The interviews of Silicone Valley people who were impacted last night on TV news suggests that it's not just rich people. Many are small businesses, start-ups, etc. They didn't seem panicked but it was anything but plain that they wouldn't be mostly wiped out. They didn't seem to know what to make of what's happening other than that they weren't able to pull out their money yesterday morning upon hearing of the problems.I suppose for as long as this remains isolated to SVB, it will probably only affect rich people.
Yeah, that's me. My checks actually still say Wamu! I was unaware that Wamu almost defaulted before reading your post!My closest experience was back in 2008 when I was a Washington Mutual customer. It didn't quite make it to an FDIC takeover, but it was close. I believe the FDIC facilitated the buyout by Chase. I was impressed by the whole operation. One day is was Wamu, then next day is was Chase without a single interruption in services.
To some extent, maybe a rather large one, SV investors killed their own bank. The bank absolutely did not do everything right but would have survived if not for a $40B outflow.
It had to do with raising the threshold of oversight for systemically important institutions from $50B to $250B. SVB (~$220B) would have had additional regs/oversight under the old version that they didn't as of the Trump de-regulations. It would have required additional stress tests and capital requirements but here we are.
$250k per person, period. It doesn’t matter if you split it among multiple accounts at the same bank.
everything he does turns to shit doesn't it?
Absolute disaster of a presidentThe six degrees of Donald Trump....
Those groups will probably be okay, even without full FDIC coverage. The people that are going to get hosed are the bond and share holders, since they'll get paid out last in any liquidation process. After the FDIC-insured payouts are covered, the underinsured accounts will be covered, and as noted, another bank may willingly come in to underwrite, since they'll get a ton of new customers and there are likely enough assets to more than cover (just not enough on hand to cover the bank run).The interviews of Silicone Valley people who were impacted last night on TV news suggests that it's not just rich people. Many are small businesses, start-ups, etc. They didn't seem panicked but it was anything but plain that they wouldn't be mostly wiped out. They didn't seem to know what to make of what's happening other than that they weren't able to pull out their money yesterday morning upon hearing of the problems.
FDIC: Financial Institution Employee's Guide to Deposit Insurance | General Principles of Insurance Coverage
Deposit accounts maintained by different depositors are separately insured. Depositors that may qualify to receive FDIC deposit insurance coverage include natural persons, legal entities such as corporations, partnerships, and unincorporated associations, and public units such as cities and...www.fdic.gov
The FDIC covers
COVERAGE LIMITS
- Checking accounts
- Negotiable Order of Withdrawal (NOW) accounts
- Savings accounts
- Money Market Deposit Accounts (MMDAs)
- Time deposits such as certificates of deposit (CDs)
- Cashier's checks, money orders, and other official items issued by a bank
The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.
The FDIC provides separate coverage for deposits held in different account ownership categories.
Depositors may qualify for coverage over $250,000 if they have funds in different ownership categories and all FDIC requirements are met.
All deposits that an account holder has in the same ownership category at the same bank are added together and insured up to the standard insurance amount.
The New York Times top left front page article right now.
This link should get you past the paywall for 14 days, i.e. until March 25, 2023:
Silicon Valley Bank Collapse Sets Off Blame Game in Tech Industry (Published 2023)
The implosion of the Silicon Valley bank led to finger-pointing, as executives and investors jumped on the crisis for their own messaging.www.nytimes.com
My premium savings account at Etrade is supposedly FDIC insured "up to $500,000" but I am not confident. $250k has been the standard for a number of years.The only smart thing is to make sure you spread out the money between different FDIC Insured institutions.
"The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. "
My premium savings account at Etrade is supposedly FDIC insured "up to $500,000" but I am not confident. $250k has been the standard for a number of years.
The question is why would you want that much money sitting in a bank account yielding basically nothing?
What looks to me a good comment to that article:The New York Times top left front page article right now.
This link should get you past the paywall for 14 days, i.e. until March 25, 2023:
Silicon Valley Bank Collapse Sets Off Blame Game in Tech Industry (Published 2023)
The implosion of the Silicon Valley bank led to finger-pointing, as executives and investors jumped on the crisis for their own messaging.www.nytimes.com
A comment to NYTimes article:This have anything to do with it? (2018)
Trump signs the biggest rollback of bank rules since the financial crisis
The measure designed to ease rules on all but the largest U.S. banks passed both chambers of Congress with bipartisan support.www.cnbc.com
Yeah, I guess for corporate/escrow accounts it makes more sense.I know nothing about this bank's general activity, but it sounds like it's the primary bank for VC, and probably acts as the primary escrow for startup funding? It would seem normal (not for personal accounts), for funders to hold tens of millions at a time while funding deals clear, no? Could definitely expose metric assloads of money to severe runaway risk like this while it waits to clear.