Mike Masnick ✅
So... the summary is that for all the fear some people had that taxpayers would "bail out billionaires," and the corresponding fear that companies had that "a ton of our money could evaporate and destroy the economy with massive downstream impact"... FDIC/Treasury stepped in and did the right thing: depositors made whole, no taxpayer funds, bank assessment to make up any difference, & SVB equity/unsecured debtholders (mostly) wiped out.
A very good result.
Mike Masnick ✅
@jbminn combination of existing assets and FDIC funds in the *short* term, which will be replenished by all other FDIC banks if they have to dip into those FDIC funds. So, basically IF they need extra, other banks will make up the difference. But it shouldn't be that much and spread across many institutions.
John Minnihan
where's the money coming from that is making depositors whole above the insured limit of $250k tomorrow?
John Minnihan
@mmasnick i'm reading the press release + see no mention of how exactly the FDIC is resolving this.
have you seen that detailed anywhere?
Mike Masnick ✅
@jbminn which part is unclear?
Mike Masnick ✅
Also, this avoids the very scariest result in my mind: that Peter Thiel, who likely set off the bank run in the first place, would step in and buy up the remains at a discount, and then own SVB.
Matt Corallo
@mmasnick it appears they mostly offered to buy long-dated bonds at face value (ie substantially overpaying). That’s most of the money and should cover all the banks in question here - they’re all underwater *today* with long-dated securities and notes that would put them at par.
Mike Masnick ✅
@macsimcon still remains to be seen what the difference is that will have to be covered. It might not be very much at all, based on what SVB held in assets.
macsimcon
@mmasnick it’s not a very good result because when the banks have to pay for SVB, they’ll just raise rates on the rest of us to compensate.
John Minnihan
so the securities that becker was trying to sell (did sell some?) are gonna be used to restore deposit values.
that makes sense, but what a clown show those VCs triggered with their letters.
Mike Masnick ✅
@jbminn they were unable to complete the sale. they still have those very secure investments on the asset side of the balance sheet.
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