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SVB customers who lost their deposits remain on the hook for loans

wsj.com

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Re: SVB customers who lost their deposits remain on the hook for loans

#131

Post by HWR_14 »

sp332 wrote: post #32
epgui wrote: post #19

Earlier quoted context omitted.

I don’t know if it’s just me that’s heartless, but I think if you’re financially sophisticated enough to bank in other countries or to have more than the insurable limit held in cash (!!! why???) then you ought to have known better or to have known the risks. I never have more than a small amount held in cash, and even if I had a crazy windfall and made some billions, I wouldn’t keep more than a small amount in cash.…

Any company with more than a couple dozen employees is going to have more than $250k in the bank for payday. SVB had some payroll processing companies as clients, so they each had multiple companies' payroll in the accounts that Friday. And the article mentions that the Cayman Islands branch had investment and private equity firms as clients, so they wouldn't get too far with only $250k in their accounts.

Are many payroll companies doing business out of the Caymans? No. This was investment and private equity firms.

They should take their losses.

Re: SVB customers who lost their deposits remain on the hook for loans

#132

Post by HWR_14 »

rahimnathwani wrote: post #112

AIUI if the loans and deposits had been with the same legal entity, any outstanding loan amount would be offset by the deposit balance. But in this case, SVB used two different entities: one for loan accounts, and another for Cayman-based deposits. Whilst this seems correct, it's also unintuitive. I guess many people here have both a mortgage and a savings account that they got from the same bank. Imagine you just ha…

SVB had two entities (or more). A US one and a Cayman one. You could deposit money in the US one (and people did, those people are fine) but then you were subject to US rules and taxes. So some people borrowed money in the US, but kept their money in the Caymans. This was not some random happenstance where something outside their control caused cashflow issues causing them to lose money[0]. This was a conscious decision with risks.

I hope these people are not made whole.

[0] In practice, while not obligated to do so, the FDIC has always repaid people 100% in the situation you described.

Re: SVB customers who lost their deposits remain on the hook for loans

#133

Post by HWR_14 »

yieldcrv wrote: post #50
mdasen wrote: post #14

This article feels like rich people who were trying to get around US law/regulations/taxes now wanting the protections afforded by it. They deposited money in SVB's Cayman Islands subsidiary (a country that's a well-known tax haven). SVB goes under and the Cayman Islands have no deposit insurance so their deposits are wiped out. Now they want their money back or their debt forgiven. The SVB Cayman deposits didn't pay…

mmmm not quite > SVB Cayman Islands … which had deposits from the bank’s clients in China, Singapore and other parts of Asia, including venture-capital and private-equity firms A) non-Americans should never bank directly in the US given the option of the Cayman Islands because the US not a competitive jurisdiction in comparison to more competitive jurisdictions such as the Caymen Islands, its way more than just the t…

> A) non-Americans should never bank directly in the US given the option of the Cayman Islands because the US not a competitive jurisdiction

It's pretty competitive when your couterparty goes bankrupt. If you opt out of US protections, congrats, you've opted out of US protections.

Re: SVB customers who lost their deposits remain on the hook for loans

#134

Post by DelaneyM »

coldtea wrote: post #74
DelaneyM wrote: post #51

Earlier quoted context omitted.

As a Caymanian I’m doing to take exception to your non-sequitur about Cayman being a “well-known tax haven”. Cayman is one of the most financially transparent, if not _the_ most financially transparent, location in the world. We fully comply with FATCA, CRS, and AEOI, to the extent that it takes even a native Caymanian multiple weeks to open a local bank account. The reason most foreign investors use Caymanian interm…

> to the extent that it takes even a native Caymanian multiple weeks to open a local bank account To a local, yes. To a wealthy local, and even more so a wealthy foreigner or foreign company, no.

I’m a wealthy local with a wealth management bank account. It took me 7 weeks and I had to file literal volumes of paperwork with help from an accountant to open a bank account when I moved home.

Re: SVB customers who lost their deposits remain on the hook for loans

#135

Post by DelaneyM »

greenthrow wrote: post #60
DelaneyM wrote: post #51

Earlier quoted context omitted.

