SVB failure

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We have most of our cash savings with Wealthfront. It's guaranteed up to $2mln because they spread it across a few different banks to deal with the $250k/account limit:
https://www.wealthfront.com/blog/cash-account-2m-fdic-insurance

That’s pretty cool. How do you like them? I have Boomer parents who have way too much cash and are super spooked right now.

Why do they not have a treasury direct account? I have held hundreds of thousands there, know that its safe and liquid and also significantly protected from simple fraud since it does not have cash checking or such access

DP. Treasuries are risky these days obviously as SVB just found out. So, if you want a deposit equivalent you would need to buy 1 months bills. Does treasuries direct offer to roll them from month to month or you need to buy a new batch every month?

No they aren't. Sorry but that was just ignorant.

You can reinvest treasuries.

Wat? Which part is ignorant bro? If you bought long term treasuries a year ago you are a loser, HTM or no HTM

[Anonymous]

FDIC is holding an auction trying to sell SVB tonight. Who would by such a big bank on such a short notice? How can you do your due diligence in a few hours? Wouldn’t the buyer have to ask for a huge discount?

[Anonymous]

Anonymous wrote:

Anonymous wrote:So are all the SVB execs going to get golden parachutes? Will there be any repercussions?

SVB execs and shareholders get nothing. No “bailout” is being proposed. Depositors need access to their deposit accounts to make payroll and operate their businesses. They didn’t assume any risks in their cash accounts. Watch there be a run on other smaller banks starting tomorrow morning.

They assumed risk by being above insurance limits.

[Anonymous]

Why not just give depositors the HTM assets? They can decide what to do.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So are all the SVB execs going to get golden parachutes? Will there be any repercussions?

SVB execs and shareholders get nothing. No “bailout” is being proposed. Depositors need access to their deposit accounts to make payroll and operate their businesses. They didn’t assume any risks in their cash accounts. Watch there be a run on other smaller banks starting tomorrow morning.

They assumed risk by being above insurance limits.

How many businesses have more than $250k per account? Most need more than that just to meet their payroll demands on 3/15. These are not consumer accounts. I know my firm’s operating accounts all by necessity have significantly more than $250k per account and that we couldn’t make payroll if we were locked out of our cash on Friday.

[Anonymous]

Anonymous wrote:Why not just give depositors the HTM assets? They can decide what to do.

Probably most of their assets are tied up in loans not in HTM treasuries

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So are all the SVB execs going to get golden parachutes? Will there be any repercussions?

SVB execs and shareholders get nothing. No “bailout” is being proposed. Depositors need access to their deposit accounts to make payroll and operate their businesses. They didn’t assume any risks in their cash accounts. Watch there be a run on other smaller banks starting tomorrow morning.

They assumed risk by being above insurance limits.

How many businesses have more than $250k per account? Most need more than that just to meet their payroll demands on 3/15. These are not consumer accounts. I know my firm’s operating accounts all by necessity have significantly more than $250k per account and that we couldn’t make payroll if we were locked out of our cash on Friday.

Is there a lesson to a small business owner here? Bank only with too big to fail banks?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why not just give depositors the HTM assets? They can decide what to do.

Probably most of their assets are tied up in loans not in HTM treasuries

Not true. SVB’s loan book grew by only 15% by end of COVID. Their long term securities holdings grew by something like 100%

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So are all the SVB execs going to get golden parachutes? Will there be any repercussions?

SVB execs and shareholders get nothing. No “bailout” is being proposed. Depositors need access to their deposit accounts to make payroll and operate their businesses. They didn’t assume any risks in their cash accounts. Watch there be a run on other smaller banks starting tomorrow morning.

They assumed risk by being above insurance limits.

How many businesses have more than $250k per account? Most need more than that just to meet their payroll demands on 3/15. These are not consumer accounts. I know my firm’s operating accounts all by necessity have significantly more than $250k per account and that we couldn’t make payroll if we were locked out of our cash on Friday.

Corporations manage this risk with a treasurer. Just because you are too lean to act like a responsible company, that’s how it unfolds.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:No one is advocating for bailing out shareholders or SVB executives. Depositors, who deposited their cash in good faith, need access to their operating accounts tomorrow to meet payroll and pay their trade accounts. If they can’t access their cash deposits, Americans lose faith in the banking system, and there is a risk of contagion. How would everyone on here feel if your company’s operating accounts suddenly vanished and they can’t make your next paycheck? Most Americans rely on their next paycheck to eat, pay rent and keep the heat on.

SVB account holders will have access to $250k starting tomorrow. FDIC insurance works.

