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Another way of dealing with a run would have been to simply replace the funding through interbank lending: Take a deposit from another bank to offset the depos
by zhte415 4y ago
Another way of dealing with a run would have been to simply replace the funding through interbank lending:
Take a deposit from another bank to offset the deposits being withdrawn. Through funds or repo. If it was a short term funding issue, this is normal (at a system level, interbank lending always balances, just an accounting identity). But that wasn't done. Whether that's because other banks were unwilling to step in may be interesting to see.
- startupsfail 4y agoAnd another way was for VCs to step in and help saving their piggy bank. There was an easy mechanism for that - simply purchase the shares SVB was offering. But no, community that claims they are going to save the world couldn’t exercise enough long-term thinking to even save their piggy bank. There should be no bailout by the Fed. This community has enough resources. If they can think long term and act together, they’ll reorganize themselves in a responsible way. If they can’t, then they deserve to fail financially and they’ll have less resources to control.
- gruez 4y ago>. If it was a short term funding issue, this is normal (at a system level, interbank lending always balances, just an accounting identity). But that wasn't done. Whether that's because other banks were unwilling to step in may be interesting to see. It wasn't done because the assets SVB had at current market values was worth less than their liabilities. You'd be crazy to lend money to SVB.
- paulddraper 4y agoThat LITERALLY exists. https://en.wikipedia.org/wiki/Interbank_lending_market https://en.wikipedia.org/wiki/Interbank_lending_market But people weren't withdrawing because of a funny Reddit meme; they were withdrawing because SVB was underwater. And creditors don't like underwater debtors