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There was no "bailout". As of right now, the government hasn't spent a dollar on SVB. It might have to eventually, if SVB continues to see a run, but as of righ
by gkoberger 4y ago
There was no "bailout". As of right now, the government hasn't spent a dollar on SVB. It might have to eventually, if SVB continues to see a run, but as of right now the government hasn't put any money into the bank.
- landemva 4y agoFDIC has spent funds. Drawdowns in FDIC reserves will be caught up with future assessments on insured banks. Anyone with a bank account will pay, though silently. Edit: I am interested in seeing something published by FDIC which shows precise amounts, if anyone has that. I presume it could be ~ 250k * count(accounts).
- ivalm 4y agoNo, for now SVB assets are enough to pay for all of the drawdown. It is unclear if SVB will actually run out of assets.
- landemva 4y agoFor now the Fed's newly created bank funding term loan mechanism is plugging the hole by having the Fed take underwater bonds at face value. SVB was solvent two weeks ago with mark-to-maturity accounting of their underwater bond holdings. SVB, from a bank accounting perspective, became insolvent when they sold the long duration bonds for a loss. At market prices of the bonds, SVB could not continue within bank accounting regulations. I suspect they will recover 90%-some.
- ivalm 4y agoI suspect they will repay 100% as they will find a buyer/not have to actually liquidate. Remember, they had net positive interest, so as long as they can continue holding to maturity they are entirely solvent.
- peanuty1 4y agoI thought the FDIC bailed out SVB by imposing fees on other banks that will likely be passed on to consumers.
- ivalm 4y agoNo, if FDIC ends up paying it will impose fees. They haven’t yet had to pay.
- deleted 4y ago[deleted]