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FDIC, Fed, and Treasury are considering a plan to backstop all SVB depositors
According to the Washington Post, the FDIC, Fed, and Treasury are considering a plan to backstop all SVB depositors if a buyer for the whole bank can’t be found in the coming hours (The Information says gov’t officials want to sell SVB to a regional bank, not an existing giant G-SIB institution, and the ideal bidder is someone like PNC, USB, or COF). The FDIC has the authority to guarantee all deposits at an institution if it concludes that a systemic risk is posed by the firm’s failure (although to do so would require the approval of 2/3 of the Fed and FDIC boards along with support from the Treasury Sec). A Reuters report says the US gov’t is preparing “material action” to stabilize deposits at SVB and prevent contagion from spreading.
- auntienomen 4y agoThis is the right thing to do. I don't think we want to live in a world where only systematically important banks are considered safe.
- deleted 4y ago[deleted]
- MilnerRoute 4y agoFor what it's worth, a staff writer at the Atlantic heard there are "multiple potential buyers" for SVB -- according to remarks Nancy Pelosi made at a public appearance today. "What we would hope to see by tomorrow morning is for some other bank to buy the bank." https://twitter.com/JohnGHendy/status/1634934773113290753?s=20 https://twitter.com/JohnGHendy/status/1634934773113290753?s=...
- gsibble 4y agoBidding ended at 2pm Eastern. We would have heard if there was a buyer by now.
- mrandish 4y agoI wouldn't expect to hear anything until tomorrow. Evaluating such bids can be quite complex because contingencies and limitations can differ between bids (eg cash injection, equity pricing, liability assumption, time windowing, bridge requirements, backstop guarantees and negotiating the degree of temporary regulatory loosening following the transaction). There will be significant back and forth between the top bidders and regulators following the final bids as they work to reconcile different bid elements against the regulator's ranked priorities.
- MilnerRoute 4y agoWould we have heard by now? TechCrunch reported that "Any agreed sale may not be known until late Sunday, if at all." https://techcrunch.com/2023/03/12/as-the-svb-auction-continues-the-sale-of-its-uk-arm-bounces-between-potential-suitors/ https://techcrunch.com/2023/03/12/as-the-svb-auction-continu... But even with that, "The FDIC is reportedly attempting to make at least a portion of clients’ uninsured deposits available from Monday." Also, SVB's UK arm actually has a bidder. https://www.fnlondon.com/articles/silicon-valley-bank-svb-bank-of-london-bid-uk-20230312 https://www.fnlondon.com/articles/silicon-valley-bank-svb-ba...