3 ms·

if a bank becomes so toxic that FDIC had to parachute in in the middle of the day (couldn't even wait til closing) and shut it down, how can this bank be saved

if a bank becomes so toxic that FDIC had to parachute in in the middle of the day (couldn't even wait til closing) and shut it down, how can this bank be saved with a bridge loan? > SVB “didn’t have nearly as much capital as an institution that risky should have had” https://www.bloomberg.com/news/articles/2023-03-10/svb-spectacularly-fails-after-unthinkable-heresy-becomes-reality https://www.bloomberg.com/news/articles/2023-03-10/svb-spect... blaming the customers for wanting to save their money and claiming as if they were the cause of the bank's recklessness seems really strange.

MrLeap 4y ago
If they had more capital, wouldn't that have made them _less risky_? Sounds like a tautology!
- vineyardmike 4y ago
  They can be risky for other behavior, necessitating capital. If they held less "risky" securities, they wouldn't need incoming cash. Cash makes the risk go away, but so does holding other better assets.
more_corn 4y ago
A bank run like this would collapse any bank in the world. I get what you’re saying. But it is literally the fault of the people panicked and withdrew their deposits. And doubly the fault of the people who advised them to do so.
- NhanH 4y ago
  Faulting the people who withdraw their money is like faulting the fresher who crashes production. Yeah they could have avoided it, but really, this is the discussion point we want to focus on?
- justahuman74 4y ago
  Some of us work at companies who did a rapid withdrawal, and are sure hoping that's enough that the company doesn't run out of money and do layoffs.
- shawabawa3 4y ago
  If that's true that's extremely worrying Are you saying every bank in the world has assets significantly less than liabilities due to over exposure on long term low interest rate bonds?
- lp0_on_fire 4y ago
  No this is literally the fault of a mismanaged Bank causing its depositors to lose confidence. Imagine using this excuse in any other situation: "It's not the food poisoning at my restaurant that's causing me to go out of business it's those darned customers who stopped eating here!"
nostromo 4y ago
Thanks to many VCs asking all of their portfolio companies to withdraw at once, SVB had $42b in withdrawal requests on Thursday. On Friday there would have had many more billions if they hadn't ceased taking them. I wonder if any US bank could muster up $100b in 24 hours. (On most days with lots of withdrawals, like on common pay days, banks will see lots deposits too. They aren't one-directional and out of the blue.)
- twelve40 4y ago
  Nobody owes them their money. That's not the bank's money and if the customers decide that the bank is no longer safe and is engaging in shifty shit the only reasonable thing to do is to take your own money and move it somewhere safe. The bank's whole job is to make sure it doesn't get to that point, and they failed at that. The CEO knew they were going to crash, probably for quite a while now.

MrLeap 4y ago

If they had more capital, wouldn't that have made them _less risky_? Sounds like a tautology!

vineyardmike 4y ago
They can be risky for other behavior, necessitating capital. If they held less "risky" securities, they wouldn't need incoming cash. Cash makes the risk go away, but so does holding other better assets.

more_corn 4y ago

A bank run like this would collapse any bank in the world. I get what you’re saying. But it is literally the fault of the people panicked and withdrew their deposits. And doubly the fault of the people who advised them to do so.

NhanH 4y ago
Faulting the people who withdraw their money is like faulting the fresher who crashes production. Yeah they could have avoided it, but really, this is the discussion point we want to focus on?
justahuman74 4y ago
Some of us work at companies who did a rapid withdrawal, and are sure hoping that's enough that the company doesn't run out of money and do layoffs.
shawabawa3 4y ago
If that's true that's extremely worrying Are you saying every bank in the world has assets significantly less than liabilities due to over exposure on long term low interest rate bonds?
lp0_on_fire 4y ago
No this is literally the fault of a mismanaged Bank causing its depositors to lose confidence. Imagine using this excuse in any other situation: "It's not the food poisoning at my restaurant that's causing me to go out of business it's those darned customers who stopped eating here!"

nostromo 4y ago

Thanks to many VCs asking all of their portfolio companies to withdraw at once, SVB had $42b in withdrawal requests on Thursday. On Friday there would have had many more billions if they hadn't ceased taking them. I wonder if any US bank could muster up $100b in 24 hours. (On most days with lots of withdrawals, like on common pay days, banks will see lots deposits too. They aren't one-directional and out of the blue.)

twelve40 4y ago
Nobody owes them their money. That's not the bank's money and if the customers decide that the bank is no longer safe and is engaging in shifty shit the only reasonable thing to do is to take your own money and move it somewhere safe. The bank's whole job is to make sure it doesn't get to that point, and they failed at that. The CEO knew they were going to crash, probably for quite a while now.