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FDIC Takes over Silicon Valley Bank

fdic.gov

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Re: FDIC Takes over Silicon Valley Bank

#121

Post by tedivm »

TechBro8615 wrote: post #51
katmannthree wrote: post #24

Yikes. Does anyone have an idea of which orgs have significant exposure (like Molly White's FTX contagion graph[0])? [0] https://www.mollywhite.net/etc/ftx-contagion

40% of startups just had their bank accounts cut down to $250k, so... a lot.

I'm not sure how true this is. I worked at a startup that took in over $100m in investment, and I was curious so I asked the cofounder how they protected that. According to him the money was divided up into chunks smaller than $249k, pushed off to a custom entity made just for the purpose, and then invested in bonds or CDs on a rotating basis.

I'm sure a lot of startups will be in trouble, but those that are working with decent investors probably had help protecting the assets.

Re: FDIC Takes over Silicon Valley Bank

#122

Post by FireBeyond »

benjaminwootton wrote: post #15

Does this mean that depositors have lost access to their funds until the bankruptcy process, with the exception of $250k which will be available on Monday?

Technically yes, but the FDIC is also working to release as much uninsured funds as possible as an "advance dividend".

Re: FDIC Takes over Silicon Valley Bank

#123

Post by sp332 »

NordSteve wrote: post #5

Only 3% of deposits in the bank are FDIC insured; other depositors will need to wait for the receivership process to run to get access to (what remains) of their deposits. edit: replace "bankruptcy" with "receivership" as the latter is usually a faster process than the former.

The FDIC will pay uninsured depositors an advance dividend within the next week.

Re: FDIC Takes over Silicon Valley Bank

#125

Post by abofh »

albatross13 wrote: post #29
FormerBandmate wrote: post #8

Turns out Twitter making bank failure a meme didn’t really help anything at all. It’ll be very interesting to see what happens to uninsured depositors

Probably a dumb question, but what determines if a deposit is insured or not at an FDIC insured bank?

Investment products are not FDIC insured; Accounts over 250k are not FDIC insured; In this case, that's probably the bulk of 'uninsured' - large accounts, or creatively sold investment products.

Re: FDIC Takes over Silicon Valley Bank

#126

Post by NordSteve »

davidw wrote: post #87

What's the best brief summary of what has happened so far?

During the last couple years, SVB got a ton of deposits, and they didn't have matching loan demand. So they invested the money in bonds. Unfortunately they make a bet that interest rates would stay low, and bought longer duration (~10 year) bonds.

Interest rates have gone up, so the bonds they bought have lost value. They tried this week to fix that by selling part of the portfolio and raising capital, but did it in a ham-handed way and triggered a bank run.

Re: FDIC Takes over Silicon Valley Bank

#127

Post by vineyardmike »

woeirua wrote: post #52

LMAO. Can't even believe how many people were confidently asserting that nothing was wrong yesterday. If you had more than $250k in SVB yesterday you probably just took a huge haircut. Hundreds of startups will become illiquid as a result of SVB's collapse, and there will be major layoffs here in the next 90 days as founders realize that they lost their funds and cannot raise in the current VC environment.

> If you had more than $250k in SVB yesterday you probably just took a huge haircut.

You may not lose money. The money isn’t gone yet. The restructuring may save the money. There’s a playbook for this sort of thing.

Re: FDIC Takes over Silicon Valley Bank

#128

Post by matheusmoreira »

woeirua wrote: post #52

LMAO. Can't even believe how many people were confidently asserting that nothing was wrong yesterday. If you had more than $250k in SVB yesterday you probably just took a huge haircut. Hundreds of startups will become illiquid as a result of SVB's collapse, and there will be major layoffs here in the next 90 days as founders realize that they lost their funds and cannot raise in the current VC environment.

If people have to be reassured to begin with, it's already over. Money only exists because people keep believing it does. As soon as they stop believing it's gone.

Re: FDIC Takes over Silicon Valley Bank

#130

Post by eddsh1994 »

JumpCrisscross wrote: post #94
briandear wrote: post #77

Earlier quoted context omitted.

I bet a lot of VCs had significant money in that bank as well. Even if companies could raise money, there wouldn't be as money available.

> a lot of VCs had significant money in that bank Everyone I know pulled yesterday.

In a fractional reserve people can't all win
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