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Feds Bailing out Chinese Companies

Arthur Hanson

Well-known member
Many depositors in Silicon Valley Bank are Chinese and they are getting bailed out to. The idea of bailing out everyone is effectively federalizing the financial system and we all have see how the government "Manages Money". This sets a very dangerous precedence for subsidizing failure. This could easily lead to a reward failure system. This is a very dangerous policy of subsidizing failure for rewarding anything creates more failure. Picking political favorites will be dangerous for everyone if we start rewarding failure. Solyndra is but one example of the government being in something it has no business in. Bailing out everyone is very dangerous and rewarding risk takers for failure in Silicon Valley will put us on the road to more failures and to even bail out the Chinese who are stealing every tech possible from us not in our best interests and punishes success. SVB had some of the worst risk management of any bank, with a very inexperienced board. We shouldn't even bail out US depositors, let alone Chinese.
 
The USA is a nation run by laws Arthur. If Chinese firms or individuals had money invested in a US bank, it is the FDIC's stated purpose to offer all of the bank's creditors equal treatment. Individuals who commit crimes should be punished to the full extent of the law and those who do not should be protected, this is how government is supposed to function.
 
So you are suggesting that domestic and foreign customers who just deposit their money in a bank for safe keeping should be punish due to poor management from said bank that causes a bank run situation. In my opinion, if the US Government does what you suggested it will destroy the all other US financial institutions, cause an even bigger bank run and ruin the dollar as the global currency of choice since no one in the world can trust it anymore. i don't know about you, but I will be extremely piss if the FDIC decide not to make me fully whole or nearly whole again due to poor management choices from a bank.

I am not sure why you are comparing Solyndra to SVB as the case of Solyndra involved a loan from the DOE that Solyndra couldn't pay back due to a combination of mismanagement and poor timing of producing a product using CIGS cells. You make it sound like the reward failure system is only exclusive to the Government when venture capitalist also experienced that with many fail startups.
 
The USA is a nation run by laws Arthur. If Chinese firms or individuals had money invested in a US bank, it is the FDIC's stated purpose to offer all of the bank's creditors equal treatment. Individuals who commit crimes should be punished to the full extent of the law and those who do not should be protected, this is how government is supposed to function.
Indeed, but there was an exisiting law in place to protect depositors to a total of $250K. Depositors with more than $250K should have been well aware of this and at a minimum not held all their deposits with a single bank. As Patrick Boyle (an excellent and highly amusing You Tuber on finance) neatly put it "What were the treasurers at those companies doing all day ?".

I suggest that in a nation run by laws (of which I thoroughly approve), making up new laws on the fly as you go along in response to the next passing crisis severs the anchor to any underlying principles and is not good practice.
 
Indeed, but there was an exisiting law in place to protect depositors to a total of $250K. Depositors with more than $250K should have been well aware of this and at a minimum not held all their deposits with a single bank. As Patrick Boyle (an excellent and highly amusing You Tuber on finance) neatly put it "What were the treasurers at those companies doing all day ?".

I suggest that in a nation run by laws (of which I thoroughly approve), making up new laws on the fly as you go along in response to the next passing crisis severs the anchor to any underlying principles and is not good practice.
These laws were changed expost facto or after the fact which is one of the most dangerous actions any nation can take. Changing laws and regulations after the fact is the first step to a very corrupt system that plays favorites and creates more failures for it rewards failure. Rewarding failure is always a losing game for economies or companies. I have never worked on a contract or for a company that rewarded failure unless going in the players knew it was a high-risk situation. I have done numerous bailouts of bad situations, and have been well rewarded for doing so. Rewarding and compensating failure is dangerous for any organization unless it is a gamble on a high risk situation. If you know of a company, government or organization that rewards failure and compensates for it let me know. Insurance companies take risks, but they know it going in and many have gone bankrupt with no compensation to anyone. The US government backing failure sets a very, very dangerous precedent, as any organization that does it.
 
