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> mass layoffs and financial turmoil as otherwise healthy companies have to shut doors due to this bank's mistakes Perhaps I'm missing something, but I would s

> mass layoffs and financial turmoil as otherwise healthy companies have to shut doors due to this bank's mistakes Perhaps I'm missing something, but I would suggest that one key aspect of a company being able to call itself healthy is that its finances are diversified.

jonhohle 4y ago
Is it feasible to keep active cash flow spread across multiple financial institutions? (Honest question) Being insured for $250k is payroll for about 10 people for a month. If your other funds were in a line of credit that abruptly closed or in equities that may not be worth as much when everyone shows up on Monday, what options are there?
- bruce343434 4y ago
  25k a month for salary? I'd love to work at your place!
  - jonhohle 4y ago
    These are SV companies plus payroll costs 1.25-1.5x employee salary (benefits, taxes, and insurance don’t appear out of thin air).
    - bruce343434 4y ago
      "Worst case" that's still 16.66K per month. Sign me up!
      - jonhohle 4y ago
        I’d say, go look for a job in the Bat Area, except, that might not be such a good idea right now ;-) that’s not out of line for an engineering salary there. (The trick is, get one of those companies to pay you Bay Area rates while you live in a much lower cost of living area working remotely!)
  - thallium205 4y ago
    That would average around 225K/yr salary after payroll tax. With retirement, health, etc benefits it’s closer to reality for an engineering salary than you think.
    - logifail 4y ago
      > closer to reality for an engineering salary Never mind engineering, how much are SV startups paying their corporate finance and corporate treasury officers? Not enough, perhaps.
      - thallium205 4y ago
        A 10 person company shouldn’t need a “treasury management” strategy in a functional banking environment.
        logifail 4y ago
        > A 10 person company [..] Newsflash: there are plenty of places, and plenty of sectors, where a 10-person company hasn't got anywhere near enough cash on deposit to reach the local deposit guarantee limit.
      - thallium205 4y ago
        The entire banking system was about to be revealed as a total clown show scam (that it is) if they weren’t going to step in here. How do you expect an SVB company to run payroll for more than 10 or so employees in a risk free way? How about 100 employees? If you can’t even ensure a tiny company can do that without losing everything and folding then you have problems with your banking system that are wayyyy more serious. This epiphany was going to happen in an extraordinary way today if they didn’t restore confidence in the (very broken) system.
        logifail 4y ago
        > The entire banking system was about to be revealed as a total clown show scam (that it is) if they weren’t going to step in here. It's fairly simple: When things are going well, entrepreneurs want the state and its oh-so-tiresome regulation to get out of their way. Then, when things don't go well, it's those very same entrepreneurs who claim it's necessary for the state to step in and save everyone. https://twitter.com/BillAckman/ https://twitter.com/BillAckman/ is quite the read at the moment.
hackernewds 4y ago
I would consider myself a reasonably sophisticated financial advisor. however, within thousands of pages of SEC disclosures and fine print, I have not the time nor the resources nor the skill sets to do due diligence on a bank's daily operations. I just consider that my zero yielding no interest deposits (not investments) are safe and in a competent banking system this should be a fair assumption, should it not? especially for a bank that wasnt investing in subprime mortgage loans or car loans, they literally got punished for investing in long-term US treasuries! a fair financial system should be afforded for everybody, and the idea that they should only be presented for the poor seems baffling
- logifail 4y ago
  > thousands of pages of SEC disclosures and fine print, I have not the time nor the resources nor the skill sets to do due diligence on a bank's daily operations The FDIC deposit insurance limit isn't hidden away in disclosures or in any fine print.
  - tomhoward 4y ago
    This just indicates that the $250K insured threshold makes no sense these days for corporate bank accounts. It makes no sense for every business owner (and a business doesn't have to be very big to have more than $250K in the bank) to have to spread their funds across multiple banks and do ongoing due diligence across each bank's investment activities. We're talking about farmers, used car dealerships, builders, and countless other kinds of businesses who would suddenly be expected to develop an aptitude for financial hedging and risk assessment. It would be incredibly inefficient and make it not worthwhile for many people to be in business at all. The whole point of a regulated financial system is that regular depositors can expect that if the regulations are being met and the regulators are verifying that the banks are in good shape, you can trust that your funds will be safe. The right response to this situation is to change the guaranteed limit for corporate bank accounts, and, sure, increase the fees that banks (and indirectly, corporate banking customers) pay for that. The wrong response would be to tank the entire banking system to stick it to the tech bros.

