SVB failure

[Anonymous]

Anonymous wrote:

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.

Why do they get dividends? When they deposited their money they received a notice that only $250k is insured.

[Anonymous]

Anonymous wrote:

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.

How is the FDIC going to liquidate clunky assets in time to keep cash-gobbling startups alive?

[Anonymous]

Lots of tech companies that have loans at SVC have all their deposits there and can't move them because of loan covenants. Some are very stressed about being able to make payroll on 3/15 because accounts are frozen.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

Why do they get dividends? When they deposited their money they received a notice that only $250k is insured.

As I understand it: under the law they have a super priority to the assets of the failed bank as they are liquidated (so sort of similar to bankruptcy). Their deposits over $250k are not guaranteed however. The FDIC guarantee is different from a priority/dividend.

[Anonymous]

Anonymous wrote:Lots of tech companies that have loans at SVC have all their deposits there and can't move them because of loan covenants. Some are very stressed about being able to make payroll on 3/15 because accounts are frozen.

Well they couldn’t move their deposits regardless, so.

Maybe these genius Californians should be smarter about doing all their banking in the same place.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Lots of tech companies that have loans at SVC have all their deposits there and can't move them because of loan covenants. Some are very stressed about being able to make payroll on 3/15 because accounts are frozen.

Well they couldn’t move their deposits regardless, so.

Maybe these genius Californians should be smarter about doing all their banking in the same place.

SVB was a global bank. Far more than just CA.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Lots of tech companies that have loans at SVC have all their deposits there and can't move them because of loan covenants. Some are very stressed about being able to make payroll on 3/15 because accounts are frozen.

Well they couldn’t move their deposits regardless, so.

Maybe these genius Californians should be smarter about doing all their banking in the same place.

You sound deeply ignorant.

[Anonymous]

Anonymous wrote:This is bad. For those of you that are going to say “this is a west coast big tech problem” it’s going to be felt nationwide, especially given the remote work environment.

Comments like this pulled out of peoples a$$ really makes me weep for the future. Is this really your analysis about how this has a national impact? Because of remote work? 🤦🏽‍♀️

Did you go to college? Have you taken any business classes, ever?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Lots of tech companies that have loans at SVC have all their deposits there and can't move them because of loan covenants. Some are very stressed about being able to make payroll on 3/15 because accounts are frozen.

Well they couldn’t move their deposits regardless, so.

Maybe these genius Californians should be smarter about doing all their banking in the same place.

Californians? It's much bigger than a California problem. It affects the entire tech industry. I've you've got any money invested in a venture fund, reach out and ask them what percentage of their portfolio is affected. I'd wager it's over 50%.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

Why do they get dividends? When they deposited their money they received a notice that only $250k is insured.

As I understand it: under the law they have a super priority to the assets of the failed bank as they are liquidated (so sort of similar to bankruptcy). Their deposits over $250k are not guaranteed however. The FDIC guarantee is different from a priority/dividend.

The depositors, even if over the limit, get priority in a sale or liquidation. Equity and debt holders of SVB will be wiped out. The depositors get first crack at asset sale proceeds. If anything is leftover, it then goes to SVB secured creditors like holders of SVB debt or structured notes.

[Anonymous]

How does this affect a typical dc resident who is not in tech? What about a government employee with a tsp?

[Anonymous]

Anonymous wrote:How does this affect a typical dc resident who is not in tech? What about a government employee with a tsp?

The most likely impact would be if your TSP is invested in a mutual fund that includes SVB. But any impact from that should be temporary.

[Anonymous]

I think we can let the 18th largest bank, which is primarily a commercial bank, in the US fail. The moral hazard of not letting it fail is worse.

Also, this will be an organized collapse. Equity and debt holders will be wiped out, as they should be. Customers will end up with 90%+ on the dollar, a very small haircut. The only issue is the time, payouts will rollout quickly but some companies may get hit because they don’t have the cushion to handle it. Some weak startups will likely fail, most would have anyways but just a bit quicker now.

[Anonymous]

I hope they don’t bail out people with accounts beyond the 250k and what they can liquidate. But the VC community is heavily Democrat and includes many big donors, so I feel like there will probably be a bail out.

[Anonymous]

Anonymous wrote:I think we can let the 18th largest bank, which is primarily a commercial bank, in the US fail. The moral hazard of not letting it fail is worse.

Also, this will be an organized collapse. Equity and debt holders will be wiped out, as they should be. Customers will end up with 90%+ on the dollar, a very small haircut. The only issue is the time, payouts will rollout quickly but some companies may get hit because they don’t have the cushion to handle it. Some weak startups will likely fail, most would have anyways but just a bit quicker now.

You have no idea what you’re talking about. Luckily no one is trusting you to make decisions.