New answers tagged federal-reserve
2
votes
How was the Fed allowed to lend $142.8 billion to the two bridge banks (incl. SVB) if it "would not" lend to insolvent banks?
I consider this only a partial answer, but apparently two things happened. The Fed cut their haircut on some instruments to zero, which essentially seems to mean they now use the full face value of ...
- 125k
10
votes
Why didn't Silicon Valley Bank ask for a loan from the Fed as the lender of last resort?
The math on a loan from the Fed may not have worked out
A loan from the Fed would have to be paid back at current interest rates. Meantime, SVB is getting payments from long-dated bonds that it ...
- 1,520
7
votes
Why didn't Silicon Valley Bank ask for a loan from the Fed as the lender of last resort?
SVB was insolvent; its assets were less than its liabilities. Even if all its stuff was sold there wouldn't be enough money to pay all the depositors - even though it may have pretended there was, by ...
- 1,817
17
votes
Accepted
Why didn't Silicon Valley Bank ask for a loan from the Fed as the lender of last resort?
Because that would be a bailout and the US government [regulators] said "no bailouts" in this case. Now the FDIC owns all of the banks assets (as a bridge bank) and is trying to sell them (...
- 125k
3
votes
Does the Federal Reserve insure the money of all depositors?
Does the Federal Reserve insure the money of all depositors?
No. The Federal Reserve doesn't insure the money of any depositors. The Fed doesn't make any promises of that kind. But it can make ...
- 64.9k
10
votes
Does the Federal Reserve insure the money of all depositors?
The Federal Reserve in its role as lender of last resort will lend money to a solvent bank that’s suffering a bank run and having temporary cash flow problems. But it appears that SVB was insolvent — ...
- 3,456
11
votes
Does the Federal Reserve insure the money of all depositors?
It depends on what you mean by "bank run". It's generally understood to mean a situation where depositors make withdrawal demands that exceed the assets of the bank that are sufficiently ...
- 7,676
12
votes
Does the Federal Reserve insure the money of all depositors?
The Federal Deposit Insurance Corporation is insuring deposits up to $250,000 per owner. A bank run can still happen (still did happen, in the recent case of the SVB) when large customers are starting ...
- 97.2k
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