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Not sure how it works in Europe, but if it's similar to the U.S., the issue is similar to what happened to SVB - they invested a large portion of their cash int
by judge2020 3y ago
Not sure how it works in Europe, but if it's similar to the U.S., the issue is similar to what happened to SVB - they invested a large portion of their cash into low-rate mortgage-backed securities, so when the rates rose, the actual value of the mortgage-backed securities dropped, making it hard to sell them without losing a bunch of money (which was deposits, not their own revenue/profits). The FED did guarantee all money in all accounts - even past $250k - but it's not a great look to be taken over by the fed to ensure money is available for withdrawal to depositors.
- hartator 3y agoSVB was investing Checking accounts money into mid-term bonds. Another kind of scam.
- judge2020 3y agoIt was all within the Fed's fund rate guidelines so I'm not sure how it was so scammy. Or does the the typical bank have a larger amount of short-term investments that can be easily liquidated in case there's a bank run?
- hartator 3y agoCash-equivalent or money market are fine, mid-term bounds are not. > It was all within the Fed's fund rate guidelines so I'm not sure how it was so scammy. SVB people are getting charged with criminal charges.