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I am seeing this talk of a bailout everywhere. But why would a bailout be needed? Where are people getting the idea that they don't have more than enough asset
by vba616 4y ago
I am seeing this talk of a bailout everywhere.
But why would a bailout be needed? Where are people getting the idea that they don't have more than enough assets for all their customers?
What I read last week was that they had a classic bank run, where they couldn't liquidate long term bonds fast enough when everyone panicked.
Is there something else going on?
- chewz 4y ago> Is there something else going on? FED's recent higher rates for longer policy is death sentence for VC's and personal wealth of many people... So they are trying to create moral panic in order to reverse FED policy.. They will not succeed.. Rates will stay higher but a discount window will be made available for banks like SVB....
- vba616 4y agoI mean, isn't it obviously true that, in hindsight, every tightening cycle for the last 40 years has ended in the Fed going a little too far, whoops? That's not to say there weren't underlying problems with the economy and financial sector, but the Fed manifestly never knows where to stop. Populist criticism of the Fed cannot identify the point that is "too far", but surely like a stopped clock they eventually have to be right. Isn't an inverted yield curve a warning signal that can't be dismissed as economically illiterate populism?
- loeg 4y agoThey were shut down because they were insolvent to the tune of $950M. It's not just that liquidation wasn't fast enough; liquidating assets also meant they needed to mark-to-market their 1.5% debt notes which they could previously account as hold-to-maturity. This transitioned them from kinda insolvent (but not in an accounting sense) to fully insolvent.