3 ms·

Because most of their depositors were business that kept >$250K (the insurance limit) in the bank.

• tome 4y ago
  Why would someone keep more than $250K in bank deposits? Isn't it more prudent (looking back no more than 15 years) to keep T-Bills or some other liquid security that isn't subject to a bank run?
  • blibble 4y ago
    $250k isn't much for a company with employees you have to keep some cash somewhere to meet short term expenses (like payroll)
    • tome 4y ago
      Is it not possible to meet short term expenses with a short term loan which is discharged over a few days by selling liquid assets? Maybe banks just don't want to let you do that.
  • SpicyLemonZest 4y ago
    It is, and no prudent company should have lost their entire war chest unless their funding arrived just yesterday. But when you're spending $10M or $100M a year, it's operationally challenging to make sure you never have more than $250K in the bank while you're doing it. (It's much, much better to be imprudent and have too much in bank deposits than miss payroll because you have too little.)