illumin Holdings Inc T.ILLM

Fed to backstop SVB AND Signature

[campst]

Regulators unveil plan to assure depositors will get money after SVB collapse

 

https://www.cnbc.com/2023/03/12/regulators-unveil-plan-to-stem-damage-from-svb-collapse.html?__source=androidappshare

 

[growthnprosper]

AcuityAds raised their money in the US on the Nasdaq so won't they be underFed US regulators?

[Capharnaum]

They are backstopping depositors. Everyone that had deposits at SVB will get access to all their cash.

[campst]

Is anyone sure at this point if depositers will get all of their funds?

[Capharnaum]

Yes. A direct quote from the US Treasury: Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13.

[campst]

This would have been unthinkable before QE. Thinking in writing.  This will, in effect, increase the money supply as the FED will 'print' money pay out to depositers.  One might say that the entire economy is taking some sort of hit. This seems like a good option at first glance, although there will be a mound of details to work out.  In the case of SVB, the newly acheived

[Capharnaum]

Most of the deposits will be covered with the sale of SVB's assets and from the loans being moved to other banks. From what I understand, the net deficit, if there is any, will be passed through as a fee to all banks in the US system. In that sense, for SVB, there will likely not be "money" printed out. The Fed will also make 1 year loans against assets such as Fed bonds, MBS, and

[campst]

Interesting.  Tks foe the oost.

[campst]

Interesting.@ Tks foe the oost.

[Torontojay]

Shareholders of Silicon Bank are not going to get their money back. 

[campst]

Maybe i don't understand the Fed, but is the loaned money not printed?  If not, why am I reading that this program is a new form of QE?

[Capharnaum]

It's only 1 year loans. The Fed isn't loaning the money for free, so the banks have a good incentive to repay it asap if they use it (ie: shore up their capital, sell assets and repay the Fed). Due to this, it will likely only be used when large withdrawals can't be met, and overall large withdrawals are likely just change of bank, where will the money go otherwise?

[campst]

Ah. I now understand your point. Makes sense.  Tks.

[Torontojay]

It does provide added liquidity (QE) on a short term basis for these banks which places the Fed between a rock and a hard place. After it gets repaid, the liquidity is removed from the system. Btw, the maximum term length is 1 year for eligible borrowers.