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My guess: SVB collapse took everyone including the FDIC by surprise. It has unfolded very quickly. Bill Ackman makes the point that the FDIC/government should h

My guess: SVB collapse took everyone including the FDIC by surprise. It has unfolded very quickly. Bill Ackman makes the point that the FDIC/government should have realized their exposure and been monitoring them much more closely. This is likely a valid point.

luckylion 4y ago
Is that not true for pretty much every collapse in the history of collapses? If everyone saw it coming from far away, it wouldn't be a sudden collapse, it would be slow and controlled demolition or they'd undertake repairs way before anything was falling apart. It's the nature of these collapses that you don't see them coming, everything looks fine one minute and the house vanishes the next. Should the government always guarantee everything with no limits, because "they should have seen it coming and should have done something a long time before it collapsed"?
- treis 4y ago
  No, it's unusual. Usually the FDIC is ahead enough to do a planned takeover on a Friday with the aim of re-opening Monday morning. This might be the first honest to goodness bank run we've seen since the FDIC was created.
- mixdup 4y ago
  No, this collapse is pretty rare. Typically they seize the bank after it closes on a Friday, have a buyer lined up in a secret auction conducted before the seizure, and on Monday the bank re-opens as a branch of the acquiring bank. It usually happens this way because the FDIC and state regulators usually do see it coming from a mile away Out of over 550 seizures since 2000, only 31 did not operate under this pattern SVB was closed at noon in the middle of the day and there was no one to acquire the assets and deposits. This happened very quickly and obviously got out of control faster than anyone realized
  - luckylion 4y ago
    Thanks, I'm still not convinced something that happens in ~5% of cases is the exception to get rid of the rules, but that adds some context and perspective.
    - daydream 4y ago
      Upthread you wrote: >Should the government always guarantee everything with no limits, because "they should have seen it coming and should have done something a long time before it collapsed"? I never said anything about guaranteeing everything with no limits. I don't believe that is reasonable. Maybe you are reacting to something Bill Ackman wrote in his tweet? If the FDIC/gov had been monitoring them much closer it opens up the set of potential solutions way wider than "government closes your bank in the afternoon on Friday because you wouldn't have made it to the end of day." Maybe this actually was happening and there were reasons events unfolded this way. Maybe it wasn't. It seems like it wasn't.

luckylion 4y ago

Is that not true for pretty much every collapse in the history of collapses? If everyone saw it coming from far away, it wouldn't be a sudden collapse, it would be slow and controlled demolition or they'd undertake repairs way before anything was falling apart. It's the nature of these collapses that you don't see them coming, everything looks fine one minute and the house vanishes the next. Should the government always guarantee everything with no limits, because "they should have seen it coming and should have done something a long time before it collapsed"?

treis 4y ago
No, it's unusual. Usually the FDIC is ahead enough to do a planned takeover on a Friday with the aim of re-opening Monday morning. This might be the first honest to goodness bank run we've seen since the FDIC was created.
mixdup 4y ago
No, this collapse is pretty rare. Typically they seize the bank after it closes on a Friday, have a buyer lined up in a secret auction conducted before the seizure, and on Monday the bank re-opens as a branch of the acquiring bank. It usually happens this way because the FDIC and state regulators usually do see it coming from a mile away Out of over 550 seizures since 2000, only 31 did not operate under this pattern SVB was closed at noon in the middle of the day and there was no one to acquire the assets and deposits. This happened very quickly and obviously got out of control faster than anyone realized
- luckylion 4y ago
  Thanks, I'm still not convinced something that happens in ~5% of cases is the exception to get rid of the rules, but that adds some context and perspective.
  - daydream 4y ago
    Upthread you wrote: >Should the government always guarantee everything with no limits, because "they should have seen it coming and should have done something a long time before it collapsed"? I never said anything about guaranteeing everything with no limits. I don't believe that is reasonable. Maybe you are reacting to something Bill Ackman wrote in his tweet? If the FDIC/gov had been monitoring them much closer it opens up the set of potential solutions way wider than "government closes your bank in the afternoon on Friday because you wouldn't have made it to the end of day." Maybe this actually was happening and there were reasons events unfolded this way. Maybe it wasn't. It seems like it wasn't.