Lol. SVB is not a consumer bank. $250k for a business? That won’t get many through even their next payroll. They need access to their operating accounts.

Of course they do, but they also chose to put their money in accounts that are not insured.

$250k on a 2-week payroll is $500k/month = $6mln/year. Let's say avg salary of $150k net (so $180-200k gross) = $250k can cover one 2-week payroll for a company of about 40. They can delay paying the taxes portion, so it's jsut $250k needed in net payments.

OMG. You obviously have no idea how small business works. My God.

DP. I have no idea how small businesses work. Can you tell us?

Okay. Typically they do not have sophisticated people with deep banking experience on staff. They don’t have the ability to shop different banks or run a complex scheme where payroll is aggregated across multiple banks. They are very cash conservative so keep it in low-yield accounts that are supposed to be safe. They have ongoing outbound payment commitments that their business relies on, so they can’t cut expenses easily to make payroll. What else do you want to know?

I think the people in this thread who are advocating for the widespread failure of small businesses and small banks are entitled nihilists.

I find it pretty laughable that you think Silicon Tech companies 1. Are cash conservative 2. Don’t have the ability to shop different banks 3. don’t have sophisticated staff that should have known to protect assets over 250k 4. Can’t run a complex scheme to aggregate payroll snd 5. Don’t have the ability to cut any expenses.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So are all the SVB execs going to get golden parachutes? Will there be any repercussions?

SVB execs and shareholders get nothing. No “bailout” is being proposed. Depositors need access to their deposit accounts to make payroll and operate their businesses. They didn’t assume any risks in their cash accounts. Watch there be a run on other smaller banks starting tomorrow morning.

They assumed risk by being above insurance limits.

How many businesses have more than $250k per account? Most need more than that just to meet their payroll demands on 3/15. These are not consumer accounts. I know my firm’s operating accounts all by necessity have significantly more than $250k per account and that we couldn’t make payroll if we were locked out of our cash on Friday.

Is there a lesson to a small business owner here? Bank only with too big to fail banks?

That is EXACTLY the lesson we dont want to happen. But good luck with that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So are all the SVB execs going to get golden parachutes? Will there be any repercussions?

SVB execs and shareholders get nothing. No “bailout” is being proposed. Depositors need access to their deposit accounts to make payroll and operate their businesses. They didn’t assume any risks in their cash accounts. Watch there be a run on other smaller banks starting tomorrow morning.

They assumed risk by being above insurance limits.

How many businesses have more than $250k per account? Most need more than that just to meet their payroll demands on 3/15. These are not consumer accounts. I know my firm’s operating accounts all by necessity have significantly more than $250k per account and that we couldn’t make payroll if we were locked out of our cash on Friday.

Is there a lesson to a small business owner here? Bank only with too big to fail banks?

So I guess we should expect a run on small banks tomorrow? No big deal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We have most of our cash savings with Wealthfront. It's guaranteed up to $2mln because they spread it across a few different banks to deal with the $250k/account limit:
https://www.wealthfront.com/blog/cash-account-2m-fdic-insurance

That’s pretty cool. How do you like them? I have Boomer parents who have way too much cash and are super spooked right now.

Why do they not have a treasury direct account? I have held hundreds of thousands there, know that its safe and liquid and also significantly protected from simple fraud since it does not have cash checking or such access

DP. Treasuries are risky these days obviously as SVB just found out. So, if you want a deposit equivalent you would need to buy 1 months bills. Does treasuries direct offer to roll them from month to month or you need to buy a new batch every month?

No they aren't. Sorry but that was just ignorant.

You can reinvest treasuries.

Wat? Which part is ignorant bro? If you bought long term treasuries a year ago you are a loser, HTM or no HTM

They only lose money if you sell. They are extremely safe.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why not just give depositors the HTM assets? They can decide what to do.

Probably most of their assets are tied up in loans not in HTM treasuries

See page 18 of PDF. $130 B in cash, bank deposits and securities. $74 B in loans. Our of total assets of $212 B (all as of year end).

On page 21 of the PDF, you can see their securities were almost entirely US Treasuries or securities issued by Fannie or Freddie. A small amount of munis ($6 billion) and much smaller amounts of corporate and foreign debt.

Except for the interest rate risk and reliance on tech depositors, SVB is about as boring as a bank can get.

https://www.ffiec.gov/npw/FinancialReport/ReturnFinancialReportPDF?rpt=FRY9C&id=1031449&dt=20221231

[Anonymous]

Feds just closed Signature Bank in NY.