4 ms·
SVB probably has enough assets to make most depositors largely whole, but it'll take time. Shareholders are going to wear a total loss. Which sucks for them but
by gonzo41 4y ago
SVB probably has enough assets to make most depositors largely whole, but it'll take time. Shareholders are going to wear a total loss. Which sucks for them but this is part of share market game.
I suspect cooler heads will not prevail. And there will be much silliness Monday morning.
- oceanplexian 4y agoThis keeps getting repeated, but no, they don’t have enough assets to make depositors whole. A bond that matures in 10 years does not make anyone whole. That’s like saying “I know I owe you money today, but don’t sweat it, I’ll get you the money in 10 years”. These arguments completely ignore the time value of money.
- gonzo41 4y agoI didn't say totally whole, i said largely whole. Everyone will get at least 250K, and then probably something like 75-85% of what ever else they had relatively quickly and then who knows.
- relativ575 4y ago> they don’t have enough assets to make depositors whole. They do, if their assets get acquired by other banks who also invest in long term bonds, says at a discount?
- mgfist 4y ago> They do, if their assets get acquired by other banks who also invest in long term bonds, says at a discount? "Hi it's me, rival bank. I'll buy those bonds of yours, buuut my best offer is 70 cents on the dollar".
- UncleEntity 4y agoHi, it’s me, Uncle Sam, I’ll buy those assets at face value because that’s what I do. No Open Market Committee buying of the stocks, though.
- Ekaros 4y agoSo just fire sale everything and distribute equally to depositors. Time value of money solved. And everyone gets fully what belongs to them.
- somewhereoutth 4y agoExactly. Somebody has to eat the loss, maybe depositors, maybe the taxpayer. And somewhere, someone (some many), was on the other end of those trades - or not on the other end of trades that should have been made, and has made a gain.