4 ms·

> Local banks, credit unions, etc are NOT on the "too big to fail" (or "systemic risk") list so therefore they can fail and will be allowed to fail. Sorry but

> Local banks, credit unions, etc are NOT on the "too big to fail" (or "systemic risk") list so therefore they can fail and will be allowed to fail. Sorry but isn't this only a problem for those with more than $250k, and that frankly is a lot for an individual. And even then you could just create another account at another local bank and you're golden. If you have a million cash, then handling four bank accounts is really not a bad problem.

treis 4y ago
But if you're a midsized construction firm turning over $10 million a month 40 bank accounts is unwieldy. If you're that and watch SVB collapse with the slow pokes holding the bag then you move to one of the big 4. For a few reasons: (1) SVB taught you that the feds will let a bank run happen (2) They won't save the poor saps that were too slow moving their money (3) The systemically important banks are too big to fail. A bank that can't pay depositors back is failed. Ergo, the SIB are too big to lose customer deposits. So you flee your regional bank because the single most important thing about a bank is that they don't lose your money.
- JumpCrisscross 4y ago
  > won't save the poor saps that were too slow moving their money This fear is unfounded. Depositors were bailed out. (That said, yes, utilising the bank’s sweep feature would be wise. As would having a second bank account.)
  - deleted 4y ago
    [deleted]
- pjc50 4y ago
  > (1) SVB taught you that the feds will let a bank run happen You can't prevent a bank run if people are going around whatsapp groups of major depositors telling each other to get their money out. > (2) They won't save the poor saps that were too slow moving their money They absolutely did, even when the rules didn't say they had to?
  - treis 4y ago
    >You can't prevent a bank run if people are going around whatsapp groups of major depositors telling each other to get their money out. Sure you can. You close the bank when it's insolvent and people are saying to get your money out. >They absolutely did, even when the rules didn't say they had to? Yes and my post was to illustrate why. Perhaps that was not as clear as it could be.
    - pjc50 4y ago
      > You close the bank when it's insolvent and people are saying to get your money out. How does this materially differ from what happened? Is there a federal power to temporarily close banks? Doesn't the run immediately continue when reopened?
      - treis 4y ago
        It doesn't because they made all the depositors whole. If they didn't do that then the last 30% or whatever depositors remained would have taken all the losses. Regulators have broad power to close banks. They could have done so when SVB failed to raise equity or really before that. Run stops because deposits are transferred to a healthy bank.
- cudgy 4y ago
  > turning over $10 million a month 40 bank accounts is unwieldy Perhaps, but does this mean you just leave your cash exposed to almost a complete loss? Surely there are services/software that could manage this for you? Seems like a lazy and incompetent accounting department. Just ask ChatGPT how to do it <sarcasm>
zer00eyz 4y ago
> only a problem for those with more than $250k, And lots of local businesses. 100 employees at 48k a year gets you to 200k a month in payroll. Never mind the money it takes to run that business. Even if you are under the 250k mark, if your bank closes on a pay day your staff is the group that suffers.
- dv_dt 4y ago
  Sounds like a perfect HN startup MVP. Split your operating cash among banks to keep under FDIC limits while presenting a convenient front end ui for payroll
  - pjc50 4y ago
    Google for "insured cash sweep". https://www.cbhou.com/Resources/Customer-Corner/entryid/237/faqs-your-guide-to-insured-cash-sweep https://www.cbhou.com/Resources/Customer-Corner/entryid/237/... The specific problem for SVB was that many VCs got their companies to agree not to do this, specifically to keep all the money in SVB.
    - Pet_Ant 4y ago
      > specific problem for SVB was that many VCs got their companies to agree not to do this What was in it for the VCs???
      - pjc50 4y ago
        I have not yet heard a specific explanation for this, although there has to have been some quid pro quo.
  - mos_basik 4y ago
    >Split your operating cash among banks to keep under FDIC limits while presenting a convenient front end ui for payroll I work for a six-person startup; our CEO landed on Brex after SVB, and one of the reasons he gave was that it does exactly this (up to 9 banks). See https://www.brex.com/product/business-account https://www.brex.com/product/business-account

treis 4y ago

But if you're a midsized construction firm turning over $10 million a month 40 bank accounts is unwieldy. If you're that and watch SVB collapse with the slow pokes holding the bag then you move to one of the big 4. For a few reasons: (1) SVB taught you that the feds will let a bank run happen (2) They won't save the poor saps that were too slow moving their money (3) The systemically important banks are too big to fail. A bank that can't pay depositors back is failed. Ergo, the SIB are too big to lose customer deposits. So you flee your regional bank because the single most important thing about a bank is that they don't lose your money.

JumpCrisscross 4y ago
> won't save the poor saps that were too slow moving their money This fear is unfounded. Depositors were bailed out. (That said, yes, utilising the bank’s sweep feature would be wise. As would having a second bank account.)
- deleted 4y ago
  [deleted]
pjc50 4y ago
> (1) SVB taught you that the feds will let a bank run happen You can't prevent a bank run if people are going around whatsapp groups of major depositors telling each other to get their money out. > (2) They won't save the poor saps that were too slow moving their money They absolutely did, even when the rules didn't say they had to?
- treis 4y ago
  >You can't prevent a bank run if people are going around whatsapp groups of major depositors telling each other to get their money out. Sure you can. You close the bank when it's insolvent and people are saying to get your money out. >They absolutely did, even when the rules didn't say they had to? Yes and my post was to illustrate why. Perhaps that was not as clear as it could be.
  - pjc50 4y ago
    > You close the bank when it's insolvent and people are saying to get your money out. How does this materially differ from what happened? Is there a federal power to temporarily close banks? Doesn't the run immediately continue when reopened?
    - treis 4y ago
      It doesn't because they made all the depositors whole. If they didn't do that then the last 30% or whatever depositors remained would have taken all the losses. Regulators have broad power to close banks. They could have done so when SVB failed to raise equity or really before that. Run stops because deposits are transferred to a healthy bank.
cudgy 4y ago
> turning over $10 million a month 40 bank accounts is unwieldy Perhaps, but does this mean you just leave your cash exposed to almost a complete loss? Surely there are services/software that could manage this for you? Seems like a lazy and incompetent accounting department. Just ask ChatGPT how to do it <sarcasm>

zer00eyz 4y ago

> only a problem for those with more than $250k, And lots of local businesses. 100 employees at 48k a year gets you to 200k a month in payroll. Never mind the money it takes to run that business. Even if you are under the 250k mark, if your bank closes on a pay day your staff is the group that suffers.

dv_dt 4y ago
Sounds like a perfect HN startup MVP. Split your operating cash among banks to keep under FDIC limits while presenting a convenient front end ui for payroll
- pjc50 4y ago
  Google for "insured cash sweep". https://www.cbhou.com/Resources/Customer-Corner/entryid/237/faqs-your-guide-to-insured-cash-sweep https://www.cbhou.com/Resources/Customer-Corner/entryid/237/... The specific problem for SVB was that many VCs got their companies to agree not to do this, specifically to keep all the money in SVB.
  - Pet_Ant 4y ago
    > specific problem for SVB was that many VCs got their companies to agree not to do this What was in it for the VCs???
    - pjc50 4y ago
      I have not yet heard a specific explanation for this, although there has to have been some quid pro quo.
- mos_basik 4y ago
  >Split your operating cash among banks to keep under FDIC limits while presenting a convenient front end ui for payroll I work for a six-person startup; our CEO landed on Brex after SVB, and one of the reasons he gave was that it does exactly this (up to 9 banks). See https://www.brex.com/product/business-account https://www.brex.com/product/business-account