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Correct me if I'm wrong, but nowadays any (sufficiently large?) solvent bank can just borrow from the Fed and survive such a run.

• bhouston 4y ago
  > Correct me if I'm wrong, but nowadays any (sufficiently large?) solvent bank can just borrow from the Fed and survive such a run. Why didn't SVB borrow then? I understand they were the 18th largest US bank last week. And they had more assets than just 47B that was the bank run. But the FDIC took them over because they didn't have the liquidity to serve the needs of the bank run as of Thursday night. I think that you can not just arbitrarily borrow from the fed, there are limits.
  • eru 4y ago
    It's because they weren't solvent.
    • bhouston 4y ago
      I think that isn't how it works. The fed just yesterday added the ability for banks to borrow nearly unlimited amounts against their assets. I do not think this existed previously. It is an emergency measure.
      • gizmondo 4y ago
        You missed the important part - they added the ability to borrow while valuing collateral at cost. Previously it had to be valued at market price, which was not sufficient for SVB (because it was insolvent on the mark-to-market basis).