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  • Jim Costa

Jim’s Daily Rant. A Humble Banker’s First Time at Bat.

The failed Banking ball game has always been played the same.

When FDIC closes a bank it kinda does it this way:


Assumptions: Net Asset Valuation: 100 M

Insured Deposit: 30 M Uninsured Deposits 180 M Other Creditors 20 M

Net Asset Valuation at closing Date: $100 M

Minus insured Deposit Funds Payout ( 30 M) (Payment back to FDIC)

Available cash to all Uninsured Depositors $70 M


Remaining Cash For Other Creditors: $0 M


Therefore, Uninsured Depositors received 39 Cents on the dollar (70/180);

other Creditors received Zip.


However, being that SVB will be the first bankruptcy under Bail In Protection,

their liquidation may go somewhat like this:

Assumptions: Net Asset Valuation: 100 M

Insured Deposit: 30 M Uninsured Deposits 180 M Other Creditors 20 M

Net Asset Valuation at closing Date: $100 M

Minus insured Deposit Funds Payout $30 M (Payment back to FDIC)


Available cash to all Uninsured Depositors $70 M


Remaining Cash For Other Creditors: $0 M


Therefore, Uninsured Depositors will someday receive 39 Cents on the dollar (70/180);

other Creditors received Zip.


BUT Uninsured Depositors do not receive cash, they get a redeemable certificate to receive 39 cents on the dollar in another 40(?) years.

Therefore, the $70 M cash due them is added back to the bank for its use. $70 M


All other creditors get zip.

If all the above is somewhat correct, one can assume the new bank owner can lend out the $70 M a thousand times, adding $70 Trillion in assets to the new bank.

I believe this is what William Mount is trying to say in his podcast Why Did The FDIC Seize 2 Perfectly Sound Banks?


He suggests that FDIC will now cannibalize banks to feed the broke Corporate government.

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