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"Uninsured" doesn't mean "all of your money is gone, sucks to be you", it means "you'll take a haircut proportional to the amount of missing assets from the pool." And yes, if the bank is a Ponzi scheme, then that pool is empty, but SVB's problem is liquidity, not overall solvency. The money is there, it's just locked at a suboptimal interest rate, which may cost you 10 - 20%.

This isn't like FTX where your "assets" are worthless IOUs written to yourself.



May also be solvency - their assets are MBSes whose market value went down with the interest rate rise, that being the proximate cause of the panic that set off the bank run.


Isn't that the definition of uninsured?


No. If I crash my car into a $80,000 BMW and totaling it—and I have no insurance—the other party will still be able to sue me and partially recover their losses. Maybe they get $63k from me and eat the other $17k.

The bank has assets. Just not enough to cover all liabilities. That's why you see the term "haircut" being used a lot in these threads.




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