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politico OP t1_jcbsf16 wrote

Reply to comment by politico in We’re POLITICO econ/finance reporters and a bank regulation expert. Ask us anything about economic politics and policy after Silicon Valley Bank’s shocking collapse. by politico

u/jh937hfiu3hrhv9: What are SVB's assets? Does the depositer's refund come from bank reserves or the FDIC?

SVB's assets are largely longer-term Treasuries and government-backed mortgage securities. These securities have little risk of loss if they're held to maturity, but they lost paper value as interest rates increased - so when SVB lost deposits and had to sell assets, they had to bear those losses.
While depositors have immediate access to their funds—which may needed to be funded in the short-term by the FDIC—the FDIC will only lose money if its sale of the assets (and/or liabilities) of SVB is less than enough to cover all the depositors. And, if the FDIC's insurance fund dips below what it determines to be sufficient coverage for the system - it will levy the banking system for the shortcoming. — Steven

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