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That’s not true. The FDIC will be disbursing money above and beyond the $250k to account holders. It won’t be the balance of their account but they’ll also ge

That’s not true. The FDIC will be disbursing money above and beyond the $250k to account holders. It won’t be the balance of their account but they’ll also get a piece of paper laying out how much more they’re potentially owed. As the FDIC winds the bank down, it will use that money to make account-holders whole. The big losers are SVB shareholders and bond holders, as they’re going to get the biggest haircut.

rickreynoldssf 4y ago
ADP isn't going to take that paper to cut paychecks. AWS isn't going to want that paper either. The best you can do is take that paper and get a loan with a stupid high interest rate and that's not going to happen quickly.
- avs733 4y ago
  I may be wrong but... ADP could always take it at 90%, figure out the expected return and everybody wins AWS could take it plus some equity for credits? I imagine the incremental cost of providing the compute is worth the risk No one forces the economy to operate on dollars - and both traditionally and currently a whole lot of it doesn't.
  - jo6gwb 4y ago
    ADP wont' take the paper but the cash advance sharks will and they're circling now.
  - icelancer 4y ago
    Any private entity's risk assessors would place a massive haircut on those pieces of paper, if they would even allow them to be purchased.
- DonsDiscountGas 4y ago
  The Fed is having an emergency meeting Monday. My guess is they loan the bank-formerly-known-as-SVB as much as necessary to cover depositors needs for the next year, and get paid back as the banks assets are sold off. https://www.federalreserve.gov/aboutthefed/boardmeetings/20230313closed.htm https://www.federalreserve.gov/aboutthefed/boardmeetings/202...
nemo44x 4y ago
The FDIC will pay an advanced dividend next week. We have no idea how much that will be but it is probably conservative. Some companies may not be able to make payroll today or early next week. Some may not be able to pay their vendors for the things that allow their businesses to run. It may only be a couple day disruption but what if your employees quit? What if your vendors cut your access and your customers leave? What if you don't get made whole but get back 80% of your cash? Now your runway is 20% shorter in a climate where investors aren't around. This could be very bad.
- dragonwriter 4y ago
  > It may only be a couple day disruption but what if your employees quit? Even if they don’t, in California there is a statutory penalty payable to the employee of $100 to each affected employee for a first, non-willful late payment of wages (second or subsequent violations, or any willful or intentional violations, have a much greater penalty – $200 plus 25% of the wages not paid); that’s not a lot (if you didn’t happen to have a prior payroll hiccup bumping this into the “second or subsequent” category), but its still a hit.
- UncleOxidant 4y ago
  > It may only be a couple day disruption but what if your employees quit? I guess they don't have to worry so much about that what with all the tech layoffs over the last 6 months and with a lot of other statups in the SVB boat, who's going to be hiring?
  - jcadam 4y ago
    Top people are always in demand - that's who you'll lose. The average performers you might keep if you get things sorted quickly enough...
UncleOxidant 4y ago
> they’ll also get a piece of paper laying out how much more they’re potentially owed. As the FDIC winds the bank down That will take months at least. In the meantime they'll have this non-liquid piece of paper. I suppose they could try to pay employees with IOUs, but I don't think that many employees would be able to afford to stick around for very long.
dragonwriter 4y ago
> It won’t be the balance of their account but they’ll also get a piece of paper laying out how much more they’re potentially owed. Yes, they’ll get an “advance dividend” based on whatever surplus cash is available beyond what is necessary to cover the insured balances, plus a “receivership certificate” accounting for the rest, and, to quote the FDIC press release [0], “As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.” [emphasis added]. [0] https://www.fdic.gov/news/press-releases/2023/pr23016.html https://www.fdic.gov/news/press-releases/2023/pr23016.html
pirate787 4y ago
Shareholders and bondholders will be zeroed out, that's not a haircut its a decapitation!

rickreynoldssf 4y ago

ADP isn't going to take that paper to cut paychecks. AWS isn't going to want that paper either. The best you can do is take that paper and get a loan with a stupid high interest rate and that's not going to happen quickly.

avs733 4y ago
I may be wrong but... ADP could always take it at 90%, figure out the expected return and everybody wins AWS could take it plus some equity for credits? I imagine the incremental cost of providing the compute is worth the risk No one forces the economy to operate on dollars - and both traditionally and currently a whole lot of it doesn't.
- jo6gwb 4y ago
  ADP wont' take the paper but the cash advance sharks will and they're circling now.
- icelancer 4y ago
  Any private entity's risk assessors would place a massive haircut on those pieces of paper, if they would even allow them to be purchased.
DonsDiscountGas 4y ago
The Fed is having an emergency meeting Monday. My guess is they loan the bank-formerly-known-as-SVB as much as necessary to cover depositors needs for the next year, and get paid back as the banks assets are sold off. https://www.federalreserve.gov/aboutthefed/boardmeetings/20230313closed.htm https://www.federalreserve.gov/aboutthefed/boardmeetings/202...

nemo44x 4y ago

The FDIC will pay an advanced dividend next week. We have no idea how much that will be but it is probably conservative. Some companies may not be able to make payroll today or early next week. Some may not be able to pay their vendors for the things that allow their businesses to run. It may only be a couple day disruption but what if your employees quit? What if your vendors cut your access and your customers leave? What if you don't get made whole but get back 80% of your cash? Now your runway is 20% shorter in a climate where investors aren't around. This could be very bad.

dragonwriter 4y ago
> It may only be a couple day disruption but what if your employees quit? Even if they don’t, in California there is a statutory penalty payable to the employee of $100 to each affected employee for a first, non-willful late payment of wages (second or subsequent violations, or any willful or intentional violations, have a much greater penalty – $200 plus 25% of the wages not paid); that’s not a lot (if you didn’t happen to have a prior payroll hiccup bumping this into the “second or subsequent” category), but its still a hit.
UncleOxidant 4y ago
> It may only be a couple day disruption but what if your employees quit? I guess they don't have to worry so much about that what with all the tech layoffs over the last 6 months and with a lot of other statups in the SVB boat, who's going to be hiring?
- jcadam 4y ago
  Top people are always in demand - that's who you'll lose. The average performers you might keep if you get things sorted quickly enough...

UncleOxidant 4y ago

> they’ll also get a piece of paper laying out how much more they’re potentially owed. As the FDIC winds the bank down That will take months at least. In the meantime they'll have this non-liquid piece of paper. I suppose they could try to pay employees with IOUs, but I don't think that many employees would be able to afford to stick around for very long.

dragonwriter 4y ago

> It won’t be the balance of their account but they’ll also get a piece of paper laying out how much more they’re potentially owed. Yes, they’ll get an “advance dividend” based on whatever surplus cash is available beyond what is necessary to cover the insured balances, plus a “receivership certificate” accounting for the rest, and, to quote the FDIC press release [0], “As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.” [emphasis added]. [0] https://www.fdic.gov/news/press-releases/2023/pr23016.html https://www.fdic.gov/news/press-releases/2023/pr23016.html

pirate787 4y ago

Shareholders and bondholders will be zeroed out, that's not a haircut its a decapitation!