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Comment by sql-spy | Hacker News Reader

In most cases depositors recover 90% or higher.

Insured deposits are paid on first day the bank opens. More than 50% of uninsured deposits are paid within a week. Another 20% or so gets paid within a year or sooner in quarterly installments. Remaining amount gets paid in yearly installments and in all cases was paid within 3 years.

Haircut is guaranteed in this political climate since there is no appetite for a bailout. At least not for SVB. The later ones could be bailed out but SVB is a goner.

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> Haircut is guaranteed in this political climate since there is no appetite for a bailout. At least not for SVB. The later ones could be bailed out but SVB is a goner.

SVB stock and bond holders will lose everything but it is far from guaranteed that depositors will take a haircut.

> More than 50% of uninsured deposits are paid within a week. Another 20% or so gets paid within a year or sooner in quarterly installments. Remaining amount gets paid in yearly installments and in all cases was paid within 3 years.

The data does not support these statements. E.g. for a random bank I selected on the FDIC site [1], "American National Bank", uninsured depositors got paid 77.8% in three installments: the first 57% two weeks after bank closure, 7.4% after three years and the last 13.3% after five-and-a-half years.

[1] https://closedbanks.fdic.gov/dividends/

https://www.fdic.gov/resources/resolutions/bank-failures/fai...

American national had its deposits transferred. The dividend payments were to other creditors.

> Haircut is guaranteed

Not if someone buys it. Unless a haircut is part of the bid, which seems unlikely. No point having 97% of your new customers pissed off at you.

But where will the money that pays un-insured deposits come from? SVB's assets are worth less than its liabilities at this point....

If SVB is acquired, the acquirer also takes on the liability to depositors (most likely all of it, but a haircut could be negotiated) so everyone should get everything back (unless a haircut is negotiated) and handling the shortfall is a cost to the acquirer. Perhaps they believe the future value of the business justifies that, perhaps they don’t and the government pushes them to do it anyway.

If it’s not acquired depositors will take a haircut (get paid less) in the unwinding process so that the amount paid out doesn’t exceed the assets available.

A buyer might be willing to pay a premium (above the assets alone) for the business, which was worth $15.5B to shareholders as recently as Wednesday. Levine's column on this failure is great, you should check it out: https://archive.is/cN3CD .

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