4 ms·

Note this was published dec 2022.

kurthr 4y ago
So, classic bank run... except there were 6 people on the same chat channel controlling 10% of the bank's reserves. Once they notice, poof!
- steveBK123 4y ago
  This is also why small, concentrated merchant banks like this are risky. Deposit base is too homogenous.
  - mikeyouse 4y ago
    It was one of the 15 largest banks in the country.. if depositors lose money here, every bank in US better be ready Monday morning as every company moves all of their funds to one of the top 3.
    - steveBK123 4y ago
      Most banks the vast majority 60-70% of depositors are insured. SVB was under 10% They were super concentrated in one industry, their depositors themselves were super concentrated with their deposits and they were poorly run. They’ll be open in some capacity Monday but the idea that big rich uninsured depositors should be made whole because of vibes is silly. They have a $10Bish hole. TBD how this plays out.
    - bcrosby95 4y ago
      Yet still small enough to not need to undergo stress tests after changes to Dodd frank in 2018.
    - IrnBru 4y ago
      That is irrational behaviour. Depositors should spread their cash across multiple banks. This is very basic risk management.
      - mikeyouse 4y ago
        I’m just telling you what I’m seeing.. The “multiple banks” will be the few biggest ones, even if it’s 1/10th of their funds, nobody will accept the risk of a smaller bank.
        sealeck 4y ago
        Except that it's not quite so trivial to open an account at a new bank (especially if everyone decides to do it at the same time) and move US$15 billion dollars by the end of Monday.
        mikeyouse 4y ago
        I opened a new business account at Wells last fall, it took maybe a week to apply and get approval? In any case, many companies have multiple banking relationships already - if I were in their shoes I’d be moving all of the excess funds to the biggest bank available. It’s not fair to the well managed small banks but honestly I don’t care at all about my bank, I just want to pay bills. I’d bank at the Federal Reserve if they offered an interest free checking account with unlimited bank insurance.

So, classic bank run... except there were 6 people on the same chat channel controlling 10% of the bank's reserves. Once they notice, poof!

steveBK123 4y ago
This is also why small, concentrated merchant banks like this are risky. Deposit base is too homogenous.
- mikeyouse 4y ago
  It was one of the 15 largest banks in the country.. if depositors lose money here, every bank in US better be ready Monday morning as every company moves all of their funds to one of the top 3.
  - steveBK123 4y ago
    Most banks the vast majority 60-70% of depositors are insured. SVB was under 10% They were super concentrated in one industry, their depositors themselves were super concentrated with their deposits and they were poorly run. They’ll be open in some capacity Monday but the idea that big rich uninsured depositors should be made whole because of vibes is silly. They have a $10Bish hole. TBD how this plays out.
  - bcrosby95 4y ago
    Yet still small enough to not need to undergo stress tests after changes to Dodd frank in 2018.
  - IrnBru 4y ago
    That is irrational behaviour. Depositors should spread their cash across multiple banks. This is very basic risk management.
    - mikeyouse 4y ago
      I’m just telling you what I’m seeing.. The “multiple banks” will be the few biggest ones, even if it’s 1/10th of their funds, nobody will accept the risk of a smaller bank.
      - sealeck 4y ago
        Except that it's not quite so trivial to open an account at a new bank (especially if everyone decides to do it at the same time) and move US$15 billion dollars by the end of Monday.
        mikeyouse 4y ago
        I opened a new business account at Wells last fall, it took maybe a week to apply and get approval? In any case, many companies have multiple banking relationships already - if I were in their shoes I’d be moving all of the excess funds to the biggest bank available. It’s not fair to the well managed small banks but honestly I don’t care at all about my bank, I just want to pay bills. I’d bank at the Federal Reserve if they offered an interest free checking account with unlimited bank insurance.