3 ms·
Why didn't the fed decide that course of action in this case? Seems the difference is small. Shareholders still lost everything, depositors lost nothing instea
by geysersam 4y ago
Why didn't the fed decide that course of action in this case?
Seems the difference is small. Shareholders still lost everything, depositors lost nothing instead of 10% but that's a minor difference.
Guess one difference is how long it'll take before depositors can access their money. Now they'll get it immediately. If they were waiting for liquidation of the banks assets, that would probably take longer.
- kevingadd 4y agoDepositors would have lost up-to $X - 250000, not 10%. SVB is down ~10% but that doesn't mean everyone would have actually been made whole from the money.
- thegrimmest 4y agoI guess I still don't see a problem. Some business close. Some people find new jobs. Life goes on. I don't see a reason for intervention here.
- rafaelero 4y agoThe difference is that the thought of losing 10% is enough to make everyone else consider withdrawing the money they have with their banks. And that initiates a bank run that would spill over all the banking sector. The bailout is not to protect SVB; that's already gone. Fed is now trying to avoid having people stress testing other banks, because they probably won't handle it.
- geysersam 4y agoThat's very interesting. Thanks.