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Absolutely wild that the FDIC had to *set up a new bank*, the Deposit Insurance National Bank of Santa Clara (DINB), to manage the assets of #SiliconValleyBank. How on earth are they going to find a buyer?
@asmallteapot@hachyderm.ioOh wow, the Treasury, FDIC, and Fed installed a backstop #SiliconValleyBank https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm
The special assessment on banks to repay the deposit insurance fund is potentially going to be pretty huge, no? #SiliconValleyBank
@asmallteapot god I hope so
@asmallteapot it depends on how much the FDIC gets out of the asset sales, I guess. It sounds like many SVB accounts exceeded the FDIC limit, as they were used for payroll processing.
@asmallteapot I take this back. Looks like Treasury + Fed are trying to guarantee all deposits at SVB and Signature Bank (which also was put in receivership). https://www.cnn.com/2023/03/12/investing/svb-customer-bailout/index.html
@asmallteapot I think less than you’d think. Their other action to backstop the treasuries at face value is an attempt to cause the market to price them that way, which has worked in other cases, and if so, should bring the assets close to the liabilities. (They’ve done this type of thing before and even creating the backstop usually causes the market to adjust to a point people don’t even need to use it. Not entirely clear to me yet whether all the same incentives will apply, but I suspect so.)