From Circle's website:
Cash held at U.S. regulated financial institutions: Bank of New York Mellon, Citizens Trust Bank, Customers Bank,
New York Community Bank, a division of Flagstar Bank, N.A., Signature Bank, Silicon Valley Bank and Silvergate
Bank.
Oof. The last two are gone now.
Although, there’s no evidence their reserves at SVB are *gone*. On paper, there appears to be enough assets at the bank to pay out all the depositors in the coming weeks. And the bond market is trading as if that’s true. I would bet, contrary to the doomer narrative, that nearly 100%, if not 100% of deposits are going to be recovered.
Agreed. Would be shocked if it’s less than 90% recovery for depositors.
Yeah, SVB failed because of an deposit duration/asset maturity mismatch, which couldn’t be corrected due to the cost of rolling those assets, which was a result of terrible risk management on their balance sheet. Their completely loss of liquidity was a function of that. Not a function of the bank being insolvent.
Thanks for clarifying that, Mike.
Yep!
Borrow short lend long is the root of many a bankrupt bank.
Surprised people still put money in such institutions.
They get crunched every single rate hike cycle.
I guess people have short memories or a too young to know better.
if they were to liquidate the rest of their long duration assets at current market value would they have enough capital to cover deposits?
But didn't those mistakes then end up making them insolvent?
To me, if you can't pay out what's owed at any moment, you're insolvent. Certainly their practices led to that, no?
Why would bond pricing indicate anything?
Bonds and prefs are at the hold co level.
The bank co is in BK. The hold co is not. The hold co has diff assets than the bank co. Previously it had claims to equity value from the bank co, in exchange for the capital it put in. That equity is now gone.
