quote:
This isn’t really a “bailout.” They are not doing anything for the investors. They are liquidating assets to allow depositors to reclaim their money.

I’m not that knowledgeable in the world of finance, but if they liquidated all the assets I don’t think they have enough money to cover all the deposits. So yes, guaranteeing the deposits above $250,000 is a bailout of the depositors.

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Posted by IT_Dawg

Georgia

Member since Oct 2012

22121 posts

Posted on 3/14/23 at 9:15 am to ChEgrad

quote:
I’m not that knowledgeable in the world of finance, but if they liquidated all the assets I don’t think they have enough money to cover all the deposits. So yes, guaranteeing the deposits above $250,000 is a bailout of the depositors.

? So selling all the Treasure bonds where the money was sitting, selling off assets, will not cover the depositors their money??

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Posted by Big Scrub TX

Member since Dec 2013

33749 posts

Posted on 3/14/23 at 10:12 am to ChEgrad

quote:
I’m not that knowledgeable in the world of finance, but if they liquidated all the assets I don’t think they have enough money to cover all the deposits. So yes, guaranteeing the deposits above $250,000 is a bailout of the depositors.

You're partially right. The long-term treasuries the bank holds as collateral for the deposits are not currently at a price that would cover all deposits. If they hold them maturity, they will be. So, the govt (the entity already on the other side of the treasuries) is simply swapping out the long-term securities for short-term securities of equal par value so that it can just be done now.

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