--- title: The Worst Thing You Can Do Is Nothing description: The problems/resolutions of both Silicon Valley Bank and Signature Bank bring to mind a Theodore Roosevelt quote: image: https://blog.citydifferentinvestments.com/hubfs/blog%20featured%20image%20(3)-1.png --- [![City Different Investments](https://blog.citydifferentinvestments.com/hubfs/raw_assets/public/Custom%20Coded/images/CDI-Logo.svg "City Different Investments")](https://citydifferentinvestments.com/) Menu - [Home](https://citydifferentinvestments.com) - About - [Our Story](https://citydifferentinvestments.com/our-story/) - [People](https://citydifferentinvestments.com/people/) - [Our Commitment](https://citydifferentinvestments.com/community-commitment/) - [Careers](https://citydifferentinvestments.com/community-commitment/) - [Strategies](https://citydifferentinvestments.com/strategies/) - [Fixed Income](https://citydifferentinvestments.com/strategies/fixed-income/) - Municipal Bond - [Short-Term](https://citydifferentinvestments.com/strategies/fixed-income/short-term-municipal-bond/) - 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By our math, that’s approximately 23 cents on the dollar.   That leaves about $90B in securities and other SVB assets in the hands of the FDIC (i.e., receivership). The estimated cost of failure to the deposit insurance fund is $20B.   First Citizens will assume $56B in deposits, $72B in loans, and 17 branches.   SVB was forced to abandon its plan to raise capital as funds.        On top of the loss-sharing agreement, the FDIC will help finance the deal with a 5-year $35B loan. The agency is also providing a $70B line of credit to cover potential depositor flights.  So, in conclusion, First Citizens bought the deposits and the loans at a significant discount. They have an upside agreement with the FDIC, the FDIC is financing it, *and* the FDIC is giving them a line of credit. From where we’re sitting, that’s a sweetheart deal with potentially dour systemic implications. Going back to Chris’s debate with Connor from last week ([in which he makes the case that this is a huge nanny-state solution)](https://vimeo.com/manage/videos/807631010), we think this could lead to a moral hazard. That being said, it was better than nothing.  --- **IMPORTANT DISCLOSURES** *The information and statistics contained in this communication have been obtained from sources we believe to be reliable but cannot be guaranteed. Any projections, market outlooks or forecasts discussed herein are forward-looking statements and are based upon certain assumptions. Any projections, outlooks or assumptions should not be construed to be indicative of the actual events which will occur. These projections, market outlooks or estimates are subject to change without notice. Please remember that past performance may not be indicative of future results. 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