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Good point, although this is also included in your link: > This leaves about $90 billion in securities and other SVB assets in the hands of the FDIC, and an es

by rcme 4y ago

Good point, although this is also included in your link: > This leaves about $90 billion in securities and other SVB assets in the hands of the FDIC, and an estimated cost of the failure to the Deposit Insurance Fund of about $20 billion. So the real number is 50 + 90 = 140.

JumpCrisscross 4y ago
> the real number is 50 + 90 = 140 This doesn’t make sense. You’re adding deposits (liabilities) to assets. $56bn deposits doesn’t mean $56bn of cash in a vault, it means $56bn owed to depositors.
- deleted 4y ago
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- rcme 4y ago
  It also doesn't make sense that SVB would need a bailout if they had 50B in liabilities and 90B in assets.
  - JumpCrisscross 4y ago
    > doesn't make sense that SVB would need a bailout if they had 50B in liabilities and 90B in assets Deposits aren’t all SVB’s liabilities, though they were most of them. Their balance sheet changed between failure and disposition. And the FDIC is giving the acquirer some guarantees on the assets, which are being acquired for substantially less than $90bn.
    - deleted 4y ago
      [deleted]
    - rcme 4y ago
      It's more likely that the 50B number doesn't represent the full FDIC coverage for deposits. For instance, this article claims that the bank was about to have 100B withdrawn the day the FDIC took over: https://www.cnbc.com/2023/03/28/svb-customers-tried-to-pull-nearly-all-deposits-in-two-days-barr-says.html https://www.cnbc.com/2023/03/28/svb-customers-tried-to-pull-... I think most likely is that the FDIC has had the bank for a number of weeks and allowed a large number of withdrawals. Those withdrawals are counted as part of the 18B cost to the FDIC, but aren't part of the 50B that was sold.
      - JumpCrisscross 4y ago
        > the 50B number doesn't represent the full FDIC coverage for deposits At some point in the past, sure, there were more deposits being emergency insured by the FDIC, which might reduce that 5,200x figure by up to an order of magnitude. I would also clarify, however, that the emergency insurance kicked in two days after the FDIC put SVB into receivership. > those withdrawals are counted as part of the 18B cost to the FDIC No, they’re not. The discount offered on the assets is where the loss comes from.
        rcme 4y ago
        The discount was only 16.5B
        JumpCrisscross 4y ago
        > discount was only 16.5B And that's not the sole source of the FDIC's possible losses. (Again, deposits being withdrawn doesn't cause losses per se. The liability and assets sold are struck simultaneously.)
        rcme 4y ago
        It's probably better if you just read the FDIC statement: https://www.fdic.gov/news/press-releases/2023/pr23023.html https://www.fdic.gov/news/press-releases/2023/pr23023.html > As of March 10, 2023, Silicon Valley Bridge Bank, National Association, had approximately $167 billion in total assets and about $119 billion in total deposits. Today's transaction included the purchase of about $72 billion of Silicon Valley Bridge Bank, National Association's assets at a discount of $16.5 billion. Approximately $90 billion in securities and other assets will remain in the receivership for disposition by the FDIC. In addition, the FDIC received equity appreciation rights in First Citizens BancShares, Inc., Raleigh, North Carolina, common stock with a potential value of up to $500 million. > The FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund (DIF) to be approximately $20 billion. The exact cost will be determined when the FDIC terminates the receivership.

by rcme 4y ago

JumpCrisscross 4y ago

> the real number is 50 + 90 = 140 This doesn’t make sense. You’re adding deposits (liabilities) to assets. $56bn deposits doesn’t mean $56bn of cash in a vault, it means $56bn owed to depositors.

deleted 4y ago
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rcme 4y ago
It also doesn't make sense that SVB would need a bailout if they had 50B in liabilities and 90B in assets.
- JumpCrisscross 4y ago
  > doesn't make sense that SVB would need a bailout if they had 50B in liabilities and 90B in assets Deposits aren’t all SVB’s liabilities, though they were most of them. Their balance sheet changed between failure and disposition. And the FDIC is giving the acquirer some guarantees on the assets, which are being acquired for substantially less than $90bn.
  - deleted 4y ago
    [deleted]
  - rcme 4y ago
    It's more likely that the 50B number doesn't represent the full FDIC coverage for deposits. For instance, this article claims that the bank was about to have 100B withdrawn the day the FDIC took over: https://www.cnbc.com/2023/03/28/svb-customers-tried-to-pull-nearly-all-deposits-in-two-days-barr-says.html https://www.cnbc.com/2023/03/28/svb-customers-tried-to-pull-... I think most likely is that the FDIC has had the bank for a number of weeks and allowed a large number of withdrawals. Those withdrawals are counted as part of the 18B cost to the FDIC, but aren't part of the 50B that was sold.
    - JumpCrisscross 4y ago
      > the 50B number doesn't represent the full FDIC coverage for deposits At some point in the past, sure, there were more deposits being emergency insured by the FDIC, which might reduce that 5,200x figure by up to an order of magnitude. I would also clarify, however, that the emergency insurance kicked in two days after the FDIC put SVB into receivership. > those withdrawals are counted as part of the 18B cost to the FDIC No, they’re not. The discount offered on the assets is where the loss comes from.
      - rcme 4y ago
        The discount was only 16.5B
        JumpCrisscross 4y ago
        > discount was only 16.5B And that's not the sole source of the FDIC's possible losses. (Again, deposits being withdrawn doesn't cause losses per se. The liability and assets sold are struck simultaneously.)
        rcme 4y ago
        It's probably better if you just read the FDIC statement: https://www.fdic.gov/news/press-releases/2023/pr23023.html https://www.fdic.gov/news/press-releases/2023/pr23023.html > As of March 10, 2023, Silicon Valley Bridge Bank, National Association, had approximately $167 billion in total assets and about $119 billion in total deposits. Today's transaction included the purchase of about $72 billion of Silicon Valley Bridge Bank, National Association's assets at a discount of $16.5 billion. Approximately $90 billion in securities and other assets will remain in the receivership for disposition by the FDIC. In addition, the FDIC received equity appreciation rights in First Citizens BancShares, Inc., Raleigh, North Carolina, common stock with a potential value of up to $500 million. > The FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund (DIF) to be approximately $20 billion. The exact cost will be determined when the FDIC terminates the receivership.