Originally Posted by SLC.Joe:
Why don’t you open a cash management account with Fidelity? They layer your deposits across multiple institutions and its FDIC insured up to $3mm. And the rate (4.22%) is probably higher than your banks.
I’m setting up a similar deal with a different outfit, but I haven’t finished it yet. I’ll definitely look into Fidelity though, thanks. [Reply]
Makes you wonder if you should have all assets over $250k separated into different accounts/institutions to protect from something like this. I've always been told no, it's not needed, however.............. [Reply]
Originally Posted by ChiefRocka:
Just read that FDIC has enough on the books to insure about 1.3% of ALL current US deposits or about the size of all SVB.
Originally Posted by ChiefRocka:
Just read that FDIC has enough on the books to insure about 1.3% of ALL current US deposits or about the size of all SVB.
I fail to see the issue here. It's not like insurance companies have the funds to pay out every policy at once. :-) [Reply]
Originally Posted by lewdog:
Makes you wonder if you should have all assets over $250k separated into different accounts/institutions to protect from something like this. I've always been told no, it's not needed, however..............
Of course you should. Absolutely. Though if you choose to do it, you’re likely safer with a Chase, Citi, or BOA.
And guys, re: the 1.3%. You do realize that during the largest financial crisis of our lives no depositors whether insured or uninsured lost money, right? Despite several hundred bank failures? There are assets against these bank deposits. And banks are so much more heavily regulated now than they had been (though a former unnamed president watered down regulations for smaller banks).
This SVB situation is super niche. They just did every stupid thing you could’ve done given their structure. Total mismanagement. [Reply]
They have about 165bn of deposits. They also have 15bn of Federal Home Loan Bank liabilities that are collateralized and senior to those deposits. Total liabilities = 180bn.
On the asset side they have have 75bn-ish of liquid securities like Treasuries, mortgage-backed securities, etc. They have 40bn-ish of cash. And then they have 75bn-ish of loans which are the murkier part and you’d have to assume a larger discount if someone were to take them off your books immediately… So let’s say 15% which gets you to 65bn..
Assets =180bn
Liabilities = 180bn (75+40+65)
This isn’t to say this analysis is foolproof and everyone will absolutely get fully paid out. But 1/ I bet there will be a solution found where ultimately everyone will get paid out; 2/ no one lost their entire savings; 3/ in bank restructurings in the past pre-financial crisis even 80% recovery on uninsured deposits was really low; 4/ if things don’t get fully solved beyond this weekend, I imagine there will be a bridge solution where uninsured depositors receive something like 50% of their money immediately and then more over time as the assets are disposed of.
Originally Posted by TwistedChief:
Of course you should. Absolutely. Though if you choose to do it, you’re likely safer with a Chase, Citi, or BOA.
And guys, re: the 1.3%. You do realize that during the largest financial crisis of our lives no depositors whether insured or uninsured lost money, right? Despite several hundred bank failures? There are assets against these bank deposits. And banks are so much more heavily regulated now than they had been (though a former unnamed president watered down regulations for smaller banks).
This SVB situation is super niche. They just did every stupid thing you could’ve done given their structure. Total mismanagement.
Okay, now what am I going to do with this cave and ammunition that I just bought? I can eat the pallets of canned goods, so that's not a problem. [Reply]
Originally Posted by TwistedChief:
Just to take it a step further:
They have about 165bn of deposits. They also have 15bn of Federal Home Loan Bank liabilities that are collateralized and senior to those deposits. Total liabilities = 180bn.
On the asset side they have have 75bn-ish of liquid securities like Treasuries, mortgage-backed securities, etc. They have 40bn-ish of cash. And then they have 75bn-ish of loans which are the murkier part and you’d have to assume a larger discount if someone were to take them off your books immediately… So let’s say 15% which gets you to 65bn..
Assets =180bn
Liabilities = 180bn (75+40+65)
This isn’t to say this analysis is foolproof and everyone will absolutely get fully paid out. But 1/ I bet there will be a solution found where ultimately everyone will get paid out; 2/ no one lost their entire savings; 3/ in bank restructurings in the past pre-financial crisis even 80% recovery on uninsured deposits was really low; 4/ if things don’t get fully solved beyond this weekend, I imagine there will be a bridge solution where uninsured depositors receive something like 50% of their money immediately and then more over time as the assets are disposed of.
The world won’t end.
Yep. The issue here isn't everyone losing their money. The issue is that a ton of businesses temporarily lost access to capital, and it may take a little time for them to get it back. [Reply]
