty much all their shareholders though they would be able to do so.

 

[CaughtInThe]

 

[reflechissez]

Get back to me when you get past the need to feel like the smartest person in the room and maybe we can have a discussion.

Oh, dear. "Need to feel...?" Seriously? Based on your posts, it seems clear that I (and some others in this thread) know more than you about this topic. There's no shame in that -- only in willfully remaining ignorant. Your defensiveness is not about me.

The value is easily calculated though, so, as per the discussion I was listening to, the bank might be more inclined to mark the bonds as such to avoid unpleasant write downs of their losses.

Sigh.

 

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[Liberal7360]

Honestly, capitalists ought to be able to develop something similar, the fact that a system that makes banks much more stable (and profitable) was imposed upon banks by FDR is definitely a strike against pure capitalism.

The only result of "pure" capitalism is a destroyed economy.

Capitalism that isn't properly regulated creates monopolies. That destroys capitalism.

Capitalism needs the free flow of money throughout the economy to work.

It also needs competition. Without proper regulations, competition is destroyed. Thus monopolies.

Business doesn't give a damn about our nation or anyone. All business cares about is money. When business isn't properly regulated, we end up with bank failures and economic crashes.

Unfortunately capitalism that isn't properly regulated forces most if the money to the top few which doesn't allow the free flow of money throughout the economy.

A stable and growing economy also needs investment. Not just in the private sector but in the public sector. Or we won't have infrastructure. That requires taxation to pay for it. A healthy economy and nation needs proper taxation to survive.

Properly regulated capitalism works. Just look at the stable stock market and banking system we had after the reform of FDR.

It wasn't until the Vietnam War, nixon changing us off the gold standard and the oil embargo that our economy started to have trouble. In fact a year after we changed off the gold standard the stock market crashed in 1972. GDP went from 7.2% down to -2%. Inflation soared from 3.2% up to 12.3%.

Then reagan came a long and made it worse with big spending, cutting taxes too much and deregulating too much. Setting record highs in deficits and debt. He set us on this course. The first bush, bush boy and trump have continued it.

We have been enduring the damage over and over ever since.

 

[sanman]

 

[sanman]

Biden running for the door, ignoring all questions

Karine Jean-Pierre trying to get past the silly banking news, so that she could tell us about what's really important -- that she was standing on stage with 2 other black women who were also historic firsts - an historic trinity

 

[tres borrachos]

What I posted in 100% accurate. The Fed is departing from the norm in this case.

Even though I and the other smart people know you are lying through your teeth, why don't you end this idiocy by posting a link to back up your (false) claim?

 

[grip]

They are selling off the bank's assets.

All depositors won't pull their money because the bank is being taken over. But the gov covering all accts doesn't bode well as a message that every bank can continue to make poor investments and be under-capitalized.