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2023-03-20 Economy

Feldman: You Can Bank on it: A Cheat Sheet on the SVB Collapse

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Posted by badanov 2023-03-20 00:00|| || Front Page|| [7 views ] Top

#1 Shareholders and certain unsecured debt holders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.

So the 'good' banks and investors must now cover the bad bank and it's investors. I believe the new term is a "socialized loss."

Posted by Besoeker 2023-03-20 02:38|| 2023-03-20 02:38|| Front Page Top

#2 I believe Nouriel Roubini, not exactly an Austrian economist, said 10-15 years ago something like "profits are privatized while losses are socialized".

Posted by DooDahMan 2023-03-20 04:32|| 2023-03-20 04:32|| Front Page Top

#3 /\ So, not a 'new term' at all. In spite of my best efforts, I continue to learn things here.

Thank you Double-D.

Posted by Besoeker 2023-03-20 07:31|| 2023-03-20 07:31|| Front Page Top

#4 I don't know how much more of "having the adults back in charge" the country can take.

Posted by M. Murcek 2023-03-20 07:44|| 2023-03-20 07:44|| Front Page Top

#5 For example, buying a 10-year U.S. Treasury bond with a 2% coupon at par and holding it for 10 years earns you 2% per annum.

Will that 2% per annum cover inflation?

Posted by Abu Uluque 2023-03-20 12:08|| 2023-03-20 12:08|| Front Page Top

#6 So it does appear that they had many more bad loans than has been apparent. And I guess that that is the reason why the FDIC swooped in.

If the only problem were the long-term treasuries underwater, SVB could have borrowed money from the Fed and ridden out the storm until the Fed lowered rates again (I know, I know, no conflict of interest here) and the treasuries returned to par. That is what the Fed is for, and its Regulation A (hint: the very first regulation) covers lending to banks. Since that did not happen, there has to be more than just the treasury maturity mismatch. And bad loans, depending on vast federal subsidies, appear to be the ultimate culprit.

Posted by Tom 2023-03-20 12:39|| 2023-03-20 12:39|| Front Page Top

#7 Great business model built on great business models

Posted by M. Murcek 2023-03-20 13:10|| 2023-03-20 13:10|| Front Page Top

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