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As of yesterday the FDIC is officially backstopping 100% of deposits, even beyond the $250k limit. They decided that confidence in the banking system takes pre
by SkyMarshal 4y ago
As of yesterday the FDIC is officially backstopping 100% of deposits, even beyond the $250k limit. They decided that confidence in the banking system takes precedence over that limit. The $250k limit no longer exists, de facto at least, if not de jure. So it's actually unclear that a service like this is even useful anymore.
- majormajor 4y agoNot everyone will want to rely on a not-guaranteed discretionary call happening again. Don't think of this like a Supreme Court decision that is unlikely to be overturned for decades if not longer.
- selectodude 4y agoThe FDIC is backstopping deposits over $250k because Silicon Valley Bank has enough money to pay out all deposits. It’s just locked up in 10 year treasuries. The FDIC will give you your money back, sit on the treasuries, and get paid back by the Federal Government when the bonds mature. The bank itself is worthless but the money didn’t disappear.
- quickthrowman 4y agoThey also have a portfolio of (dogshit, I’m sure) loans to startups that I would wager is worth at most 50 cents on the dollar. Deposit liabilities at SVB will exceed asset liquidation value, I’d bet a decent sum of money on that.
- selectodude 4y agoTheir whole problem was that they didn't have anybody to loan to. Startups aren't borrowing from banks, they're getting VC money and parking it at SVB. Their "dogshit" is 10 year treasuries almost exclusively.