Political Discussion

Hemotep said:
Gretchen Whitmer might be an interesting candidate, but I haven't followed her career closely enough to really know all her politics. What's happening in Michigan is promising though.
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I’m keeping my eye on her. Our resident Michiganders can speak with more authority than I, but she’s confident, smart, from a swing state, and is intimidating enough to the right wing weenies that she’s already been the target of more than one kidnapping/assassination plot, which means she’s doing something right.

Then again I thought Buttigieg was going to emerge as a bold and exciting leader, so what do I know.
 

Property values near the derailment site are expect to drop if they haven't already been destroyed. And people who were trying to sell their house this year now have to reconsider their plans and are asking Norfolk Southern for compensation for the loss of property values, which Norfolk Southern is responsible for causing. But of course Norfolk Southern balked at the idea.

Even Senate Democrats are pushing for Norfolk Southern to compensate home owners.

At Thursday’s Senate hearing on the crash, Sen. Ed Markey, a Massachusetts Democrat, asked Shaw four different times to commit to compensating homeowners, only to hear Shaw repeatedly reply, “Senator, I’m committed to do what’s right.”
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In other words, protecting shareholders compensation over compensating homeowners.
 
Lee Newman said:
I don’t see this as a yikes, maybe if some of these people with more money than anyone could possibly need lose their shirts, things will start to correct.
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The government is going to bail out these risky investors with tax payer dollars because they're afraid of a general run on the banks. This is just like 2008 when the government bailed out AIG and other banks with tax payer dollars and then those same banks turned millions of tax paying Americans out of their homes. We could have avoided this had the government used that same money to give to homeowners with negative equity in their houses and put them in the black--give them enough money to displace the negative equity so if they were $20K underwater, the government would pay that $20K and the homeowner would start paying based on the new balance. However, the banks would have lost a lot of interest payments this way and they would also see a devaluation of their assets in total, which would have been terrible for these banks' profitability (i.e. stock price/dividend payments) and that's not okay for the people at the top that rely on other people's interest payments so they don't have to work and also get to buy ridiculous things like private jets.
 


Last night's main topic was Welfare, TANF in particular. I learned a lot and was infuriated.

Didn't realize Clinton was responsible for the worst changes to the welfare system. That welfare block sums to states haven't been updated since Clinton made the change, so their already incredibly low funding value have lost 40% when accounting for inflation alone.

At the same time States are sitting on huge surpluses of funding because they have made the requirements of eligibility to hard to meet, or make requirements like weekly job search check ins required and if you miss just one week you can be kicked off the program. Some states end the program after a period of time and you are not eligible to re apply once you lose it without having got and lost a job in between.

For example, a single mother of 3, working a job paying $11 an hour, but is only making half the federal poverty level worth of income does not qualify because "she makes too much money". Isn't she exactly who these programs are designed for?

The programs are set up in away these that assumes everyone applying for them is trying to defraud the system and is lazy and doesn't want to work.

Meanwhile, many states elected officials have shown over the last 20 years that they are the real fraudsters. Using millions in TANF funding for things like building a volleyball stadium that Brett Favre lobbied for at the school his daughter attends. Or using the money as financial aid to white middle class families who don't need it to help pay for college.
 
RenegadeMonster said:
There are reports that wealthy investors and founders of SVB were tipped off / had early warning and withdrew all their money form SVB on Thursday.

Does any kind of insider trading law apply to banks?
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Also, not sure about the trading laws for banks but this is an interesting article, especially if you note the publish date of Feb 22 of this year, so a couple weeks before anyone started reporting on SVB's total collapse:

financialpost.com

Silicon Valley Bank profit squeeze in tech downturn attracts short sellers

Short sellers are betting SVB's shares, which have lost 50% of their value since the start of 2022, will fall further. Read more.
financialpost.com financialpost.com

It is being rocked as tech startups face the biggest collapse in their value since the dotcom bubble burst in the early 2000s. SVB’s market capitalization has fallen from a peak of more than US$44 billion less than two years ago to US$17 billion today.

