I do not like the precedent, however tbh its tough for me to picture a policy that might have conserved SVB. They had safe holdings, ten years bonds (with low rates of interest). Peter thiel triggered an operate on a bank with 175 billion in deposits, resulting in a one day overall withdrawal of 42 billion. SVB simply could not offer their bonds quick enough, and most likely generally at stated value at that.
Possibly I have actually got some information incorrect, however that’s my impression. This was simply a billionaire bank run and millionaires got injured. I believe more than anything it reveals failing rely on the banking system total and the looming economic downturn.
The fed program to backstop banks by purchasing notes and home mortgage backed securities at stated value instead of market price appears even worse than covering these deposits. If property sinks once again like in 08, then banks can sell their scrap home loans for cold tough fed money. Money for cars 2023.
The fed might be covering withdrawals for accounts instantly, however it’s not like the funds aren’t still connected into numerous kinds of properties still on the books. I do question what % of overall deposits are eventually a “expense” to the fed, when they have actually liquidated SVB.