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Excellently said. On top of that: there is no meaningful risk that these startups will not be made whole in the coming weeks. Given the absence of risk, there

Excellently said. On top of that: there is no meaningful risk that these startups will not be made whole in the coming weeks. Given the absence of risk, there will be plenty of lenders competing to provide these companies with liquidity for a relatively small slice of the pie, should it even come to that.

sp332 4y ago
To be clear, you think the FDIC will be able to sell enough bank assets to cover 100% of deposits?
- woodruffw 4y ago
  No, I think they'll recover a large percentage of it, and that the difference won't matter.
  - Danieru 4y ago
    I don't think "being made whole" means what you think it means.
    - JohnFen 4y ago
      The FDIC will cover the portion that they couldn't recover from bank assets. The depositors will be made whole (up to $250k), but it may take some taxpayer money to do that.
      - deleted 4y ago
        [deleted]
      - Danieru 4y ago
        The subject of OP's post is the non-insured deposits. No one, yet, has expressed doubt on the credit of the FDIC. Sub 10% of SVB's deposits were insured. Meanwhile SVB's HTM bonds have taken a 20%+ loss which will, barring an acquisition, cause non-insured deposits to take a 19%+ haircut. Combined with an indeterminate period of waiting. So start ups with cash in SVB should expect to lose 20% and find alternative sources to make payroll, pay payroll taxes, and pay suppliers. I expect we will see many startups close us shop when founders are unwilling to bail out their own company's balance sheet with personal money.
        JohnFen 4y ago
        Ah, my bad. Then yes, I agree they probably won't be made whole by the fed or government. Nor should they, in my opinion.
time_to_smile 4y ago
> there is no meaningful risk that these startups will not be made whole in the coming weeks. Wow, two very bold claims here: 1. they will be made whole 2. in a few weeks For 1. I think this is very unlikely to happen. Absolutely account holders will get some money back, but I would be pretty surprised if it was 100%. Regarding number 2. I would be even more shocked if anything more than the FDIC insured amount was returns within "a few weeks". However you are claiming that there is "no meaningful" probability these will not both happen. Do you care to elaborate on this more because I have heard nobody with any experience in this space making claims like this?
- JohnFen 4y ago
  > I would be pretty surprised if it was 100% It would be unthinkable that they wouldn't, up to the $250k limit. Beyond that limit, they probably won't be made whole.
  - astrange 4y ago
    If they sell SVB to another bank, it will probably guarantee 100% of it because the alternative makes all customers of small banks a lot more nervous about their accounts.
- woodruffw 4y ago
  https://home.treasury.gov/news/press-releases/jy1337 https://home.treasury.gov/news/press-releases/jy1337

sp332 4y ago

To be clear, you think the FDIC will be able to sell enough bank assets to cover 100% of deposits?

woodruffw 4y ago
No, I think they'll recover a large percentage of it, and that the difference won't matter.
- Danieru 4y ago
  I don't think "being made whole" means what you think it means.
  - JohnFen 4y ago
    The FDIC will cover the portion that they couldn't recover from bank assets. The depositors will be made whole (up to $250k), but it may take some taxpayer money to do that.
    - deleted 4y ago
      [deleted]
    - Danieru 4y ago
      The subject of OP's post is the non-insured deposits. No one, yet, has expressed doubt on the credit of the FDIC. Sub 10% of SVB's deposits were insured. Meanwhile SVB's HTM bonds have taken a 20%+ loss which will, barring an acquisition, cause non-insured deposits to take a 19%+ haircut. Combined with an indeterminate period of waiting. So start ups with cash in SVB should expect to lose 20% and find alternative sources to make payroll, pay payroll taxes, and pay suppliers. I expect we will see many startups close us shop when founders are unwilling to bail out their own company's balance sheet with personal money.
      - JohnFen 4y ago
        Ah, my bad. Then yes, I agree they probably won't be made whole by the fed or government. Nor should they, in my opinion.

time_to_smile 4y ago

> there is no meaningful risk that these startups will not be made whole in the coming weeks. Wow, two very bold claims here: 1. they will be made whole 2. in a few weeks For 1. I think this is very unlikely to happen. Absolutely account holders will get some money back, but I would be pretty surprised if it was 100%. Regarding number 2. I would be even more shocked if anything more than the FDIC insured amount was returns within "a few weeks". However you are claiming that there is "no meaningful" probability these will not both happen. Do you care to elaborate on this more because I have heard nobody with any experience in this space making claims like this?

JohnFen 4y ago
> I would be pretty surprised if it was 100% It would be unthinkable that they wouldn't, up to the $250k limit. Beyond that limit, they probably won't be made whole.
- astrange 4y ago
  If they sell SVB to another bank, it will probably guarantee 100% of it because the alternative makes all customers of small banks a lot more nervous about their accounts.
woodruffw 4y ago
https://home.treasury.gov/news/press-releases/jy1337 https://home.treasury.gov/news/press-releases/jy1337