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it is insolvent. It sold assets at firesale. That wiped out SVB's entire equity!! If SVB literally had a way to hack the time-space continuum and wait out for

it is insolvent. It sold assets at firesale. That wiped out SVB's entire equity!! If SVB literally had a way to hack the time-space continuum and wait out for asset prices they own , to stabilize ("maturity") , or to pay them back in full ( a loan)...SVB would STILL likely lack enough funds to pay back their deposits.

fnordpiglet 4y ago
That hack of space time is called “credit,” and they can collateralize their entire liability sheet if they had a credit willing to lend them massive amounts of cash on their illiquid assets. The FDIC owns them now and has access to credit. As a business they’re fine. The issue wasn’t the selling of assets, it was the panic that their actions took to prop up a balance sheet hole. It’s not like Enron or Lehman.
- IG_Semmelweiss 4y ago
  I don't think it is even chicken or egg. I think you have it wrong here I contend there is no private entity credit that would go near SVB because precisely they realized more losses than they had more depositors, and such credit would have never been secured at the top of the pile with the FDIC lurking nearby. No credit facility would save a doomed bank after the realized losses. It was a matter of time. The panic was not the cause. The panic was always going to happen. A public company would have never been able to do a firesale/equity raise without inducing a panic in the first place.
  - fnordpiglet 4y ago
    That untrue. If they held the bonds to maturity they would be worth more than their face value. However due to time value of money other bonds with higher yields are in more demand making the current price lower. A private entity wouldn’t take the risk but a public one would. In fact the fed (quasi public) has been buying precisely these assets for over a decade. They actually made substantial returns by simply holding these MBS to maturity.
    - JumpCrisscross 4y ago
      > the fed (quasi public) has been buying precisely these assets for over a decade At market price, not face value.
      - fnordpiglet 4y ago
        That’s correct, but they can also lend at net present value of the HTM value using it as collateral.
- shawabawa3 4y ago
  Credit doesn't help If you need $80B before your 10Y bonds mature and borrow it today, you're paying minimum 4% interest. By the time your $80B in bonds mature you owe $118B If you're saying it doesn't matter to FDIC because they can get "free" credit, that's equivalent to a bail out
  - fnordpiglet 4y ago
    I don’t think there’s any doubt the depositors and clients of the bank are being bailed out.

fnordpiglet 4y ago

That hack of space time is called “credit,” and they can collateralize their entire liability sheet if they had a credit willing to lend them massive amounts of cash on their illiquid assets. The FDIC owns them now and has access to credit. As a business they’re fine. The issue wasn’t the selling of assets, it was the panic that their actions took to prop up a balance sheet hole. It’s not like Enron or Lehman.

IG_Semmelweiss 4y ago
I don't think it is even chicken or egg. I think you have it wrong here I contend there is no private entity credit that would go near SVB because precisely they realized more losses than they had more depositors, and such credit would have never been secured at the top of the pile with the FDIC lurking nearby. No credit facility would save a doomed bank after the realized losses. It was a matter of time. The panic was not the cause. The panic was always going to happen. A public company would have never been able to do a firesale/equity raise without inducing a panic in the first place.
- fnordpiglet 4y ago
  That untrue. If they held the bonds to maturity they would be worth more than their face value. However due to time value of money other bonds with higher yields are in more demand making the current price lower. A private entity wouldn’t take the risk but a public one would. In fact the fed (quasi public) has been buying precisely these assets for over a decade. They actually made substantial returns by simply holding these MBS to maturity.
  - JumpCrisscross 4y ago
    > the fed (quasi public) has been buying precisely these assets for over a decade At market price, not face value.
    - fnordpiglet 4y ago
      That’s correct, but they can also lend at net present value of the HTM value using it as collateral.
shawabawa3 4y ago
Credit doesn't help If you need $80B before your 10Y bonds mature and borrow it today, you're paying minimum 4% interest. By the time your $80B in bonds mature you owe $118B If you're saying it doesn't matter to FDIC because they can get "free" credit, that's equivalent to a bail out
- fnordpiglet 4y ago
  I don’t think there’s any doubt the depositors and clients of the bank are being bailed out.