I don’t get how this works. You would need to keep money in the bank for the same amount to be insured. What’s the point of keeping, say, $5 million at SVB if you lose it and just get $5 million? You haven’t made any profits.
Unless they’re suggesting that they’ll reinvest/loan out the money, and if they make money the depositor profits via interest, and if they lose money, the government will just refund them the original amount
In the scenario, the person can either put 5 mil in SVB, lose it, and then get it all back without any worry or they can put that 5 mil into another bank and if it failed, they would lose that 5 mil.
I don’t get how this works. You would need to keep money in the bank for the same amount to be insured. What’s the point of keeping, say, $5 million at SVB if you lose it and just get $5 million? You haven’t made any profits.
Unless they’re suggesting that they’ll reinvest/loan out the money, and if they make money the depositor profits via interest, and if they lose money, the government will just refund them the original amount
In the scenario, the person can either put 5 mil in SVB, lose it, and then get it all back without any worry or they can put that 5 mil into another bank and if it failed, they would lose that 5 mil.
Ah okay. That makes sense. But didn’t the fed seize it? I thought once that happens they’re gonna get liquidated and normal operations stop