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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 seiz
by 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 agoThanks, 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 agoUpthread 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.