[bwilson4web]

Have there been any reports on the SVB failure and Tesla and suppliers?

Bob Wilson

 

[Ed Woodrick]

Seeing that the feds took it over and are guaranteeing All deposits, I doubt if there will be any lasting fallout

 

[bwilson4web]

Last night I saw articles that Elon speculated about buying it as part of Twitter. This would give him banking standing to make super-PayPal.

Bob Wilson

 

[Klaus-rf]

Last night I saw articles that Elon speculated about buying it as part of Twitter. This would give him banking standing to make super-PayPal.

Just think how fast he could lose money investing all deposits into Bitcoin (or other crypto currencies)!!

 

[garsh]

It's a Federal Credit Union. Like banks, they're strictly regulated by the government. There's no reason to fear them - at least, not any more than any other bank or credit union.

Boy, those words are coming back to bite me now, aren't they.

My credit union just sent out an email in the wake of the SV bank failure.

 

[iChris93]

Boy, those words are coming back to bite me now, aren't they.

My credit union just sent out an email in the wake of the SV bank failure.

View attachment 47166

How does this change what you said before?

 

[garsh]

How does this change what you said before?

The part about banks automatically being trustworthy.

It's a Federal Credit Union.... There's no reason to fear them - at least, not any more than any other bank or credit union.

 

[bwilson4web]

Just think how fast he could lose money investing all deposits into Bitcoin (or other crypto currencies)!!

Just curious:

I never had any interest but if the debt limit is not increased, this may become another choice.

Bob Wilson

 

[iChris93]

The part about banks automatically being trustworthy.

I guess I just don’t see any reason to panic still. Maybe I’ve missed something, but I think the government stepped in and still guaranteed everyone’s money.

 

[garsh]

I guess I just don’t see any reason to panic still. Maybe I’ve missed something, but I think the government stepped in and still guaranteed everyone’s money.

No reason to panic, but I thought banks were better regulated than to allow one to go bankrupt.
It's a little scary to think that customer's money would have been lost if it hadn't been for the government stepping in.

 

[iChris93]

It's a little scary to think that customer's money would have been lost if it hadn't been for the government stepping in.

Isn’t that why there is the FDIC though? It guarantees you won’t be out your money (at least to $250k) if a bank goes bankrupt. The bank made mistakes that caused failure, but the safety system worked as intended.

 

[garsh]

Isn’t that why there is the FDIC though? It guarantees you won’t be out your money (at least to $250k) if a bank goes bankrupt. The bank made mistakes that caused failure, but the safety system worked as intended.

The problem with the SV bank was that the customers were all small businesses. $250k is a decent amount for an individual, but nothing compared to what a small business needs to keep around just to handle things like payroll. So the FDIC coverage didn't help the bank's customers much in this case, which is why the government had to step in.

 

[FRC]

The problem with the SV bank was that the customers were all small businesses. $250k is a decent amount for an individual, but nothing compared to what a small business needs to keep around just to handle things like payroll. So the FDIC coverage didn't help the bank's customers much in this case, which is why the government had to step in.

I don't believe there are a bunch of small businesses that routinely have over $250k sitting in their bank account. And those that do should have heeded accounting practices to have multiple accounts so that ALL the cash is FDIC insured.

 

[garsh]

I don't believe there are a bunch of small businesses that routinely have over $250k sitting in their bank account.

This article doesn't get into financial information for every customer, but some of them definitely did.

These are some of the companies impacted by the Silicon Valley Bank collapse

From fintech firms to swimwear startups and winemakers, these companies are affected by SVB's collapse.

www.cbsnews.com

 

[FRC]

Hard way to learn this banking lesson: IF you have cash assets in excess of $250K, keep them in multiple accounts/banks so that ALL of your cash is FDIC insured. Perhaps this was common knowledge for those closer to the great depression, and not so common anymore.

 

[tivoboy]

The problem with the SV bank was that the customers were all small businesses. $250k is a decent amount for an individual, but nothing compared to what a small business needs to keep around just to handle things like payroll. So the FDIC coverage didn't help the bank's customers much in this case, which is why the government had to step in.

