Ie need the FDIC to step in and liquidate assets to cover depositors. Does not include SVB.
Context: Silicon Valley Bank was closed Friday morning by state regulators and put under the control of the FDIC, after a bank run and capital crisis.
https://www.cnn.com/2023/03/10/investing/svb-bank/index.html
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Signature Bank, with assets of >$100B, was closed by the FDIC today
Frustrating that they don’t specify the exact range we want, but as a sense of scale:
“As of December 31, 2020, there were 315 institutions with total assets between $400 million and $500 million, and another 136 with assets between $850 million and $1 billion.”
So to bet NO: Are you sure SVB 99th percentile mismanaged?
I think there is likely at least one other who did similar things and will have a similar outcome.
Betting No.
There were 4 bank failures in 2020, and none involved assets much above $100M. I don't think the current situation is significantly worse than the 2020 recession.
https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/
Also, SVB was a regional bank with unique exposure.
The next most vulnerable bank with assets >$500M is First Republic Bank. 68% of their deposits are uninsured. There's a risk here, but I think it's under 45%.
@ChrisGillett Wasn’t a core issue with Silicon Valley Bank rising interest rates, which are “worse” than 2020?
Although I share your principled understanding that it is neither 0% or 100%, I think it is more than 45% likely that Silicon Valley Bank is not the only one who mismanaged the risk of rates going higher than projected (https://www.realtor.com/research/2022-national-housing-forecast-midyear-update).
I agree the strongest argument against my position is that Silicon Valley Bank had a unique client profile. We’ll see!