3 ms·

No, failing is failing. It means the bank is insolvent. That doesn't mean the bank is worthless, but it doesn't have enough cash to meet its obligations. And ye

by rcme 4y ago

No, failing is failing. It means the bank is insolvent. That doesn't mean the bank is worthless, but it doesn't have enough cash to meet its obligations. And yes, depositors will likely get some of their money back, but only after a long battle. Also, the bonds held by the bank are likely off the run. The market for these is not large.

rich_sasha 4y ago
Yes, insolvent, but the money doesn't go poof. I never traded cash bonds but would struggle to imagine it would be hard to liquidate. Sure, over a week, but surely SVB can't be a major bondholder.
- Ekaros 4y ago
  They are easy to liquidate. But not at the face value. For that you need to wait until maturity. Principle is simple. Why would you buy from someone a piece of paper saying someone else(even government) will pay you 1,5% a year. When you could directly buy from then similar paper paying 4%.
- rcme 4y ago
  These types of bonds are what caused the pound's dramatic fall a few months ago. There isn't a large market for these. If you need to sell a lot at once, you're in trouble. The treasury recently explored stepping in to provide liquidity for off-the-run bonds: https://www.reuters.com/markets/us/yellen-says-taking-steps-enhance-treasury-market-funds-resilience-2022-10-24/ https://www.reuters.com/markets/us/yellen-says-taking-steps-...
- prottog 4y ago
  > I never traded cash bonds but would struggle to imagine it would be hard to liquidate Bonds are actually well known for having terrible liquidity. It's common for corps and munis even with good credit ratings to be no-bid, and even Treasuries, once they're off-the-run, aren't easy to move without moving markets.
nonethewiser 4y ago
You're disagreeing but I dont see the conflict between your claims and his.
- rcme 4y ago
  He's making it sound like depositors are going to get 80% of their money back tomorrow. It's going to be a years-long legal battle while affected companies are going to potentially shutter due to an inability to meet obligations. Also, his number of 80-85 is based on the yield of the treasuries, but old treasuries like this are hard to move.
  - late2part 4y ago
    Why won't the FDIC resolve this quickly for depositors?
    - jccooper 4y ago
      For customers who are startups, investors, and large tech concerns, FDIC insurance of $250k may not cover the balance. Sure don't want the $2M you have left from your last funding round to evaporate, or even be frozen.
cwkoss 4y ago
Can the bank be sold and continue operating under new ownership without making all depositors whole?

by rcme 4y ago

rich_sasha 4y ago

Yes, insolvent, but the money doesn't go poof. I never traded cash bonds but would struggle to imagine it would be hard to liquidate. Sure, over a week, but surely SVB can't be a major bondholder.

Ekaros 4y ago
They are easy to liquidate. But not at the face value. For that you need to wait until maturity. Principle is simple. Why would you buy from someone a piece of paper saying someone else(even government) will pay you 1,5% a year. When you could directly buy from then similar paper paying 4%.
rcme 4y ago
These types of bonds are what caused the pound's dramatic fall a few months ago. There isn't a large market for these. If you need to sell a lot at once, you're in trouble. The treasury recently explored stepping in to provide liquidity for off-the-run bonds: https://www.reuters.com/markets/us/yellen-says-taking-steps-enhance-treasury-market-funds-resilience-2022-10-24/ https://www.reuters.com/markets/us/yellen-says-taking-steps-...
prottog 4y ago
> I never traded cash bonds but would struggle to imagine it would be hard to liquidate Bonds are actually well known for having terrible liquidity. It's common for corps and munis even with good credit ratings to be no-bid, and even Treasuries, once they're off-the-run, aren't easy to move without moving markets.

nonethewiser 4y ago

You're disagreeing but I dont see the conflict between your claims and his.

rcme 4y ago
He's making it sound like depositors are going to get 80% of their money back tomorrow. It's going to be a years-long legal battle while affected companies are going to potentially shutter due to an inability to meet obligations. Also, his number of 80-85 is based on the yield of the treasuries, but old treasuries like this are hard to move.
- late2part 4y ago
  Why won't the FDIC resolve this quickly for depositors?
  - jccooper 4y ago
    For customers who are startups, investors, and large tech concerns, FDIC insurance of $250k may not cover the balance. Sure don't want the $2M you have left from your last funding round to evaporate, or even be frozen.

cwkoss 4y ago

Can the bank be sold and continue operating under new ownership without making all depositors whole?