| The good news is that even in a worst case scenario of a fire sale, we are talking about a small percentage of uninsured deposits at risk (likely around 5% depending on how many deposits were successfully pulled over the last couple of weeks). However, a fire sale is definitely not needed for all assets, and it seems likely given Yellen's comments that the government will provide some short term liquidity so that the fire sale of illiquid assets is not necessary (e.g. portions of their loan portfolio; their $7bn municipal bond portfolio; their $3.5bn of unmarketable securities (largely affordable housing projects...). Honestly, in many ways the regulation worked. What our regulation didn't account for is that bank runs at the non-top 4 banks have become more likely in a interconnected world with "too big to fail" alternatives. The $120bn FDIC Insurance Fund (self-funded by the banks and not the government) will definitively not even take a penny loss from this failure. That to me is the actual problem. We are not protecting enough of the banking system with insurance. Should it be 100% of all deposits, probably not. Should it be up to $1mm or even $10mm per depositor, probably! Why should someone who sold their $750k family home yesterday be out any money just because they decided to deposit the money at their non systematically important bank? Or why should a non-profit that just completed their annual fundraising push for $1mm be out some of that money? SVB "Fire Sale" Scenario Napkin Math Note: Uses 12/31 numbers, but that should be largely inconsequential for determining the net liquidated cash value of a fire sale $209bn assets - $15.5bn HTM MTM + Slippage - $7.5bn Loan Impairment + Slippage - $2bn AFS Impairment + Slippage - $1.5bn Non-Marketable Securities Impairment + Slippage - $0.5bn Goodwill + Intangibles - $0.5bn Property, Equipment, Lease & Other Asset Write
Downs - $0.5bn Wind Down Administration $181bn Liquidated Cash - $15bn FHLB "Super Lien" $166bn Liquidated Cash Available to Depositors - $7.6 Insured Domestic Deposits - $151.5 Uninsured Domestic Deposits - $13.9bn Foreign Deposits $7.5bn Liquidated Cash Shortfall |