Silicon Valley Bank is NOT getting bailed out.

[RandySF]

SVB is being shuttered with the feds auctioning off the pieces. Depositors are being kept whole with the bank's assets. Am I incorrect It doesn't sound like a bailout to me.

[RandySF]

1. Kicked for edit.

[sheshe2]

2. Kick. Rec.

TY.

[HariSeldon]

3. There might be a bit of a bailout for depositors

Secretary Yellen said that the depositors would all be made whole. The reason the bank collapsed is that it couldn't fulfill all the withdrawals being made. My recollection is that the balance sheet at seizure was about $980,000,000 in the hole, so that (less than 1% of the bank's assets) is what taxpayers might absorb. The bank's investors, however, made their bed and Yellen intends to let them lie in it.

[euphorb]

4. The taxpayers are not paying for this.

The statement from Yellen and the FDIC said that the amount needed to make depositors whole will be covered by assessments from banks (I'm not sure how that works). The statement said expressly that this will not come from taxpayer funds.

[Demobrat]

5. It's not a bailout

From an article on yahoo it won’t let me post

Depositors will have access to all of their money starting Monday, March 13," the statement added. "No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer."

The Federal Reserve also said it will offer funding to banks through a new facility to help ensure banks can meet all depositor withdrawals, essentially backstopping all deposits — both those insured and uninsured — across the U.S. financial system.

The Fed's financing will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year to banks, savings associations, and credit unions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral.

[roamer65]

6. So, the Federal Reserve is regurgitating the Aldrich-Vreeland Act from the Panic of 1907.

Nice.




That act allow National Banks to issue currency on all pledged debt other than US Treasuries, until around 1915.

The act was done to increase the money supply after the Panic of 1907.

By now allowing banks to monetize a wider range of their assets in exchange for low cost loans, it is inflating the money supply.

[betsuni]

7. K&R

[AZSunDevil]

8. Confusing

Confusing yes

[Delphinus]

9. Welcome to DU!

[Shanti Shanti Shanti]

10. LOL yes they are, the Federal Govt is covering their asses, taxpayer funds or not!

Its a bailout, everybody can see that with two banks going under, just to put the brakes on a domino general panic run taking over...the billionaires are being bailed out, bigtime.

[Johnny2X2X]

11. This is just wrong

The billionaires are not being bailed out. Depositors are. The bank itself is kaput, and the stake holders in the bank are out of luck. The vast majority of the depositors had less than $250K in their accounts and this was already covered under normal federal insurance. The handful of accounts with larger balances are getting their money through the sale of the banks assets. And again, most of those with more than $250K were simply businesses who used the bank for payroll.

Where this hurts rich startups is this bank was a source of credit for them that will no longer be available, they'll have to secure credit elsewhere, the Fed is going to do anything to guarantee credit deals they might have had in place.

[Shanti Shanti Shanti]

12. Right, its a Hail Mary from the FED to avert a complete shitshow panic...still a bailout

[Johnny2X2X]

13. Also not true

And the Fed has nothing to do with this. The FDIC is not the Federal Reserve bank. The FDIC is taking measures to protect depositors who have in excess of $250K in their accounts, they are doing this by seizing the banks assets.

The shareholders in the bank are going to lose their money, preventing that would be a bailout. What is occurring now is simply ensuring the bank pays its debts.

[Shanti Shanti Shanti]

14. Semantics, hundreds of millions in corporate cash is being rescued, I better buy more peanut butter

[Johnny2X2X]

16. Not semantics at all

The FDIC is simply fulfilling its role, full stop. This is not a bailout of a failed bank, this is not a taxpayer funded bailout. This is making depositors whole, same as you'd expect to happen for you if the bank you do business with went under.

[Shanti Shanti Shanti]

18. Not my point, bang! First Republic Bank down 65%, expect it to fail, Regional banks tanking all over

Holy shit! See Market Watch, regional banks stocks tumbling all over the country, this is just the beginning...Bank of Hawaii, Western Alliance many more

Breaking News....Banks Stocks Price Crash Live!

[DFW]

15. You are correct. The Bank is NOT being bailed out. It is done. It will not re-open this year or ever

Last edited Mon Mar 13, 2023, 09:53 AM - Edit history (1)

I have tried to peruse enough articles and BBC broadcasts, and the bank is NOT being kept above water. It is closed, not to reopen. Making its depositors whole has nothing to do with the bank at all, and taxpayer funds are not being used for this purpose.

What the "bailout!" shouters seem to be ignoring is that the bank still had many billions in bond assets that will now be sold off. Their problem is that these assets were no longer worth what the bank paid for them, but they are not worth nothing. If current interest rates are 4.5% and the bank's eggs are all in one 1.5% basket, the bonds are still worth a discount of 3%, although per year times ten, THEN it starts to look bad. It sounds like a game of hot potato if ten years times 3% is the ultimate loss. Obviously, the closer the bonds get to maturity, the less of a bad investment they will be, especially if interest rates go down again.

But that will be the concern of the liquidators, not the depositors, if I get the news right. The bank will not re-open, and it's shareholders will suffer an immense loss when dividing up what is left at the end of the liquidation. It won't be nothing, but they will all be taking an immense bath nonetheless.

[Johnny2X2X]

17. +1000

Excellent post.

There is no bail out this time. The bank is being allowed to fail, it will not reopen. The FDIC is doing what it normally does when a bank fails, making the depositors whole.