3 ms·
I am also confused about where the money is coming from to cover SVB’s losses, if not from the taxpayer.
by reso 4y ago
I am also confused about where the money is coming from to cover SVB’s losses, if not from the taxpayer.
- cragfar 4y agoThe FDIC can tell banks they need to pay more into it to cover the losses.
- geodel 4y agoThe pay is then collected from depositors by banks.
- gruez 4y ago1. FDIC reserve fund (from the premiums they collect) 2. "a special assessment" aka a tax on member banks directly
- dodgerdan 4y ago3. SVB’s assets. They actually have enough assets to pay, but it will take time for those bonds to mature.
- gruez 4y agoHaving to wait for the bonds to mature is arguably a haircut. Otherwise you can for example, justify a 10% haircut by saying that you can take that 10%, buy some 5 year treasuries with it, and get back your money once those bonds mature.
- perryizgr8 4y ago> 2. "a special assessment" aka a tax on member banks directly And if some bank doesn't have enough to cover everything they can get freshly printed USD courtesy of BTFP: https://www.wsj.com/livecoverage/stock-market-news-today-03-13-2023/card/meet-the-btfp-the-fed-s-2023-crisis-facility-Bn7TsQpropbMiW1Z3kdp https://www.wsj.com/livecoverage/stock-market-news-today-03-...