But some analysts, shareholders and short sellers point to another problem of its making: a move to put US$91 billion of its assets into a poorly performing bond portfolio that has since amassed an unrealized US$15 billion loss.

SVB’s core business is centred on banking deposits of cash raised by tech startups, and lending to the venture capital and private equity firms that back them. At the peak of the tech investing boom in 2021, customer deposits surged from US$102 billion to US$189 billion, leaving the bank awash in “excess liquidity.”

At the time, the bank piled much of its customer deposits into long-dated mortgage-backed securities issued by U.S. government agencies, effectively locking away half of its assets for the next decade in safe investments that earn, by today’s standards, little income.

So basically, it bought a bunch of mortgages during a housing bubble market. along with government backed bonds and expected the Fed not to raise interest rates as high as it did.

While interest rates were low, several big banks parked more deposits into government debt accepting the lower rate of return during a time of economic uncertainty

However, SVB’s relative exposure far exceeds its peers. It had US$120 billion of investment securities ⁠— which include its US$91 billion mortgage-backed securities portfolio ⁠— at the end of 2022, far exceeding its US$74 billion total loans.

SVB’s large portfolio of securities ⁠— the single biggest asset category on its balance sheet ⁠— relative to the amount of loans the bank makes is having an outsized impact on its net interest income.
So this becomes an addition (or really subtraction issue), net interest income = interest on assets - what it pays in deposits. When the mortgage backed securities started producing negative interest (because these securities were bought at the height of a housing bubble that's being rapidly deflated by the Fed), SVB was unable to pay out deposits.

The bank is committed to holding its US$91 billion portfolio of bonds to maturity, an important accounting designation that shielded its profits from turmoil in financial markets last year, as long-term bond yields rose sharply above the 1.64 per cent yield of the portfolio.

But that also meant that at the end of last year the “held-to-maturity” assets were valued at their purchase price of US$91 billion on SVB’s balance sheet, rather than their US$76 billion market value.

The unrealized US$15 billion loss disclosed by SVB is almost as much as the group’s US$17 billion market capitalization, and greater than the total profits reported by the bank over three decades.

This loss alone, even though the bank still continues to hold the bond portfolio, attracted short sellers. This started the "run" on the bank that we see right now.
 
Biden just spoke addressing the nation on this.

  • All taxpayers will be made whole who banked with SVB and Signature Bank
  • Investors will not, investing is a risk and that's how capitalism works.
  • Everyone who works in the banks management will be fired.
  • He will work congress to restore tougher requirements on banks to prevent this from happening again.
  • There was a reference to a third bank that the FDIC could soon shut down.
Overall tone was trying to reassure confidence in our banking system, and that everyone who has money in our banks will be safe and made whole.


Anyone know what the third bank is? It wasn't not referenced by name by Biden or the recap by NBC.
 
RenegadeMonster said:
Biden just spoke addressing the nation on this.

  • All taxpayers will be made whole who banked with SVB and Signature Bank
  • Investors will not, investing is a risk and that's how capitalism works.
  • Everyone who works in the banks management will be fired.
  • He will work congress to restore tougher requirements on banks to prevent this from happening again.
  • There was a reference to a third bank that the FDIC could soon shut down.
Overall tone was trying to reassure confidence in our banking system, and that everyone who has money in our banks will be safe and made whole.


Anyone know what the third bank is? It wasn't not referenced by name by Biden or the recap by NBC.
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Man, this stuff is why I get nervous about my in-laws talking about how you can get better yields with (insert sketchy sounding online bank I've never hear of). They were trying to explain it and I was immediately skeptical. Like, how are you getting 7% on a savings account? Sounds like someone is making some risky moves with your money and hoping you are blinded by a little extra earned interest.
 
folsom_lives said:
Man, this stuff is why I get nervous about my in-laws talking about how you can get better yields with (insert sketchy sounding online bank I've never hear of). They were trying to explain it and I was immediately skeptical. Like, how are you getting 7% on a savings account? Sounds like someone is making some risky moves with your money and hoping you are blinded by a little extra earned interest.
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At least their advice is not as bad as my fathers. Yesterday he was telling me I should be moving my money into foreign bank accounts / different currencies. Yeah, how about no.

