[noemon]

The collapse of Silicon Valley Bank and its UK subsidiary has sent ripples across the tech and life-sciences world.

Though generally unheard of, it is the bank that tech and medical science companies use in the US but even more especially in the UK.

Its customers include most of the big names in the UK and all of its customers have now been locked out of their account.

Jellen confirmed that the US will not bail out the bank leaving all its depositors at risk of losing everything.

In the UK, the government is trying to churn out a deal for the bank to be acquired by the systemic British banks in an attempt to save depositors and ensure their financial viability.

As of Friday, several tech and medical companies are unable to pay their debts, rent, employees and general liabilities.

This is an issue of major concern that will send ripple shocks across entire ecosystems.

I personally advise people to move their cash across several bank accounts to keep their monies below the covered threshold(85k) in the UK.

[Robert Urbanek]

Long log, I spread my savings over different banks to keep them safely under the U.S. federal insurance limit.

[Fasces]

93% of accounts are over FDIC insurance limits.

Not the working class bank, I guess.

[noemon]

93% of accounts are over FDIC insurance limits.

Not the working class bank, I guess.

This is quite ridiculous dude.

It's mostly companies that bank with it, tech companies and medical-science companies, of course it is so.

Companies with more than say 20 employees are expected to have some cash in a bank to keep the lights on and their employees paid.

[Sandzak]

They will get help this are democrat supporter companies, so the white house will support them.

[wat0n]

93% of accounts are over FDIC insurance limits.

Not the working class bank, I guess.

It's not a natural persons aka consumer bank. It serves businesses mainly.

Of course, their due diligence in this regard kinda sucks, to say the least.

[ness31]

My shallow understanding is that these banks were vulnerable due to their high exposure in the tech industry. But what does that mean? Did they get into crypto too much? That’s how I understood the Silvergate failure. I am more shocked about the SVB though.

[XogGyux]

Long log, I spread my savings over different banks to keep them safely under the U.S. federal insurance limit.

richie rich

And the sad part, it seems in this case they were doing what it is considered safe, AKA investing in low-yield US bonds the irony is if they had invested in stocks perhaps they would be fine right now.
Now we all need an all-fashion mass panic and have everyone withdraw their monies and crash the world's economy so we can skip to post-civilization anarchy.

[noemon]

People and businesses who have money deposited with failed US bank Sillicon Valley Bank (SVB) will be able to access all their cash from Monday, the US government has said.

A statement from the US Treasury, the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) said depositors would be fully protected.

https://home.treasury.gov/news/press-releases/jy1337

Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.

After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.

We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.

Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.

Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.

The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.

Phew.

[XogGyux]

so cancel my amazon order for dollar sign bags?

[ness31]

Yeah, I felt like SVB might come under the Too Big To Fail umbrella. It was just too quiet man, lots of sphincter paralysis..

[noemon]

SVB has not come under the "too big to fail" umbrella. It has collapsed and all its shareholders left out to dry. They have not been rescued.

Only the depositors(which includes thousands of small companies) have had their deposits guaranteed as they should in any sane country that wants to keep its own lights running.

[ness31]

Oh, okay. Wow. I’m still shocked.

While we’re at it, does anyone understand what it the de-pegging of USDC means? I’m really confused right now lol

[Robert Urbanek]

richie rich

And the sad part, it seems in this case they were doing what it is considered safe, AKA investing in low-yield US bonds the irony is if they had invested in stocks perhaps they would be fine right now.
Now we all need an all-fashion mass panic and have everyone withdraw their monies and crash the world's economy so we can skip to post-civilization anarchy.

I started spreading the money around back in the 1980s when the FDIC limit was $100,000. I am not that rich. Most of the money will quickly disappear if I ever have to live in an assisted living facility.

[Fasces]

A CEO keeping millions in a single uninsured bank account and not invested or across several banks - like it appears that many tech CEO's at SVB were doing - is incompetent. You have to hedge risk. I could keep all my savings in one account and still be below FDIC limits and even I still have them in four different accounts. @noemon @wat0n

That being said, SVB has a positive balance sheet in terms of assets. It will not need a bailout. This is a liquidity crisis, its assets and debts will be absorbed by a larger bank at auction, and the companies with stupid CEOs will be made whole eventually or take only minor haircuts and learn a lesson about basic risk management.

It is OK to laugh at them for being stupid CEOs.

If workers need to be made whole, it should be on the board of directors and executives to do so, not the taxpayer. Unlimited profit but zero liability for the management class is a disgrace.

[noemon]

A CEO keeping millions in a single uninsured bank account and not invested or across several banks - like it appears that many tech CEO's at SVB were doing - is incompetent. You have to hedge risk. I could keep all my savings in one account and still be below FDIC limits and even I still have them in four different accounts. @noemon @wat0n

Companies especially smaller companies get paid in a single bank account and use one business bank account to conduct most of their business so they do not have to pay additional fees and not just banking fees but also card transaction fees and contracts. The less money you pass through a card machine the more commission you pay. Spreading money around across several banks increases costs substantially. Besides 250k or 85k is not a lot of money in business transactions, an average SME has a lot of money passing through and a small local electrical company with 3-4 crew working would require 4-8 bank accounts to go below the thresholds in the UK.

It's easy to say when you deal with little money and transactions, but when you transact several thousand or millions per month or week or day, the difference between 2% and 2.4% is lots of money and it would take tenths if not hundreds of business accounts to spread it all. People should not have this kind of insecurity while conducting day to day transactions.

And it's funny that leftists who are all about state control and security are using such types of arguments.

[Fasces]

Yes, risk management is often a cost that many companies feel they don't have to pay/is easy to cut. It is a choice. Put it there with the "maintain enough reserves of stock to survive shipping disruptions" and "have enough staff to cover all labor even when some call out sick" in our folder of "basic lessons we are re-learning in the 2020s".

CEO lowers cost by abandoning basic risk management and gets a bonus. When that risk blows up in his face, he gets a bailout too? If we're going to socialize risks, I don't see the sense in privatizing profit.

[noemon]

Noone is claiming that the CEO or its shareholders should be bailed out. But depositors must be made whole.

Your "risk management" solution is total nonsense, the thresholds are so low, most companies would require tens or hundreds of bank accounts to spread the money and an equal amount of credit card contracts.

It's total bollocks. Companies transact a lot of money that they do not keep but simply pass through them.

The actual solution is to guarantee all deposits regardless and instill total security. This money is not investment but deposits.

[Fasces]

Again, this is a liquidity crisis. The bank has a positive asset balance - it's debts and assets will get bought at auction by some other investor and the depositors will likely be made whole in that process.

But no, I fundamentally disagree that there is a national duty to make folks whole (rather than as whole as possible when assets are sold), except at state/nationalized banks. And yes, every country should have a state-run bank operating as a non-profit for this purpose.

[noemon]

Again nobody cares about the bank's assets and what you say is very doubtful anyway but more importantly, its assets belong to its shareholders not its depositors.