4 ms·

$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

$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
        dlubarov 4y ago
        I stand corrected, though the point remains that if everyone tried to exit once that news came out on Nov 7, we still would have had a bank failure with roughly the same shortfall.
        youngtaff 4y ago
        > though the point remains that if everyone tried to exit once that news came out on Nov 7, we still would have had a bank failure with roughly the same shortfall. True, we’d need to look at previous filings to understand when it could have first been worked out VCs should have kept a closer eye on where their cash was, but perhaps they were too enamoured with the benefits they were getting from SVB
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.

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
      - dlubarov 4y ago
        I stand corrected, though the point remains that if everyone tried to exit once that news came out on Nov 7, we still would have had a bank failure with roughly the same shortfall.
        youngtaff 4y ago
        > though the point remains that if everyone tried to exit once that news came out on Nov 7, we still would have had a bank failure with roughly the same shortfall. True, we’d need to look at previous filings to understand when it could have first been worked out VCs should have kept a closer eye on where their cash was, but perhaps they were too enamoured with the benefits they were getting from SVB

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.