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Wait so now everyone has to sit down and evaluate their banks balance sheet before trying to do business with them? Silicon Valley Bank had nothing wrong with

Wait so now everyone has to sit down and evaluate their banks balance sheet before trying to do business with them? Silicon Valley Bank had nothing wrong with it's business practices other than they were concentrated in one particular industry, and a slowdown in VCs pumping money resulted in them shrinking deposits suddenly. They asked their investors for money, some VCs basically yelled fire in a crowded theatre and boom a 40 year old institution was wiped out in 24 hours. America has thousands of banks, and the way you would have this work would shrink that to 5. This way of operation would also wipe out every single credit union. Literally none of them have the insane levels of stability necessary to trust with money, if larger accounts are going to be at risk of a bank run. That 250,000 number hasnt changed in nearly a 100 years. Maybe it isn't what we should be going off of?

lolinder 4y ago
> everyone has to sit down and evaluate their banks balance sheet before trying to do business with them? No, if you're not keeping more than $250k in the account, you don't have to do the homework. If you're keeping more than $250k in the account, you can afford to pay someone $1k to do a bit of due diligence.
- Mystery-Machine 4y ago
  $250k is nothing for a company. It's 1 engineer salary. And, no, it's not $1k. It's more like $10k-$20k per month, plus all the overhead of having your money in multiple bank accounts and shuffling it all around just to never hit the $250k limit. Just my 2 cents on this strawman part of discussion.
  - lolinder 4y ago
    My parent wasn't talking about shuffling money around, they were talking about reading the bank's balance sheet. $1k gets you several hours of an accountant's time to go through the bank's balance sheet and tell you if their interest rates and other perks are, in fact, too good to be true. If you want to go the extra mile and try to move money around to keep under the limits, more power to you, but paying someone to occasionally keep an eye on your bank's balance sheet and make sure it's not going to collapse under you is totally within the capabilities of pretty much any company.
    - dlubarov 4y ago
      How could my accountant have known the risks? I don't think there was any public information about SVB's poorly-timed MBS purchases, the main cause of this incident.
      - lolinder 4y ago
        This guy short sold SVB based on their quarterly and annual reports: https://archive.ph/XaKkt https://archive.ph/XaKkt
      - youngtaff 4y ago
        AFAIK it was in SVBk’s Nov 7th public filings
        dlubarov 4y ago
        I don't think their MBS positions were public until last week. But say we knew earlier, perhaps soon after they purchased the MBSs - wouldn't the result have been similar, just the bank run would have been shifted up a bit? I.e. having a CFO who's on top of things might mean I'm first in line to get out once there are public red flags, but not everyone can exit an insolvent bank, so the macro result seems similar.
        youngtaff 4y ago
        > It’s true that investors had been aware at the latest since its 10-Q filing on Nov. 7 that it had sustained unrealized losses among its held-to-maturity (HTM) portfolio large enough to wipe out its entire $15.8 billion in shareholder equity. While this would theoretically render it insolvent were they to materialize in full, SVB Financial was dismissive of the risks. "SVB collapse highlights $620 billion hole lurking in banks’ balance sheets" -https://archive.is/qnwYh https://archive.is/qnwYh Also short sellers worked it out a while back "A Silicon Valley Bank short seller explains how he knew the bank was in trouble months ago" - https://archive.is/XaKkt https://archive.is/XaKkt
  - subsistence234 4y ago
    if $250k is nothing then $1k is less than nothing.
  - ZachPruckowski 4y ago
    I mean, completely reducing this risk to 0 is probably expensive and annoying, yes. But you could halve the risk by splitting your money into just two bank accounts, and reduce it further by keeping medium/long-term savings in short-duration no-coupon T-Bills or something.
  - trogdor 4y ago
    You can purchase insurance for excess deposits. Businesses that have to keep large amounts of cash on hand routinely do this.
rudedogg 4y ago
> That 250,000 number hasnt changed in nearly a 100 years. Maybe it isn't what we should be going off of? For what it's worth, it used to be $100K and was increased to $250K in 2008. Here's a timeline: https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation#Historical_insurance_limits https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corp...

lolinder 4y ago

> everyone has to sit down and evaluate their banks balance sheet before trying to do business with them? No, if you're not keeping more than $250k in the account, you don't have to do the homework. If you're keeping more than $250k in the account, you can afford to pay someone $1k to do a bit of due diligence.

Mystery-Machine 4y ago
$250k is nothing for a company. It's 1 engineer salary. And, no, it's not $1k. It's more like $10k-$20k per month, plus all the overhead of having your money in multiple bank accounts and shuffling it all around just to never hit the $250k limit. Just my 2 cents on this strawman part of discussion.
- lolinder 4y ago
  My parent wasn't talking about shuffling money around, they were talking about reading the bank's balance sheet. $1k gets you several hours of an accountant's time to go through the bank's balance sheet and tell you if their interest rates and other perks are, in fact, too good to be true. If you want to go the extra mile and try to move money around to keep under the limits, more power to you, but paying someone to occasionally keep an eye on your bank's balance sheet and make sure it's not going to collapse under you is totally within the capabilities of pretty much any company.
  - dlubarov 4y ago
    How could my accountant have known the risks? I don't think there was any public information about SVB's poorly-timed MBS purchases, the main cause of this incident.
    - lolinder 4y ago
      This guy short sold SVB based on their quarterly and annual reports: https://archive.ph/XaKkt https://archive.ph/XaKkt
    - youngtaff 4y ago
      AFAIK it was in SVBk’s Nov 7th public filings
      - dlubarov 4y ago
        I don't think their MBS positions were public until last week. But say we knew earlier, perhaps soon after they purchased the MBSs - wouldn't the result have been similar, just the bank run would have been shifted up a bit? I.e. having a CFO who's on top of things might mean I'm first in line to get out once there are public red flags, but not everyone can exit an insolvent bank, so the macro result seems similar.
        youngtaff 4y ago
        > It’s true that investors had been aware at the latest since its 10-Q filing on Nov. 7 that it had sustained unrealized losses among its held-to-maturity (HTM) portfolio large enough to wipe out its entire $15.8 billion in shareholder equity. While this would theoretically render it insolvent were they to materialize in full, SVB Financial was dismissive of the risks. "SVB collapse highlights $620 billion hole lurking in banks’ balance sheets" -https://archive.is/qnwYh https://archive.is/qnwYh Also short sellers worked it out a while back "A Silicon Valley Bank short seller explains how he knew the bank was in trouble months ago" - https://archive.is/XaKkt https://archive.is/XaKkt
- subsistence234 4y ago
  if $250k is nothing then $1k is less than nothing.
- ZachPruckowski 4y ago
  I mean, completely reducing this risk to 0 is probably expensive and annoying, yes. But you could halve the risk by splitting your money into just two bank accounts, and reduce it further by keeping medium/long-term savings in short-duration no-coupon T-Bills or something.
- trogdor 4y ago
  You can purchase insurance for excess deposits. Businesses that have to keep large amounts of cash on hand routinely do this.

rudedogg 4y ago

> That 250,000 number hasnt changed in nearly a 100 years. Maybe it isn't what we should be going off of? For what it's worth, it used to be $100K and was increased to $250K in 2008. Here's a timeline: https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation#Historical_insurance_limits https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corp...