- Forum Clout
- 118,101
Thats now how it works, stupid. Banks do have very little cash but the way it works is through overnight lending. Banks lend to other banks charging interest on the money lent. Why do banks need this lent money? The Federal Reserve has a mandatory reserve limit meaning everyday there’s a calculation of the minimum amount of money the bank has to have in reserves to meet any of the days loans, withdraws, deposits, etc. So banks that are short of this minimum amount will borrow from a bank with more than necessary with interest. The interest calculated is that of the overnight Federal Funds rate.
In no way is this a pyramid scheme. As far as what i know, SBV suffered major losses not because of wokeness or some Madoff shit. It’s because they experienced a bank run that had 40 billion dollars in withdraws. I understand the bank had 200 billion in assets at the time of it’s failure, but theres no way thats the average person pulling out their money. Thats the Silicon Valley part of the name, and the big investors pulled a rug pull.
So SBV obviously goes to another bank and needs to borrow 40 billion dollars to cover the withdraws. Even a bank can’t just ask for a loan like that without there being some question of them being able to back that. Yes. 200 Billion in assets. But as we all saw they were gone in 3 days so anyone who even gave them double that loan would probably have been out of it. There’s literally no way the bank would have survived. Now the Fed “bails” them out with their emergency money (that isn’t coming from the taxpayers) with all deposits of any amount allowed to be pulled out for customers and the shareholders of the bank fucked. (Previously the FDIC only covered accounts up to 250,000$ but the Fed has taken control of both SBV and Signature in order to make sure customers of any amount get their money.) After this the company will no longer exist. A not even 40 year old bank tried to become big. It managed to become huge. It failed. i really don’t see what part of this is a pyramid scheme. Fucking retard.