Quote:
Originally Posted by Lizap
The FDIC insures that depositors will get back a maximum of $250k. They may well receive more; this would be decided as bank assets are sold off. What the government should NOT do is step in and guarantee that all depositors will be made whole. This is terrible precedent. Is the government going to step in and save every business from failing?
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There were 563 bank failures from 2001 through 2023 (I'm looking at the FDIC website).
It appears that in each case, the assets of the bank seized by the FDIC exceeds its deposits. I looked at all 563 cases. Unless I made a mistake, each and every one of the 563 banks put into receivership by the FDIC had more than enough assets to cover the deposits.
There are two general cases of bank failure:
1) The FDIC puts the bank under receivership ("seizes the bank") and the FDIC enacts a sale to a healthier, larger bank. When this happens, it is business as usual for the depositors. Everyone gets all their money pretty much right away.
2) The FDIC puts the bank under receivership ("seizes the bank") and doesn't find anyone to buy the bank. When this happens, everyone is issued a check for their money up to the $250K limit (it might take a week or more to issue the checks by US mail). If you have more money in the bank than $250K, you get a "Receiver's Certificate" for the balance above the $250K limit. Then, over the coming months, as assets of the bank are sold off, everyone gets the balance of their money.
Note that in both #1 and #2
everyone is made whole - eventually. It is just a matter of time.
The problem is businesses have to pay their employees every pay period. They have to pay their creditors for everything from their electric bill to bills for new parts & equipment & raw materials. Etc. Their employees have their own bills to pay. Many companies close their doors but not because they are losing money. Local governments expecting their property tax revenue don't receive payments. Etc.
So what made SVB different?
1. The FDIC decided not to sell off SVB to a suiter. The Chairman of the FDIC is a partisan far-left ideologue who hates big banks and did not want to see a potential buyer get even larger as a result.
2. SVB's executives are powerful donors to Democrats.
3. SVB's clientele - Venture Capitalists - are powerful source of campaign contributions to Democrats.
4 Silicon Valley is source of campaign contributions to Democrats.
5. High Tech Company employees are power sources of campaign contributions to Democrats.
6. California has 55 Electoral Votes.
7. We are now in the election cycle.
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No details....just read UBS will take over Credit Suisse.
