When the FDIC closed the bank, it had $119 billion in remaining deposits. SVB’s 2022 year-end regulatory reports show $209 billion in assets funded with about $175.5 billion in deposits, of which about $157 billion were held in accounts with balances in excess of the $250,000 FDIC insurance limit.

The $9.4 billion estimate overstates the insurance fund’s liability because roughly $42 billion in deposits ran before the bank was closed. When it failed, the bank had $167 billion in total assets funded with at most $4.8 billion in fully insured deposits and at most $9.4 billion in deposit insurance fund liability for the 37,466 accounts with balances in excess of the $250,000 FDIC insurance limit. If the SVB failure was treated as a routine bank failure, it could have been resolved with minimal cost to the FDIC deposit insurance fund. Other banks, and ultimately taxpayers, will pay for SVB’s insurance fund losses, losses that were a direct result of regulatory neglect. Treasury, the Federal Reserve and the FDIC choose to declare SVB a “ systemic risk” to the financial system so they could impose a blanket deposit insurance guarantee that will cost the FDIC fund at least $20 billion, probably more, instead of virtually nothing if the bank was resolved following normal procedures. Under normal rules, losses would have been borne by the uninsured depositors as required by the FDIC Improvement Act of 1991 which mandates that the FDIC carry out resolutions in a manner that imposes the least cost on the deposit insurance fund. If the FDIC had treated SVB as a routine bank failure, it would have been resolved without any cost to the FDIC deposit insurance fund. Time will tell, but I am guessing the insurance fund losses will exceed the $20 billion initial estimate and be, by far, the most costly bank failure in history - a title formerly held by the $12 billion insurance fund loss on IndyMac. 31 regulatory reports, these securities reportedly had $15 billion in mark-to-market losses. Will the SVB receivership suffer only $3.5 billion in additional losses when it liquidates $90 billion in held-to-maturity securities? As of SVB’s Dec.

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