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But where will the money that pays un-insured deposits come from? SVB's assets are worth less than its liabilities at this point....
by dh2022 4y ago
But where will the money that pays un-insured deposits come from? SVB's assets are worth less than its liabilities at this point....
- barnabee 4y agoIf SVB is acquired, the acquirer also takes on the liability to depositors (most likely all of it, but a haircut could be negotiated) so everyone should get everything back (unless a haircut is negotiated) and handling the shortfall is a cost to the acquirer. Perhaps they believe the future value of the business justifies that, perhaps they don’t and the government pushes them to do it anyway. If it’s not acquired depositors will take a haircut (get paid less) in the unwinding process so that the amount paid out doesn’t exceed the assets available.
- loeg 4y agoA buyer might be willing to pay a premium (above the assets alone) for the business, which was worth $15.5B to shareholders as recently as Wednesday. Levine's column on this failure is great, you should check it out: https://archive.is/cN3CD https://archive.is/cN3CD .