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Bank credit rating downgrades and warnings

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AndySoCal
Valued Contributor

Re: Bank credit rating downgrades and warnings

@Anonymalous  Simple, to make sure were both mean the same thing by those terms.  Here are several questions

 

If SVB  had invested that 20 billion plus dollars in short term investments of year or less like brokerage money market funds, treasury notes and bills would SVB needed to be bailed out?

What caused the public perception to change about the safety of money in SVB?

Can a consumer have $450,000 in a bank and still be fully FDIC insured?

 

My answer to the first question is no the last question is yes.

The middle question is there were reports that SVB was trying to shore up capital in the weeks before the bailout. That changed some of the perception of safety. Thanks to the social media that started the snowball that resulted in the bail out.

 

 

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Message 11 of 12
Anonymalous
Valued Contributor

Re: Bank credit rating downgrades and warnings


@AndySoCal wrote:

@Anonymalous  Simple, to make sure were both mean the same thing by those terms.  Here are several questions

 

If SVB  had invested that 20 billion plus dollars in short term investments of year or less like brokerage money market funds, treasury notes and bills would SVB needed to be bailed out?

What caused the public perception to change about the safety of money in SVB?

Can a consumer have $450,000 in a bank and still be fully FDIC insured?

 

My answer to the first question is no the last question is yes.

The middle question is there were reports that SVB was trying to shore up capital in the weeks before the bailout. That changed some of the perception of safety. Thanks to the social media that started the snowball that resulted in the bail out.

 


1. No, of course not. Short term assets involve very little interest rate risk. As I've mentioned several times.

2. As I said in one of my first posts, they sold off long term assets at a loss to cover a potential outflow of depositors, and that triggered speculation about their long-term stability, and a bank run.

3. Of course. I literally provided an example of how to do it 2 posts ago.

 

I'm not sure we have anything further to discuss, because you're just repeating basic definitions and asking questions a cursory read of my previous posts would have answered.

Message 12 of 12
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