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If SVB didn't already have sufficient lines of credit (recall that 40+ billion was withdrawn in just one day) arranging a loan or credit for the cash amounts in
by olliej 4y ago
If SVB didn't already have sufficient lines of credit (recall that 40+ billion was withdrawn in just one day) arranging a loan or credit for the cash amounts involved takes a large amount of time compared to the obligations a bank is under.
This kind of event is ostensibly prevented by regulations requiring "shock testing" of banks, but the GOP and trump rolled back those regulations for banks like SVB because government regulation is bad, and the CEO of SVB told congress that despite the established history of unregulated banks failing just like this, it would not happen again because magic.
- Kye 4y agoThat makes sense. The market is there to make sure banks have enough to meet the reserve requirement. And if that requirement is too low... I guess that's why we have the FDIC, and why banks pay into the insurance. And why 2008 wasn't as bad as the crash that led to its creation. It looks like the fund has $124 billion as of 2022. https://www.fdic.gov/news/press-releases/2022/pr22064.html https://www.fdic.gov/news/press-releases/2022/pr22064.html That doesn't sound like enough to do much more than cover $250k on all accounts, but I guess that's the idea.