I think the argument that FRC is making (hopefully, not THAT FRC) is that for the overwhelming majority of the 97% of uninsured companies that used SVB for their banking or finanincg the overall majority were NOT what one would consider a SMALL business. They were mostly venture backed businesses that had somewhere between 0/2.5 and 1B in annual revenues.. It’s a problem that from a cash management standpoint, TECHNICALLY having over 250K in a merchant account, all of the overage can be TECHNICALLY at risk if the bank FOLDS.

Historically, I always moved money around, even in the late 90’s and early augghts, it was easy, it was plannable, it was manageable and it was prudent. also, different banks offered me different services that it made sense to keep some of our 1-5M per bank at each of 5-6 banks. THAT’s part of sound treasury at a “small business”

 

[Ed Woodrick]

I don't believe there are a bunch of small businesses that routinely have over $250k sitting in their bank account. And those that do should have heeded accounting practices to have multiple accounts so that ALL the cash is FDIC insured.

That depends on your definition of a small business. $250k. $1k/wk salary for 2 weeks would only be 125 employees with no other money in the bank. Hopefully there would be a lot more than just 2 weeks payroll in the account.

 

[francoisp]

Hard way to learn this banking lesson: IF you have cash assets in excess of $250K, keep them in multiple accounts/banks so that ALL of your cash is FDIC insured. Perhaps this was common knowledge for those closer to the great depression, and not so common anymore.

Lot's of startups have millions if not tens of millions of seed money. Keeping that money in dozen separate accounts is not practical.

No one should loose their money because a banker has made an unfortunate choice of investing in safe Treasury bonds that lost value because of quickly raising interest rates. These Treasury bonds if held until their redemption date would have returned their full amount. The banker's mistake was that he didn't promptly adjust their investment strategy in the light of raising interest rates as others have successfully done.

 

[JasonF]

No one should loose their money because a banker has made an unfortunate choice of investing in safe Treasury bonds that lost value because of quickly raising interest rates. These Treasury bonds if held until their redemption date would have returned their full amount. The banker's mistake was that he didn't promptly adjust their investment strategy in the light of raising interest rates as others have successfully done.

From what I’ve read on this, the root cause of all of this wasn’t treasury bonds, it’s that banks are allowed by regulators now to behave like risky investors and invest nearly all of their deposit money. Most large banks won’t do that and risk collapse, but the smaller and ‘scrappier’ ones will - but that’s also how they promise higher returns to their clients than the bigger banks.

Exacerbating that right now is that all of the investments fell apart at once. The silicon valley companies who have loans with them aren’t making payments, or are paying late, cutting off the cash flow they normally use to cover some deposits. Their stock market and bitcoin investments became too volatile to sell and fill the gap. So the least damaging loss they could take were selling treasury bonds too early, except that act triggered questions about their stability and a run on deposits.

I listed all of those because if any one of those wouldn’t have happened, SVB would still be doing business today. Limping along, but still there.

 

[francoisp]

I

From what I’ve read on this, the root cause of all of this wasn’t treasury bonds, it’s that banks are allowed by regulators now to behave like risky investors and invest nearly all of their deposit money. Most large banks won’t do that and risk collapse, but the smaller and ‘scrappier’ ones will - but that’s also how they promise higher returns to their clients than the bigger banks.

Exacerbating that right now is that all of the investments fell apart at once. The silicon valley companies who have loans with them aren’t making payments, or are paying late, cutting off the cash flow they normally use to cover some deposits. Their stock market and bitcoin investments became too volatile to sell and fill the gap. So the least damaging loss they could take were selling treasury bonds too early, except that act triggered questions about their stability and a run on deposits.

I listed all of those because if any one of those wouldn’t have happened, SVB would still be doing business today. Limping along, but still there.

It's really about the loss svb incurred when they had to sell their Treasury bonds at a loss due to the bank run