jonhohle 4y ago

Is it feasible to keep active cash flow spread across multiple financial institutions? (Honest question) Being insured for $250k is payroll for about 10 people for a month. If your other funds were in a line of credit that abruptly closed or in equities that may not be worth as much when everyone shows up on Monday, what options are there?

bruce343434 4y ago
25k a month for salary? I'd love to work at your place!
- jonhohle 4y ago
  These are SV companies plus payroll costs 1.25-1.5x employee salary (benefits, taxes, and insurance don’t appear out of thin air).
  - bruce343434 4y ago
    "Worst case" that's still 16.66K per month. Sign me up!
    - jonhohle 4y ago
      I’d say, go look for a job in the Bat Area, except, that might not be such a good idea right now ;-) that’s not out of line for an engineering salary there. (The trick is, get one of those companies to pay you Bay Area rates while you live in a much lower cost of living area working remotely!)
- thallium205 4y ago
  That would average around 225K/yr salary after payroll tax. With retirement, health, etc benefits it’s closer to reality for an engineering salary than you think.
  - logifail 4y ago
    > closer to reality for an engineering salary Never mind engineering, how much are SV startups paying their corporate finance and corporate treasury officers? Not enough, perhaps.
    - thallium205 4y ago
      A 10 person company shouldn’t need a “treasury management” strategy in a functional banking environment.
      - logifail 4y ago
        > A 10 person company [..] Newsflash: there are plenty of places, and plenty of sectors, where a 10-person company hasn't got anywhere near enough cash on deposit to reach the local deposit guarantee limit.
    - thallium205 4y ago
      The entire banking system was about to be revealed as a total clown show scam (that it is) if they weren’t going to step in here. How do you expect an SVB company to run payroll for more than 10 or so employees in a risk free way? How about 100 employees? If you can’t even ensure a tiny company can do that without losing everything and folding then you have problems with your banking system that are wayyyy more serious. This epiphany was going to happen in an extraordinary way today if they didn’t restore confidence in the (very broken) system.
      - logifail 4y ago
        > The entire banking system was about to be revealed as a total clown show scam (that it is) if they weren’t going to step in here. It's fairly simple: When things are going well, entrepreneurs want the state and its oh-so-tiresome regulation to get out of their way. Then, when things don't go well, it's those very same entrepreneurs who claim it's necessary for the state to step in and save everyone. https://twitter.com/BillAckman/ https://twitter.com/BillAckman/ is quite the read at the moment.

hackernewds 4y ago

I would consider myself a reasonably sophisticated financial advisor. however, within thousands of pages of SEC disclosures and fine print, I have not the time nor the resources nor the skill sets to do due diligence on a bank's daily operations. I just consider that my zero yielding no interest deposits (not investments) are safe and in a competent banking system this should be a fair assumption, should it not? especially for a bank that wasnt investing in subprime mortgage loans or car loans, they literally got punished for investing in long-term US treasuries! a fair financial system should be afforded for everybody, and the idea that they should only be presented for the poor seems baffling

logifail 4y ago
> thousands of pages of SEC disclosures and fine print, I have not the time nor the resources nor the skill sets to do due diligence on a bank's daily operations The FDIC deposit insurance limit isn't hidden away in disclosures or in any fine print.
- tomhoward 4y ago
  This just indicates that the $250K insured threshold makes no sense these days for corporate bank accounts. It makes no sense for every business owner (and a business doesn't have to be very big to have more than $250K in the bank) to have to spread their funds across multiple banks and do ongoing due diligence across each bank's investment activities. We're talking about farmers, used car dealerships, builders, and countless other kinds of businesses who would suddenly be expected to develop an aptitude for financial hedging and risk assessment. It would be incredibly inefficient and make it not worthwhile for many people to be in business at all. The whole point of a regulated financial system is that regular depositors can expect that if the regulations are being met and the regulators are verifying that the banks are in good shape, you can trust that your funds will be safe. The right response to this situation is to change the guaranteed limit for corporate bank accounts, and, sure, increase the fees that banks (and indirectly, corporate banking customers) pay for that. The wrong response would be to tank the entire banking system to stick it to the tech bros.