The media reports have some saying the Federal Reserve WILL NOT supply the money tho bail out the Silicon Valley banks failure….
Don’t take that as gospel….
The answer will become more clearer this coming week….
The SVB has all it’s accounts at $250,000 and under actually covered by the Federal Government by Law….
Most banks have OVER 50% of their deposits covered….SVB had around 40% it’s reported…..
(It WAS the 16th or so largest US bank)
The Fed’s will roll the assets still in the bank to a new bank and they will look for ANOTHER bank one who guess to buy THAT bank and its assets and problems…..
There are reportedly numerous small tech companies that went to SVB because it lent them money when the big guys wouldn’t….
The bank is closed….
The Fed’s are working on the mess….
HTF does these companies do next weeks PAYROLL?
Now if they can’t ?
Do other companies in the same situation with the same type banks get antsy and pull their money?
Because if they do?
We have the beginnings of a ‘bank run’….
For those of you who have forgotten?
There was one of those in 2008/2009 scared the Fed’s shitless….
And THAT was on the start of Obama/Biden’s watch…..
One hopes that the worst case does NOT develop….
President Biden and the American and World economy doe NOT need that coming off the pandemic…
The other worry attached to this is ole’Jerome at the Fed….
Is he gonna keep jacking up the interest rates which did N OT help the banking system either….
If next weeks get messY?
I don’t care what ‘officals’ say today…..
The Federal Government WILL step in and save the day….
They remember 2008/2009….
Biden has to….
Battle lines are already being drawn over what caused SVB’s stunning demise. Progressives and some investors are blaming the Federal Reserve for its rapid interest rate hikes, which have burdened many lenders. Democrats say Republican-led deregulation of banks removed critical safeguards. Others say regulators failed to spot red flags in the bank’s investment portfolio and customer base. Many blame SVB itself.
“Imagine if politicians’ campaign funds were in SVB. Does anyone think we wouldn’t have had more action & communication?” Democrat Rep. Ro Khanna,whose Northern California district is home to the bank, tweeted on Saturday afternoon.
So far, the Federal Deposit Insurance Corp. has offered little clarity on what might happen to SVB’s more than $150 billion in uninsured deposits that support thousands of high-tech startups and health-care companies across the globe. After briefing House Financial Services Committee members on Friday, the agency on Saturday postponed a meeting with California lawmakers whose districts are among those most affected by the crisis, frustrating the Congress members.
As agency officials race to make sense of SVB’s massive loan portfolio and accounts, speculation is swirling over whether the bank will be acquired or sold off in pieces — or if a government-funded bailout might be in the works. Treasury Secretary Janet Yellen has convened regulators to monitor the fallout.
The crisis is also reigniting a fierce debate over the regulations that should be applied to large regional lenders — which are much smaller than megabanks like JPMorgan Chase and Bank of America but considerably bigger than most of the country’s nearly 5,000 banks. Congress voted in 2018 to loosen regulations on those institutions with bipartisan support….
The simplest option for the FDIC is to find a buyer. Usually, when a bank fails, the agency finds another bank to purchase it, and the transition for customers is relatively smooth. In this situation, the FDIC took control of the bank’s assets in the middle of the day on Friday, rather than its typical practice of waiting until the end of the day, suggesting immediate action was necessary.
It’s unclear whether any bank would be in a position to buy SVB in its entirety; a few of the megabanks aren’t legally able to buy other institutions because they already control a heavy percentage of U.S. deposits. But some other large banks could theoretically do it. The question is whether they’d want to and under what terms. Otherwise, the FDIC will have to sell off the bank’s parts, a process that could take years.
In the meantime, customers whose funds are insured by the FDIC will be able to access their deposits “no later than Monday morning.” The problem is, some 96 percent of deposits at SVB aren’t insured. That’s because there’s a $250,000 limit per account owner per bank, and its customers generally had balances well exceeding that threshold.
For now, the FDIC says uninsured depositors will receive a dividend and a certificate for the rest of their funds, though they’d also likely begin to get more money as the agency sells off SVB’s assets. And there are still scenarios where all depositors get their money back, particularly since any losses would be borne first by creditors to the bank.
There are also multiple ways the government could make SVB’s customers whole, such as guaranteeing all its deposits. The FDIC would likely need sign-off from two-thirds of the Fed board and the Treasury secretary to take such a move….
“That’s all we’ve been dealing with for the past 48, 72 hours,” Mislav Tolusic, co-managing partner and chief investment officer at the venture firm Marlinspike Partners, told POLITICO. “Most companies in the US are on bi-monthly payroll cycle, which means the next one is on Monday.”
Rippling, a payroll services provider, was unable to send out paychecks for clients after the funds were trapped on the defunct bank’s payment rails. Roku, which manufactures streaming devices, disclosed it had more than a quarter of its cash — nearly half a billion dollars — deposited with SVB. The venture-backed toy store Camp sent an email to customers on Friday alerting them that they no longer had access to their accounts and kicked off an online sale — promo code BANKRUN — in an attempt to raise money.
The crisis has also rippled across a network of defense and biotech startups that are now unable to access their accounts.
Eliot Pence, the chief commercial officer at defense contractor Cambium, said his company will be unable to pay for necessary employees and materials until its bank accounts are restored — threatening the fulfillment of a Department of Defense contract.
“We can’t do any of that until we have clarity about cash flow and the status of SVB going forward,” he said. “I want to stay in business.”….
Officials at the Treasury Department, Federal Reserve, and Federal Deposit Insurance Corporation discussed the idea this weekend, the people said, with only hours to go before financial markets opened in Asia. White House officials have also studied the idea, per two separate people familiar with those discussions
The plan would be among the potential policy responses if the government is unable to find a buyer for the failed bank. The FDIC began an auction process for SVB on Saturday and hoped to identify a winning bidder Sunday afternoon, with final bids expected by 2 p.m. Eastern time, according to two people familiar with the matter….
WashPost give’s a list of companies affected bt the SVB collapse….
image….Federal Reserve Board Chairman Jerome H. Powell listens as Treasury Secretary Janet L. Yellen speaks during a meeting at the Treasury Department in October. …Anna Moneymaker/Getty Images
(What’s missing from this picture is President Biden)
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