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One fair argument that is going to squeeze the market a bit is that suddenly a LOT of companies just realized that maybe they shouldn't have all/50%/30%/20% the
by agloe_dreams 4y ago
One fair argument that is going to squeeze the market a bit is that suddenly a LOT of companies just realized that maybe they shouldn't have all/50%/30%/20% their cash in one account. This is going to cause a short run where money is stuck between banks as it slushes around. Most larger banks will probably see increases in deposits. Smaller, more risky banks will likely see more immediate liquidity issues caused by the run and less deposits to cover the money taken out.
- Scoundreller 4y agoI could see it going both ways: If I’m a smaller client/business that regularly has $400k in my Bank of America account, I might now split it between BoA and a new account at a small bank down the street just to keep under $250k at all times. Keeping bajillions over fdic limits was always a risky affair. Not sure how many smaller banks actually have/had volumes of accounts like that but I could see SVB being an exception.
- agloe_dreams 4y agoI agree, though I think it is more likely that those over FDIC limits will move from a smaller bank to a more stable larger bank, purely because they have more reason to worry. SVB being an exception is absolutely true though.