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Thanks for the posted paper. But if SVB was able to borrow against the mark to market value of their collateral, I don't understand why they couldn't remain sol

• tripletao 4y ago
  The SVB was in the process of arranging exactly such borrowing. There were some delays, but it probably would have succeeded if the FDIC hadn't intervened to shut it down. > “We were well under way with the transfer of collateral and were waiting for a call from the Federal Reserve and SVB,” a spokesperson for the San Francisco FHLB said. “And while we were waiting for a call, the FDIC took over SVB.” https://www.wsj.com/articles/how-the-last-ditch-effort-to-save-silicon-valley-bank-failed-89619cb2 https://www.wsj.com/articles/how-the-last-ditch-effort-to-sa... The FDIC intervened because that was unlikely to save the SVB--those loans could fully resolve a liquidity crisis, but they actually make a solvency crisis worse for the remaining depositors, since an insolvent bank becomes relatively more insolvent with each dollar withdrawn. It's bad for public trust when a bank shuts down with $100B in deposits backed by only $90B in assets; but it's much worse when the run continues until there's $10B in deposits backed by nothing.