> If you had more than $250k in SVB yesterday you probably just took a huge haircut.
You may not lose money. The money isn’t gone yet. The restructuring may save the money. There’s a playbook for this sort of thing.
You may not lose money. The money isn’t gone yet. The restructuring may save the money. There’s a playbook for this sort of thing.
Separately, this is going to cause a lot of finance vultures to look at other banks who also have MBS portfolios on their books. The show's only beginning.
Edit: this is actually a serious question, if someone knows the actual answer.
I understand that ideally the government wouldn't want to hold onto the bonds, but is there any statutory (or other real) reason why they would _have_ to sell them at less than face value? If you could guarantee 100% of deposits could be returned by just holding onto the bonds until maturity, that seems like a worthwhile trade.
If there were fewer assets then deposits, then yes the 250k+ accounts are probably out of luck.
Whatever bank/organization that wants to have SVB's customers, probably. If an even bigger bank comes in, one which can take on those lukewarm assets for a decade without risk, then they can immediately position themselves as the "new SVB" and get a bunch of VCs and startups as customers. I assume that they could stand to profit some from such an arrangement, but I'm not a banker, so maybe not?
The government, to protect the economy
If I'm the FDIC and I have the opportunity to return 100% of the funds to depositors at the cost of just holding on to a bond for a few more years than I otherwise would, that seems like a tradeoff I'd make to stabilize a lot of companies. (I'm of course biased here)
Someone will buy SVB, and they will put capital in as part of the purchase.
Not all mortgage backed securities are subprime CDO squareds.
i suspect the real number will be closer to 40% than 1%
What we do know for sure though, is that this process will take months, maybe years, to play out and many startups will run out of money long before this is resolved.