SVB failure

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don’t think you all understand what happened. FDIC took over the bank. All FDIC-insured deposits are guaranteed and FDIC will pay a dividend out against non-insured funds. Branches will open as usual on Monday.

For all practical purposes, the bank essentially switched ownership.

This isn’t a bank for mom and pop. These are startups and VCs, which banked their operating capital at SVB. It was a symbiotic relationship since SVB dabbled in VC as well. But they had balances much bigger than $250k. I thought I read about 90% of funds were not FDIC insured.

Now that doesn’t mean it’s loss, but it means assets are frozen until court bankruptcy is processed, and there will be a haircut for what is recovered.

Customers will get a dividend against uninsured funds within about the next week. That’s according to the FDIC’s announcement.

Well as long as dividend payments match their capital needs that will help.

The reason these companies banked with SVB to begin with is that they burn huge amounts of cash. Reality is there is going to be a lot of orgs that already have more than 250K due out between now and early next week. Cash is their lifeblood and its going to be hard to hold one of these businesses together even for a few days without access to operating funds.

+1 This is the real issue.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don’t think you all understand what happened. FDIC took over the bank. All FDIC-insured deposits are guaranteed and FDIC will pay a dividend out against non-insured funds. Branches will open as usual on Monday.

For all practical purposes, the bank essentially switched ownership.

This isn’t a bank for mom and pop. These are startups and VCs, which banked their operating capital at SVB. It was a symbiotic relationship since SVB dabbled in VC as well. But they had balances much bigger than $250k. I thought I read about 90% of funds were not FDIC insured.

Now that doesn’t mean it’s loss, but it means assets are frozen until court bankruptcy is processed, and there will be a haircut for what is recovered.

FDIC will find another bank to buy it and take over responsibility for all the deposits. Likely by Monday.

[Anonymous]

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don’t think you all understand what happened. FDIC took over the bank. All FDIC-insured deposits are guaranteed and FDIC will pay a dividend out against non-insured funds. Branches will open as usual on Monday.

For all practical purposes, the bank essentially switched ownership.

This isn’t a bank for mom and pop. These are startups and VCs, which banked their operating capital at SVB. It was a symbiotic relationship since SVB dabbled in VC as well. But they had balances much bigger than $250k. I thought I read about 90% of funds were not FDIC insured.

Now that doesn’t mean it’s loss, but it means assets are frozen until court bankruptcy is processed, and there will be a haircut for what is recovered.

FDIC will find another bank to buy it and take over responsibility for all the deposits. Likely by Monday.

Nope banks are all too big.

FDIC already said they are not doing that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don’t think you all understand what happened. FDIC took over the bank. All FDIC-insured deposits are guaranteed and FDIC will pay a dividend out against non-insured funds. Branches will open as usual on Monday.

For all practical purposes, the bank essentially switched ownership.

This isn’t a bank for mom and pop. These are startups and VCs, which banked their operating capital at SVB. It was a symbiotic relationship since SVB dabbled in VC as well. But they had balances much bigger than $250k. I thought I read about 90% of funds were not FDIC insured.

Now that doesn’t mean it’s loss, but it means assets are frozen until court bankruptcy is processed, and there will be a haircut for what is recovered.

FDIC will find another bank to buy it and take over responsibility for all the deposits. Likely by Monday.

Normally this would be the case however the way SVB operated and acted as a lender for these deposit holders is going to make things messy. One of the reasons the FDIC had to step in that they could not find investors or a buyer for liquidity. No ones interested in making broad investments in anything to do with tech startups at the moment.

[Anonymous]

My SIL (on the East coast) works for SVB and my DH’s company (mostly remote, but East coast based - though we live in CA) does it’s banking with SVB. I don’t think they’ll be able to cover next weeks’ bi-weekly payroll if they only have access to $250k, let alone such things as health insurance premiums.