These laws were changed expost facto or after the fact which is one of the most dangerous actions any nation can take. Changing laws and regulations after the fact is the first step to a very corrupt system that plays favorites and creates more failures for it rewards failure. Rewarding failure is always a losing game for economies or companies. I have never worked on a contract or for a company that rewarded failure unless going in the players knew it was a high-risk situation. I have done numerous bailouts of bad situations, and have been well rewarded for doing so. Rewarding and compensating failure is dangerous for any organization unless it is a gamble on a high risk situation. If you know of a company, government or organization that rewards failure and compensates for it let me know. Insurance companies take risks, but they know it going in and many have gone bankrupt with no compensation to anyone. The US government backing failure sets a very, very dangerous precedent, as any organization that does it.
Sadly, pretty much every government I can think of Arthur.
 
The USA is a nation run by laws Arthur. If Chinese firms or individuals had money invested in a US bank, it is the FDIC's stated purpose to offer all of the bank's creditors equal treatment. Individuals who commit crimes should be punished to the full extent of the law and those who do not should be protected, this is how government is supposed to function.
There are no laws protecting money over the limits. If there are, please let me know.
 
Many depositors in Silicon Valley Bank are Chinese and they are getting bailed out to. The idea of bailing out everyone is effectively federalizing the financial system and we all have see how the government "Manages Money". This sets a very dangerous precedence for subsidizing failure. This could easily lead to a reward failure system. This is a very dangerous policy of subsidizing failure for rewarding anything creates more failure. Picking political favorites will be dangerous for everyone if we start rewarding failure. Solyndra is but one example of the government being in something it has no business in. Bailing out everyone is very dangerous and rewarding risk takers for failure in Silicon Valley will put us on the road to more failures and to even bail out the Chinese who are stealing every tech possible from us not in our best interests and punishes success. SVB had some of the worst risk management of any bank, with a very inexperienced board. We shouldn't even bail out US depositors, let alone Chinese.
It is not rewarding failure of system as the equity holders and bond holders of the bank are wiped out. If anything its the law's fault for not stress testing regional banks on interest rate raises. Depositor sit at the top of the pecking order during asset fire sale and most likely will get compensated by following the process. The guarantee is to prevent a widespread panic that could potentially force other bank into liquidity issues. Laws are made to ensure function of society and should be changed through due process.
 
The USA is a nation run by laws Arthur. If Chinese firms or individuals had money invested in a US bank, it is the FDIC's stated purpose to offer all of the bank's creditors equal treatment. Individuals who commit crimes should be punished to the full extent of the law and those who do not should be protected, this is how government is supposed to function.
Bailing out US firms is at our government's prerogative, if they want to or not want to bail out foreign companies that is also our government's prerogative. If the Chinese government wants to bail out their companies, let them do it. It our governments choice on who and who not to bail out. Bailing out our own companies is totally different. I don't ever recall the Chinese government bailing out a US company, in fact the opposite, robbing our companies blind of expensive high value intellectual property without even giving it a second thought. In fact, this is an ideal time to ballance the books, but the Chinese government knows when you add everything up they would owe US and other foreign companies a fortune.
 
It is not rewarding failure of system as the equity holders and bond holders of the bank are wiped out. If anything its the law's fault for not stress testing regional banks on interest rate raises. Depositor sit at the top of the pecking order during asset fire sale and most likely will get compensated by following the process. The guarantee is to prevent a widespread panic that could potentially force other bank into liquidity issues. Laws are made to ensure function of society and should be changed through due process.
That is an excellent point. Wherever there's a bank failure, there's also often a regulatory failure. US banking regulators knowingly chose a more lax regulatory regime than Europe on asset valuation and stress testing and this is one of the consequences. Not saying that European banks are any better or more robust - rapidly moving events will tell us that anyway - but the banks are more constrained. It's a bit like operating a chip outside the characterised range - you can do it, but you're no longer quite as certain what will happen.
 
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