Re:Yellen says government will help SVB depositors but rules...
by gamblor956 on Sunday March 12, 2023 @02:50PM
(#35124444)
Also known as being literally insolvent. They can't pay back what they owe.
No, insolvency is a legal and accounting term indicating that liabilities exceed assets. If assets and liabilities are equal, but the liquidity of those assets did not match the term of the liabilities., that is illiquidity, not insolvency.
That being said, the CFPI said in its order shutting down SVB that the bank was both illiquid and insolvent so it appears that their assets, even adjusted for value at maturity, were not sufficient to cover liabilities. And that's probably why the banks they reached out to about taking over SVB Thursday night did not.
No, insolvency is a legal and accounting term indicating that liabilities exceed assets. If assets and liabilities are equal, but the liquidity of those assets did not match the term of the liabilities., that is illiquidity, not insolvency.
That being said, the CFPI said in its order shutting down SVB that the bank was both illiquid and insolvent so it appears that their assets, even adjusted for value at maturity, were not sufficient to cover liabilities. And that's probably why the banks they reached out to about taking over SVB Thursday night did not.