Sunday, March 12, 2023

Depositors in Silicon Valley Bank and Signature Bank will get access to all their money Monday (tomorrow)

 In this CNBC report, still less than an hour old, The Fed, The Treasury, and the FDIC have said they will allow Silicon Valley Bank and Signature Bank (also closed over the weekend) depositors access to all their money on Monday.  They aren't bailing out the banks, but they are bailing out the depositors.  Since most of the SVB depositors are good sized businesses, from Roku and Shopify, to tech start-ups, many have multiple millions in the bank.  But the FDIC only insures each depositor up to $250,000, as I understand it.  So about 95% of the deposits in SVB were not insured by the FDIC.  

Because of this action (by the very people and agencies that caused the fucking inflation and interest rate crisis in the first place) those businesses will be able to make payroll, pay suppliers, and keep functioning as businesses.  That's good.  If this step had not been taken, it would be like telling U.S. businesses, "Yeah, you're money may not be safe in your bank."  That's not cool, and there would have been a major banking meltdown.  Check the article linked for the details on the plan to wind things down. 

There will still be a lot of other issues in the financial world in coming months, due to high interest rates, bad debt and unrealized losses (low yield treasuries, MBS, CMBS, ABS, CLO's, maybe SLABS) on the books of banks, hedge funds, and othe institutional investors, but this particluar crisis, providing things go pretty much as planned, should calm down, and the business world keeps functioning.  That's good.   

No comments:

Post a Comment

The bank crisis is putting more stress on commercial real estate- 3/24/2023

In this Yahoo Finance report from today (3/24/2023), they talk about how the bank crisis is not a good thing for commercial real estate, in...