Joint Statement by the Department of the Treasury, Federal Reserve, and FDIC

Re:Joint Statement by the Department of the Treasury, Federa... by s1artibartfast on Sunday March 12, 2023 @08:53PM (#35129033)

>there isn't an actual loss here as long as it encourages people to not withdraw money early.

This is like saying you loaning me 50B for ten years is zero cost as long as you get it back at the end.

It ignores the fact that you have to come up with the money, and once you have it, you could put it somewhere with an actual return.

This is the exact reason SVB failed. Their 10 year investments were worth 70 cents on the dollar because there are better returns elsewhere.

[ Parent | on HN ]

Re:Joint Statement by the Department of the Treasury, Federa... by astrange on Sunday March 12, 2023 @09:18PM (#35129325)

SVB failed because all their customers are in group chats with each other and think it would be funny to withdraw all their money at once and then buy stock in the bank.

https://twitter.com/torrenegra/status/1634573234187407369

Even their bad investment decisions wouldn't have killed them if there hadn't been a bank run.

[ Parent | on HN ]

Re:Joint Statement by the Department of the Treasury, Federa... by s1artibartfast on Sunday March 12, 2023 @09:28PM (#35129446)

If loaning or borrowing money were free, they could have covered every withdraw.

Im pushing back on the specific idea that paying full price for an asset that is locked up for 10 years isn't a loss.

[ Parent | on HN ]

Re:Joint Statement by the Department of the Treasury, Federa... by stefan_ on Sunday March 12, 2023 @10:48PM (#35130329)

I love this LinkedIn style post of "today we organized a bank run". Except they are totally serious.

[ Parent | on HN ]