3 ms·
> And it's a lot of money (e.g. 30% loss on $200bn is about $600 per US resident household). I'm not sure where you got this number, but it's different than wh
by benmccann 4y ago
> And it's a lot of money (e.g. 30% loss on $200bn is about $600 per US resident household).
I'm not sure where you got this number, but it's different than what I've seen. Yes, SVB had $200B in deposits, but it had $15B in unrealized losses. The FDIC is probably contributing $12B as roughly 6% of deposits were insured. That means the gap is probably $3B if the government is to step in, which is very different than the $60B you're suggesting. If these instruments can't be held to maturity then the losses may be greater as many of them are illiquid and would have to be sold at a discount, but the government has the liquidity to avoid that.
- rahimnathwani 4y agoYou're right, the gap is likely much smaller. I did a quick calculation based on: - $200bn deposits (on which we agree) - press reports that Jefferies and hedge funds are offering to buy claims at up to 70c on the dollar (suggesting 30% loss)
- DennisP 4y agoApparently the offer from hedge funds gives them a substantial profit.
- deleted 4y ago[deleted]
- nuclearnice3 4y agoDoes the FDIC work like that? I imagined they would sell assets for the insured. And then sell more for the uninsured. If that process didn't cover the insured, they would bring money. In this case, the insured are well covered by the assets, so the FDIC won't bring money. We have a $12B difference of opinion here. Although, more generally, I agree from initial reports the assets - deposits gap does not seem to reach 30%. We should know more tonight and Monday morning.
- chernevik 4y agoThe FDIC will pay off insured deposits from bank assets. Those deposits get first call on the assets. The FDIC only chips in if those assets aren't enough.