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Political Discussion
Reply to "SVB Bank Run: Fed Calling Emergency Meeting "
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[quote=Anonymous][quote=Anonymous]Do people have over $250,000 In the bank if they are not buying anything big at any given time? Do they invest and buy bonds at the time?[/quote] Large entities need to make payments reliably. Banks perform both the role of facilitating payments AND financing asset purchases. The customers of SVB are almost always moderately large entities that largely just wanted payments processing and cash management. But since the bank holds lots of cash, the bank has to invest it in order to pay interest on deposits AND generate the bank’s income. They just invested the money unwisely, hence their losses.[/quote]
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