One reason why it's not (mostly) a bailout is that SVB's deposits are (as far as we know) still backed by bonds and mortgage backed securities, the problem is that those securities can't be easily sold right now (because people want higher valued investments) - a sudden forced sale means selling at a loss (or a cash flow crisis which is how SVB got into this state), holding on to them and letting them play out and they still have their value (worst case you sell them at a loss that is the difference between what they yield and what current investments yield)
They're worth alot - I haven't seen any indication that they're more than 10% underwater. Even 20% underwater is much more than 'not be[ing] worth very much'
One thing nobody seems to be talking about is whether SVB had more assets than liabilities- presumably they did since it was a money-making enterprise, right? So even if they sell at a loss there may be more than enough to cover the liabilities.
From [1]:
> The bank initially sold more than $20 billion of bonds, but did so at a $1.8 billion loss.
What we don't know is did they liquidate the positions that were more valuable in order to take a smaller loss, or positions that were most underwater? I'm guessing it's the former, which would mean they were in even worse shape with the unsold securities.
They absolutely did the former. Those are the securities which were marketable reasonably quickly, and they were planning to sell equity, too (another expensive but liquid asset).
Now that those assets are in the FDIC's hands, though, they can likely be unwound really slowly and without a ton of execution slippage, which would have otherwise happened if this were a firesale.
the problem is if I sell my own investments right now at loss nobody will come to pay my obligations. so why large institutions get to reap profit but get out of jail free when they screw up.. one set of rule for common man and another for investor..elite class.
