4 ms·

So what do you do when your payroll is more than $200k? The depositors were not treating SVB as investment, they were bank accounts for doing transactions.

sejje 9mo ago
Multiple accounts?
58028641 9mo ago
There are banks that sweep the money across various other banks automatically.
- steveBK123 9mo ago
  Things I learned in Econ 101 like 25 years ago, and one of about four options if you google "how do companies manage payroll with fdic limits". But people with [mb]illions of funding just plopped money in a single account ..
  - epistasis 9mo ago
    Indeed, most of SVBs customers were those who had almost zero business finance experience. There were lots of startups but there were also lots of normal businesses and non-profits in the Bay Area that used SVB. Perhaps the slow depositors should be punished for not being sufficiently sophisticated, or as quick as the Thiel-backed startups that got the bat-signal to do a bank run. But the "moral" value of letting all those organizations lose their deposits is very low. The moral value of letting SVB fail, which it did, seems high to me!
    - ecshafer 9mo ago
      > Indeed, most of SVBs customers were those who had almost zero business finance experience. There were lots of startups but there were also lots of normal businesses and non-profits in the Bay Area that used SVB. The thing is that you don't need to be a financially sophisticated. Why are they making companies without talking to a CPA? They can get an account with PayChex and they will literally handle everything related with payroll. If your average mom and pop restaurant didn't do this we would fault them for being irresponsible.
      - steveBK123 9mo ago
        They disrupted financial sophistication
buellerbueller 9mo ago
Buy insurance for this type of situation. It's not like Silicon Valley lacks the funds to buy insurance. The rest of us are MANDATED to buy insurance for our cars and our healthcare, and many of us live paycheck to paycheck. Silicon Valley, however, home to the world's greatest concentrations of private wealth? Oh no, thats a too much to ask that they play by the same rules.
shimman 9mo ago
That's not our problem to solve, but seeing how millions of other businesses were able to pay people maybe it's SVB that needs to figure out how to do this and not lowly commentators.
- SpicyLemonZest 9mo ago
  Millions of other businesses do not have a secret strategy to pay people without ever landing >>$200k in a single account. Their banks just didn’t fail so it wasn’t a problem.
  - oh_my_goodness 9mo ago
    Of course it's not secret, but they do. Read almost any other comment here.
lotsofpulp 9mo ago
Use your political power to lobby for making electronic money transfers a government operated utility.
p_j_w 9mo ago
Buy private deposit insurance.
justin66 9mo ago
A corporation can hold t-bills and cash equivalents instead of relying on a bank account where the $250K FDIC limit will bite them. This notion that the $250K FDIC insurance limit is an acceptable part of our system, except in cases where a bank fails and the depositors are... sympathetic? It's incredibly silly.
ineptech 9mo ago
The depositors were using SVB because SVB was willing to hand out loans to startups with no revenue that other creditors wouldn't fund, right? Using a less reliable vendor to get a better rate is a risk, whether that vendor is supplying labor or parts or banking services. One could argue that the depositors didn't know SVB was unreliable, but that's kind of undercut by the fact that there was a run on the bank in the first place.
kasey_junk 9mo ago
Sweeps and obo accounts are the bone simple answer to this that every mainline treasury has used for this problem for at least 30 years. Further the banking ecosystem in the US is predicated on the idea that depositors, especially large ones, are doing their own diligence on the health of the bank.
- steveBK123 9mo ago
  Yeah but but first principles! /s

sejje 9mo ago

Multiple accounts?

58028641 9mo ago

There are banks that sweep the money across various other banks automatically.

steveBK123 9mo ago
Things I learned in Econ 101 like 25 years ago, and one of about four options if you google "how do companies manage payroll with fdic limits". But people with [mb]illions of funding just plopped money in a single account ..
- epistasis 9mo ago
  Indeed, most of SVBs customers were those who had almost zero business finance experience. There were lots of startups but there were also lots of normal businesses and non-profits in the Bay Area that used SVB. Perhaps the slow depositors should be punished for not being sufficiently sophisticated, or as quick as the Thiel-backed startups that got the bat-signal to do a bank run. But the "moral" value of letting all those organizations lose their deposits is very low. The moral value of letting SVB fail, which it did, seems high to me!
  - ecshafer 9mo ago
    > Indeed, most of SVBs customers were those who had almost zero business finance experience. There were lots of startups but there were also lots of normal businesses and non-profits in the Bay Area that used SVB. The thing is that you don't need to be a financially sophisticated. Why are they making companies without talking to a CPA? They can get an account with PayChex and they will literally handle everything related with payroll. If your average mom and pop restaurant didn't do this we would fault them for being irresponsible.
    - steveBK123 9mo ago
      They disrupted financial sophistication

buellerbueller 9mo ago

Buy insurance for this type of situation. It's not like Silicon Valley lacks the funds to buy insurance. The rest of us are MANDATED to buy insurance for our cars and our healthcare, and many of us live paycheck to paycheck. Silicon Valley, however, home to the world's greatest concentrations of private wealth? Oh no, thats a too much to ask that they play by the same rules.

shimman 9mo ago

That's not our problem to solve, but seeing how millions of other businesses were able to pay people maybe it's SVB that needs to figure out how to do this and not lowly commentators.

SpicyLemonZest 9mo ago
Millions of other businesses do not have a secret strategy to pay people without ever landing >>$200k in a single account. Their banks just didn’t fail so it wasn’t a problem.
- oh_my_goodness 9mo ago
  Of course it's not secret, but they do. Read almost any other comment here.

lotsofpulp 9mo ago

Use your political power to lobby for making electronic money transfers a government operated utility.

p_j_w 9mo ago

Buy private deposit insurance.

justin66 9mo ago

A corporation can hold t-bills and cash equivalents instead of relying on a bank account where the $250K FDIC limit will bite them. This notion that the $250K FDIC insurance limit is an acceptable part of our system, except in cases where a bank fails and the depositors are... sympathetic? It's incredibly silly.

ineptech 9mo ago

The depositors were using SVB because SVB was willing to hand out loans to startups with no revenue that other creditors wouldn't fund, right? Using a less reliable vendor to get a better rate is a risk, whether that vendor is supplying labor or parts or banking services. One could argue that the depositors didn't know SVB was unreliable, but that's kind of undercut by the fact that there was a run on the bank in the first place.

kasey_junk 9mo ago

Sweeps and obo accounts are the bone simple answer to this that every mainline treasury has used for this problem for at least 30 years. Further the banking ecosystem in the US is predicated on the idea that depositors, especially large ones, are doing their own diligence on the health of the bank.

steveBK123 9mo ago
Yeah but but first principles! /s