> It actually has a pretty solid financial situation except for that!

Then why couldn't they find a buyer in the auction today? If Silicon Valley Bank had positive equity, someone would have bought them out for an easy profit.

Solid except for the time-value of money.

Their bonds average 1.9% with a 10 year maturity. They pay out when they mature. But because rates are so much higher now, if they sold today they'd take a massive haircut.

The bank made mistakes, and their startup assets are a big ? of unrealized losses. But they do have assets, just not liquid.

But the reason why they'd take a massive haircut if sold today is that when they get the principal back in 10 years it will probably be worth a lot less. Their assets are completely liquid, they're just worth a lot less right now than what they're owed, and for good reason. That the assets might nominally cover the deposits in 10 years is besides the point, the depositors don't want to wait 10 years. Whoever pays to make depositors whole, be it FDIC, tax payers or other banks/bank customers, is transferring real value to the SVB depositors.

> That the assets might nominally cover the deposits in 10 years is besides the point, the depositors don't want to wait 10 years

This would be a problem of liquidity though, which was my original statement.

Not just liquidity. A dollar 10 years from now is worth less than a dollar today. That means it's a solvency issue as well.

Isn't it what happened with the UK branch of SVB ?

No, it didn’t have a liquidity problem, it was insolvent. The value of all its assets marked to market are less than its liabilities.

Not if you let them do their shenanigans to let the assets be on the balance sheet on "face" value because they are in a "HTM" portfolio and not on the real market value. Many of the other banks are silently insolvent too, just the simple little account trick keeping them afloat.

That's whats need to be changed, not a bail out of which more will follow

Well... I guess. But the price of many of those assets were low because of the run right? So it's a self fulfilling prophecy.

Banks that buy SVBs branches will be making money off that deal I think. Not short term obviously, but long term.