ST Alpha - "Strictly speaking, are the depositors even being bailed out? All the money is there, isn't it? Just tied up in instruments that aren't earning much? -- nm" (Reading a Post)

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In response to "The Biden message on the bank is easy: We protected depositors, but not the bank owners. The people responsible aren't being bailed out. -- nm" by TWuG

Strictly speaking, are the depositors even being bailed out? All the money is there, isn't it? Just tied up in instruments that aren't earning much? -- nm

Posted by mara (aka mara) Mar 13 '23, 06:48

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Responses:

I don't think 'all the money' is there, but I could be wrong? -- nm - ty97 Mar 13, 06:56 10
- The statement I saw said that no taxpayer money would be used. I’m guessing being able to value their remaining treasury holdings at par is enough -- (edited) - znufrii, meh and problematic Mar 13, 07:00 7
  - Member banks pay into the FDIC don't they? So that, in combo with asset sale, would cover? -- nm - ty97 Mar 13, 07:01 4
    - FDIC only covers $250,000 per depositor, and that hasn’t changed as far as I’ve seen. -- nm - znufrii, meh and problematic Mar 13, 07:08 3
      - They said last night that they are covering 100% for SVB and Signature -- nm - ty97 Mar 13, 07:12 1
        
        Not specifically through FDIC insurance though, to my reading of it, just that all depositors will be made whole. - znufrii, meh and problematic Mar 13, 07:15
      - "the Fed will make a new lending facility available to banks to buttress any financial risks they face. Also, sale of all or part of SVB’s assets and - mara Mar 13, 07:09
  - The Fed is going to use a couple of tools from what I heard - 1 being an insurance fund it has for emergencies -- nm - decline Mar 13, 07:01 1
    - Gotcha. -- nm - znufrii, meh and problematic Mar 13, 07:04
- of course not - no bank has all the money it holds for depositors - decline Mar 13, 06:59 1
  - By "there" I didn't mean "in the bank," I mean "existent." -- nm - mara Mar 13, 07:02

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