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"A lot of" doesn't mean there's enough to cover the deposit outflow. It may be that the remaining assets amount to 85-90% of remaining customer deposits and can
by dgacmu 4y ago
"A lot of" doesn't mean there's enough to cover the deposit outflow. It may be that the remaining assets amount to 85-90% of remaining customer deposits and can be sold fairly soon. Thats not enough to prevent a bank failure but it's an awful lot better than 0% for folks wondering WTH is going to happen to their money. [Note: 85-90% is hypothetical,
the FDIC is likely in the process of figuring out what that number really is right now.]
- stefan_ 4y agoYou can't have it both ways, either they can be sold immediately or they can't. What's the theory here? A lot of the assets can be sold immediately but they held off on doing that to cover deposit outflow for the greater good of having FDIC take control, bury SVB & their careers and methodically unwind it for a better price? I don't even doubt you can sell the assets and come out of it with 90% of deposits, but the wording is off.
- loeg 4y agoSVB couldn't keep selling assets because it was insolvent, not because the market was illiquid.
- dgacmu 4y agoNo, they sold assets (at a loss) and covered withdrawals. But then they reported their remaining balances and the FDIC stepped in because after taking those losses there were insufficient assets to cover the expected future rush of withdrawals.