Another take on SVB, and how "no bailout" was a lie: regime will use tax dollars to re-pay millionaires

The piece below is from Jeffrey Carter's substack.  I've edited it slightly, and the full piece is well worth reading.

Venture Capitalists are super happy tonight. Back to the ski lifts everyone! Utah getting more powder this week! They got a bailout. The bailout will cost taxpayers money despite the protestations of the elites in Washington.

Why?

How are they going to bail them out? The Fed will expand its balance sheet and buy the securities from SVB and Signature. Where are those securities priced? We already know they are underwater by billions. Hence, the Fed will play bagman and eat the loss. Who gives the money to the Fed? You do with your tax dollars.

Hence, taxpayers will eat all the loss of bailing out the venture capitalists and their "portfolio firms" that had tens of millions at SVB.

Hey, everyone feels for any business that put money in a bank only to have it vanish due to no fault of their own. But every depositor knew that the FDIC only insured deposits up to $250,000, so if they wanted to risk depositing millions, maybe they should have done  more due diligence on SVB instead of just taking people’s word for it.

We'll get hearings with senator Elizabeth Warren slamming her fist, but the result will be to support the multimillion bailouts.  California Democrat Rep Ro Khanna will make sure the VCs see the signals, and both pols will get campaign money.

Capitalism isn't the problem.  But a crony capitalistic economy--where prudent, longstanding rules are waived (or simply ignored without explanation) is a huge problem, in which the wealthy use their political clout to force ordinary citizens to pay for the elite’s negligence or crimes.

What do we have in America today?

When prudent rules and regulations are mysteriously waived for elites, adding more regulations won’t prevent banks from failing.  This is especially true when moronic pols are writing the new rules.

The most effective way to stop banks from failing is to have managers and execs who pay attention to business.  Banks that have managers who don't do that should fail.  We should have let them fail in 2008.