Speaking of high interest savings accounts. Apple is launching a savings account option for Apple Card holders that's supposed to yield 5% interest. It's through Goldman Sachs. So more trustworthy than online startups you never heard of, but Goldman Sachs is struggling and is considered a high risk bet by investors right now so it makes me wonder.

I did try applying for the Apple Card again a couple weeks back. Though for sure I would finally get approved for it now that I paid off all my credit cards last December and my credit shot up to nearly 800. But nope. Declined again, but this time they gave me a path for approval instead of just saying declined. My path for approval is to pay off all past due balances by July and if I can do so, I can have my application reconsidered.

The past due balance it shows that I need to pay off is the total balance of my defaulted private student loan. So, nope, not going to happen buy July. It's like pay off 55k by July. Yeah, that's realistic.

Also, I don't want the line of credit, just that 5% savings account. Why is it dependent on the credit card?
 
Thinking back to that episode of John Oliver, it just angers me how blank and white the eligibility requirements are. You are either eligible or you are not eligible.

So when a women had an infection that turned into septic shock and was placed into a medically induced coma for 2 months missed her weekly check ins to prove job seeking activities, she was no longer eligible for her welfare benefits. There are no mechanisms for valid reasons to miss a eligibility requirement and no way to get the decision to be reconsidered.
 
Indymisanthrope said:
Because offering 5% interest on a savings account gets people to sign up for a credit card.
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True, but why make the credit card so hard to get if you want to turn a profit. It's not like their interest rates are any better than any other cards with a range of 18% to 28% you can be approved for based on your credit. From what I heard, Goldman Sachs is known for being one of the harder banks to get approved for credits.

I pretty much could get any other credit card if I tried to apply for one. And in the past month all the banks have been increasing my credit lines out of the blue. One by up to an additional 7k
 
RenegadeMonster said:
True, but why make the credit card so hard to get if you want to turn a profit. It's not like their interest rates are any better than any other cards with a range of 18% to 28% you can be approved for based on your credit. From what I heard, Goldman Sachs is known for being one of the harder banks to get approved for credits.

I pretty much could get any other credit card if I tried to apply for one. And in the past month all the banks have been increasing my credit lines out of the blue. One by up to an additional 7k
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I'm not really a finance guy so I couldn't tell you, but I would imagine that if Goldman is struggling in the manner you describe then there are two paths available: take big risks, or become very risk averse. Denying you on the basis of a prior loan default indicates the latter, to me. But that's just me connecting imaginary dots on the internet, I don't know.
 
Indymisanthrope said:
I'm not really a finance guy so I couldn't tell you, but I would imagine that if Goldman is struggling in the manner you describe then there are two paths available: take big risks, or become very risk averse. Denying you on the basis of a prior loan default indicates the latter, to me. But that's just me connecting imaginary dots on the internet, I don't know.
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Most banks though don't treat student loan debt or medical debt the say way as they due with other debts. Especially when it comes to passed due or defaulted. My student loans were a concern of mine when Honda wanted me to turn my lease in early and give me a deal on a new model. When I voiced this concern to them they pretty much told me Student Loan debt doesn't matter and won't be taken into consideration.

Goldman Sacks is the only place that has ever flagged it. It doesn't even show up in my credit report on Credit Karma as a issue.
 
Biden made it pretty clear that there will be no Bailout for these failed banks, and that taxpayers dollars will not be used to make all depositors whole. All the money is coming from the FDIC, which banks pay fees into to cover FDIC insurance.

Which has sparked some interesting discussions online that I have been following.

Firstly, there is a high likelihood of the FDIC assessing higher fees on banks in the short term to replenish depleted funds.

So that has a lot of people thinking trickle down economics. This will all have to come back to the consumer one way or another. And most likely will come in the form of fees that disproportionately impact the people who they would hurt the most. People with lower income and living paycheck to paycheck. These fees are often for over drafts or not maintaining a minimum balance.
 
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