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From your link https://www.sipc.org/news-and-media/news-releases/20220928 https://www.sipc.org/news-and-media/news-releases/20220928: > Distributions to unsecu

by zamnos 4y ago

From your link https://www.sipc.org/news-and-media/news-releases/20220928 https://www.sipc.org/news-and-media/news-releases/20220928: > Distributions to unsecured general creditors with allowed claims totaled over $9.372 billion, representing a 41.2841 percent recovery. That sure sounds like 58.7259% didn't recover what they were owed. Mind explaining why that isn't the case? And what about IndyMac? IndyMac depositors only got 50 cents on the dollar. https://www.depositaccounts.com/blog/indymac-depositors-are-still-out-of.html https://www.depositaccounts.com/blog/indymac-depositors-are-...

mikeyouse 4y ago
Unsecured creditors in Lehman Brothers were entities like other banks and hedge funds who either offered unsecured credit lines or bank loans -- they're inherently risky and have nothing to do with retail or consumer banking. Those entities ate the losses and none of their customers lost money. It's good and appropriate they saw haircuts after the depositors and secured creditors were repaid in full. Indymac is an interesting case - their insured depositors were made whole at $100k and then the uninsured amounts were paid out immediately at 50% -- but then that is indeed when Dodd Frank did the retroactive FDIC raise to $250k -- so all of their depositors were fully reimbursed at $250k and presumably there were some losses of uninsured beyond that. It was a weird entity, they didn't have any debt or secured creditors so there wasn't anything else for an acquiring bank to buy once it was bankrupt. Very different than SVB but fair enough, a case where uninsured depositors lost some money in a bank run.
- zamnos 4y ago
  Unsecured creditors also includes anyone holding their stock, so if you held any shares of SIVB before today, you're sitting on a big fat goose egg.
  - mikeyouse 4y ago
    Equity holders are a lower precedence still from the unsecured creditors but nobody wants to bail either of them out - they took a risk and it didn’t pay off. Their investment is worth zero. People and companies who had cash in checking accounts weren’t taking any imprudent risk.

by zamnos 4y ago

mikeyouse 4y ago

Unsecured creditors in Lehman Brothers were entities like other banks and hedge funds who either offered unsecured credit lines or bank loans -- they're inherently risky and have nothing to do with retail or consumer banking. Those entities ate the losses and none of their customers lost money. It's good and appropriate they saw haircuts after the depositors and secured creditors were repaid in full. Indymac is an interesting case - their insured depositors were made whole at $100k and then the uninsured amounts were paid out immediately at 50% -- but then that is indeed when Dodd Frank did the retroactive FDIC raise to $250k -- so all of their depositors were fully reimbursed at $250k and presumably there were some losses of uninsured beyond that. It was a weird entity, they didn't have any debt or secured creditors so there wasn't anything else for an acquiring bank to buy once it was bankrupt. Very different than SVB but fair enough, a case where uninsured depositors lost some money in a bank run.

zamnos 4y ago
Unsecured creditors also includes anyone holding their stock, so if you held any shares of SIVB before today, you're sitting on a big fat goose egg.
- mikeyouse 4y ago
  Equity holders are a lower precedence still from the unsecured creditors but nobody wants to bail either of them out - they took a risk and it didn’t pay off. Their investment is worth zero. People and companies who had cash in checking accounts weren’t taking any imprudent risk.