Banks will continue to be able to make horrendous decisions and not have any fractional reserve requirements. Executives will continue to get absurd performance benefits until losses are realized. Depositors won’t have to care that the institution where they dump millions of dollars is run by someone doing their best financial John Wayne Gacy impersonation. And we’ll all suffer because institutionally these horrendous investments are backstopped.
Please just let one of these banks fail. A few more will. Lots more should. And then maybe we’ll see them act with any sort of prudence.
What the hell else are they supposed to do with the assets that are left in the bank? Giving them to the people the bank owed money makes a lot more sense than lighting them on fire or whatever. Do people think that the FDIC/government funds end up being a significant portion of the money that goes to the depositors or something?
Hundreds of thousands of employees from tens of thousands of small businesses aren't getting paid salaries for the last 1-3 weeks. And aren't getting paid this week. And very likely are out of a job. Same for those businesses vendors and subcontractors. Hundreds of thousands left without a health care plan with two weeks notice because premiums will go unpaid and afterall the employer is the true contractor of the plan, if they go out of business because most of their cash deposits were just destroyed. That seems bad.
What sort of influence levers do these depositors have over their bank's investment policies either before of after the fact? It seems pointless.
No one is suggesting anyone burn svbs assets. Only that we do not print more money to make up the difference between the face value and the market value
Why should a bank's depositors take haircuts before its bondholders and shareholders?
>Only that we do not print more money to make up the difference between the face value and the market value
The difference is made up by FDIC special assessment on banks.
If you want to rant against the customers of a bad bank getting bailed out, that's fine, but the bank wasn't bailed out, it was wiped out. The new bank is the owner of the old banks assets and responsible for the old banks debts. The owners of the old bank have nothing to do with the operations of the new bank.