Re:Yellen says government will help SVB depositors but rules...
by s1artibartfast on Sunday March 12, 2023 @11:32PM
(#35130650)
Thanks for the productive discussion. I think I got my general point across but I want to make a couple clarifying comments.
>This is literally why government agencies like the BLS, Treasury, et alia exist and hire economists and statisticians to address such questions. Whether or not Congress listens or allows them to do their jobs is another story.
Most policy and politics isn't decided on the basis of financial ROI, even when it is available. I think it should be more of a central driver. Basically nobody is making serious arguments that student loan forgiveness will lower taxes. Same with SVB. Im sure the FDIC has an idea of what the deposit write-down is, and maybe the total number of employees at those companies. They have no idea what the long term impacts and ROI would be. Even the founders of those companies don't know if they will be successful and the total taxes paid over the future lifetimes of their corporations. If you think this is simple and known, we simply disagree on the facts.
>This seems backwards to me. Moral hazard and (lack of proper) incentives are the root cause. If you don't like the government needing to step in to help people, then you should consider these your top priority.
I think I could have been clearer here. I'm saying moral hazard and incentives are secondary when deciding if account holders in this specific instance should be made whole.
I agree fixing the root issue is probably a more important problem, but again separate from what to do with the account holders.
By way of analogy, if you have a car crash on a dangerous road, what to do with the car and how to fix the road are separate questions. Maybe the ROI on repairing the car is bad so you write it off, but it still makes sense to fix the road so you don't have more crashes.
>This is literally why government agencies like the BLS, Treasury, et alia exist and hire economists and statisticians to address such questions. Whether or not Congress listens or allows them to do their jobs is another story.
Most policy and politics isn't decided on the basis of financial ROI, even when it is available. I think it should be more of a central driver. Basically nobody is making serious arguments that student loan forgiveness will lower taxes. Same with SVB. Im sure the FDIC has an idea of what the deposit write-down is, and maybe the total number of employees at those companies. They have no idea what the long term impacts and ROI would be. Even the founders of those companies don't know if they will be successful and the total taxes paid over the future lifetimes of their corporations. If you think this is simple and known, we simply disagree on the facts.
>This seems backwards to me. Moral hazard and (lack of proper) incentives are the root cause. If you don't like the government needing to step in to help people, then you should consider these your top priority.
I think I could have been clearer here. I'm saying moral hazard and incentives are secondary when deciding if account holders in this specific instance should be made whole.
I agree fixing the root issue is probably a more important problem, but again separate from what to do with the account holders.
By way of analogy, if you have a car crash on a dangerous road, what to do with the car and how to fix the road are separate questions. Maybe the ROI on repairing the car is bad so you write it off, but it still makes sense to fix the road so you don't have more crashes.