[Anonymous]

Anonymous wrote: Ashley Tyrner, CEO of Boston wellness firm FarmboxRx, said she had at least $10m deposited with SVB and has been frantically calling her banker. She called it 'the worst 18 hours of my life.'

maybe she should get a real job

[Anonymous]

Anonymous wrote:My SIL (on the East coast) works for SVB and my DH’s company (mostly remote, but East coast based - though we live in CA) does it’s banking with SVB. I don’t think they’ll be able to cover next weeks’ bi-weekly payroll if they only have access to $250k, let alone such things as health insurance premiums.

Once again: FDIC is issuing dividends to cover uninsured funds.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My SIL (on the East coast) works for SVB and my DH’s company (mostly remote, but East coast based - though we live in CA) does it’s banking with SVB. I don’t think they’ll be able to cover next weeks’ bi-weekly payroll if they only have access to $250k, let alone such things as health insurance premiums.

Once again: FDIC is issuing dividends to cover uninsured funds.

FDIC is not issuing dividends for the full value of uninsured funds.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don’t think you all understand what happened. FDIC took over the bank. All FDIC-insured deposits are guaranteed and FDIC will pay a dividend out against non-insured funds. Branches will open as usual on Monday.

For all practical purposes, the bank essentially switched ownership.

My rink dink business has about $1.2 in the operating checking account this afternoon. If I can only access 250K of it Monday morning I have a major problem.

Why not spread over 4 banks?

DP - I work for a midsize company that has about $40 million in revenue. One payroll is $750,000. It's wildly impractical to think a business should spread their money over different accounts not over $250K.

On the other hand, keeping $40 million in one bank account is not a prudent move.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My SIL (on the East coast) works for SVB and my DH’s company (mostly remote, but East coast based - though we live in CA) does it’s banking with SVB. I don’t think they’ll be able to cover next weeks’ bi-weekly payroll if they only have access to $250k, let alone such things as health insurance premiums.

Once again: FDIC is issuing dividends to cover uninsured funds.

FDIC is not issuing dividends for the full value of uninsured funds.

They are for most of it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don’t think you all understand what happened. FDIC took over the bank. All FDIC-insured deposits are guaranteed and FDIC will pay a dividend out against non-insured funds. Branches will open as usual on Monday.

For all practical purposes, the bank essentially switched ownership.

This isn’t a bank for mom and pop. These are startups and VCs, which banked their operating capital at SVB. It was a symbiotic relationship since SVB dabbled in VC as well. But they had balances much bigger than $250k. I thought I read about 90% of funds were not FDIC insured.

Now that doesn’t mean it’s loss, but it means assets are frozen until court bankruptcy is processed, and there will be a haircut for what is recovered.

FDIC will find another bank to buy it and take over responsibility for all the deposits. Likely by Monday.

How does that solve anything? The deposits are still illiquid.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My SIL (on the East coast) works for SVB and my DH’s company (mostly remote, but East coast based - though we live in CA) does it’s banking with SVB. I don’t think they’ll be able to cover next weeks’ bi-weekly payroll if they only have access to $250k, let alone such things as health insurance premiums.

Once again: FDIC is issuing dividends to cover uninsured funds.

FDIC is not issuing dividends for the full value of uninsured funds.

They are for most of it.

Yeah but a “dividend” does not mean they have access to their deposits or any guarantee of getting their money back.

[Anonymous]

I love a good financial crisis. Such a great learning opportunity. Let the vegan lip gloss startups fail!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My SIL (on the East coast) works for SVB and my DH’s company (mostly remote, but East coast based - though we live in CA) does it’s banking with SVB. I don’t think they’ll be able to cover next weeks’ bi-weekly payroll if they only have access to $250k, let alone such things as health insurance premiums.

Once again: FDIC is issuing dividends to cover uninsured funds.

FDIC is not issuing dividends for the full value of uninsured funds.

They are for most of it.

Yeah but a “dividend” does not mean they have access to their deposits or any guarantee of getting their money back.

They will get regular dividends as the FDIC sells off assets. Sure, they will ultimately get a haircut, but they will get most of their money back over the next few weeks/months. Enough to keep payroll going.

The FDIC needs to move fast, however.