that is a lie. the amount of money involved here is not that much. it would be very easy for a larger bank to swallow if they believed in the long term value of the assets.
the real thing is that SVB had an iconic brand, tons of business relationships, and very skilled and well connected employees, and yet none of that intangible value offset the hole in their balance sheet. that is the real indicator of just how bad it actually is.
Not in today’s environment. My Citi savings account pays 0.12% interest despite fed funds being at ~5%. Big banks don’t need more deposits, they can’t even make enough on their existing deposits. They especially don’t need to get involved in another bank during a bank run.
that's the thing. SVB has a loan portfolio paying much higher interest rates. but if that loan portfolio is to a bunch of companies that are going to go bankrupt, then it isn't worth anywhere close to what it is on the books at.
the game here is very simple: SVB loans money to cash burning startups and they keep that money in SVB accounts, so it looks like they have cash, and it looks like SVB has deposits, but all of that is created out of thin air by SVB giving loans to companies that couldn't get them from a real bank. If those companies actually take the money SVB loaned them out of their SVB account, then the scam collapses.
Ok, maybe that's true, maybe it's not? We don't know yet. Is that worth the collapse of the regional banking system in this country even if that is true? I'd prefer to have choices with my money, not just Citibank, Chase, and Wells Fargo.
