The right answer is what the FED did today.
With 1, they eliminated any issues that SVB customers were going to have. They also set the prcedent that they will likely do the same with the other 2 banks that they took over. That should go a long way towards calming depositor fears at all US banks.
With 2, they were able to claim it wouldn't cost taxpayers anything. Although in the case of SVB it looks like it's unlikely the FDIC will incur a cost.
With 3, the BTFP program they effectively eliminate any liquidity issues a bank might have.
Re: 7 - Good post. Should keep the conspiracy theorist’s ankle biting to a minimum on the thread.
Won’t cost the taxpayer a dime. People actually believe that?
If the assets exceeded the deposits by 40 billion, why did they shut it down?
Democrats want to tax our unrealized gains...
...but are ignoring the unrealized losses of SVB's bonds and are "backstopping" them as collateral at par value instead of current market value?
That means that the government is tying up taxpayer funds until the maturation date of SVB's bonds or until SVB pays back the backstop loan?
If they do this, they should drop the idea of taxing investors' unrealized gains, letting us "backstop" our tax payments, too.
-PJ
No need for “#1, 2 or 3”...liquidate the failed bank like you have liquidated every bank that failed in the past (except for 2008, Goldman Sachs, etc.)...”transactional account” individuals covered to $250K...couples/joint accounts covered to $500K, and if no other bank wants/buys the assets the rest of the deposits take an average 10-20% haircut. What makes SVB so special? Another “too big to fail”?
https://www.fdic.gov/bank/historical/bank/bfb2017.html
In order to offset svb’s losses, they had to print money and take over their low interest bonds. Printing = inflationary. Waiting on low interest bonds to mature = a loss. It exacerbates current problems.
That said, individuals were probably calmed.