US government steps in and says depositors at SVB will get their money back

[countryBoy641]

No.
They are expecting U.S taxpayers to pay.

 

[athlonmank8]

But this is not a real fix because there will surely be more bank failures down the road. What the Fed needs to do is open the discount window and then put the future rate hike on hold.

What's going to cause these bank failures outside of bank runs? What was the underlying problem in SIVB? It wasn't the IR risk. Are these start-ups going bust all at once? What triggered the bank run and then the bond sales?

I'm trying to get a better understanding of what is the initial trigger here.

 

[kashirin]

I would say extremely prudent and expected.

I sold some puts at the futures open
should,ve bought calls too but still not bad
so big thank you US taxpayer

 

[R1234]

I'm pretty sure the amounts not paid by FDIC (anything greater than $250k) is the responsibility of the US taxpayer. Those well to do Bay Area tech geeks will be made whole with the taxes I pay.

 

[ktm]

What's going to cause these bank failures outside of bank runs? What was the underlying problem in SIVB? It wasn't the IR risk. Are these start-ups going bust all at once? What triggered the bank run and then the bond sales?

I'm trying to get a better understanding of what is the initial trigger here.

It began as many of the startups backed off deposits and experienced tighter economic conditions - over the course of some months. The deposit base of SVB was a bit volatile because of the customer base anyway. This caused their cash cushion to drop to a low level with the bulk of deposits locked in long dated Treasuries. They sold some Treasuries at a loss of nearly $2B to raise cash, but were in the quiet period. Word got out and lots of VC folks and others deemed SVB to be circling the bowl low and tight and told their people to get their money out. Last Thursday customers withdrew $42B.

I get that the Fed will trade cash for Treasuries valued at par, but the uninsured folks (or the bank) needs to take the haircut for that.

 

[athlonmank8]

It began as many of the startups backed off deposits and experienced tighter economic conditions - over the course of some months. The deposit base of SVB was a bit volatile because of the customer base anyway. This caused their cash cushion to drop to a low level with the bulk of deposits locked in ......

Thanks!