As a Caymanian I’m doing to take exception to your non-sequitur about Cayman being a “well-known tax haven”. Cayman is one of the most financially transparent, if not _the_ most financially transparent, location in the world. We fully comply with FATCA, CRS, and AEOI, to the extent that it takes even a native Caymanian multiple weeks to open a local bank account. The reason most foreign investors use Caymanian interm…

This is some top tier gaslighting, man. You know as well as I do that people put money in the Cayman islands to dodge taxes. You're behaving like someone at the Cheesecake Factory being offended when someone says their food is high calorie.

Citations needed.

You just can’t hide money in Cayman. You can put money in Cayman, when you need to put money somewhere safe and neutral, but not hide it. Nobody dodges taxes by putting money in Cayman.

There are some ways to save on some countries’ taxes by putting money here, but that’s on those countries, not on Cayman.

Re: SVB customers who lost their deposits remain on the hook for loans

#136

Post by DelaneyM »

14u2c wrote: post #77
DelaneyM wrote: post #51

Earlier quoted context omitted.

As a Caymanian I’m doing to take exception to your non-sequitur about Cayman being a “well-known tax haven”. Cayman is one of the most financially transparent, if not _the_ most financially transparent, location in the world. We fully comply with FATCA, CRS, and AEOI, to the extent that it takes even a native Caymanian multiple weeks to open a local bank account. The reason most foreign investors use Caymanian interm…

Why exactly do you think people use the Caymans at all then? If it's as you claim the surely keeping the money domestic makes more sense? Of course the truth is more complicated, and you even skirt around it with "global funds", i.e. a way to operate without repatriating the money and paying taxes.

People use Cayman because it’s a neutral and safe jurisdiction for global funds which plays nicely in the global financial system.

If you keep money in the US, and the beneficial owner of that money is in Singapore/UAE/China/etc, then profits are taxed twice.

If you operate in USA but earn money globally, then you’re subject to at least double, but sometimes a polynomial combination, of reporting and filling obligations from combinations of jurisdictions.

Cayman is clean, simple, above-board, and safe. It’s like a global money cache.

Re: SVB customers who lost their deposits remain on the hook for loans

#137

Post by DelaneyM »

TheAlchemist wrote: post #83
DelaneyM wrote: post #51

Earlier quoted context omitted.

As a Caymanian I’m doing to take exception to your non-sequitur about Cayman being a “well-known tax haven”. Cayman is one of the most financially transparent, if not _the_ most financially transparent, location in the world. We fully comply with FATCA, CRS, and AEOI, to the extent that it takes even a native Caymanian multiple weeks to open a local bank account. The reason most foreign investors use Caymanian interm…

I thought it's a joke, but apparently not. It can be both - transparent, and a tax heaven. And it's one of the most well-known. Sorry, but in at least 2 countries where I lived, if you hear Cayman, you immediately think "tax evasion". I get that you're offended though - when you see the Swiss - that somehow managed to turn their most shady banking system into a national pride thing - and admired but others too !

It’s mostly Grisham’s fault from his 90’s book “The Firm”, IMO. Also, like much of the world, before global money laundering laws and regulations came into being there _was_ a lot of tax evasion happening here. But that hasn’t been the case for twenty years, we grew up.

Re: SVB customers who lost their deposits remain on the hook for loans

#138

Post by DelaneyM »

light_hue_1 wrote: post #87
DelaneyM wrote: post #51

Earlier quoted context omitted.

As a Caymanian I’m doing to take exception to your non-sequitur about Cayman being a “well-known tax haven”. Cayman is one of the most financially transparent, if not _the_ most financially transparent, location in the world. We fully comply with FATCA, CRS, and AEOI, to the extent that it takes even a native Caymanian multiple weeks to open a local bank account. The reason most foreign investors use Caymanian interm…

> As a Caymanian I’m doing to take exception to your non-sequitur about Cayman being a “well-known tax haven”. The Cayman islands are a well-known tax haven. Sorry to say. Economists, in journals, routinely refer to the Cayman islands as a tax haven. Just a few examples out of many thousands: https://www.nber.org/system/files/chapters/c14730/c14730.pdf https://eprints.lse.ac.uk/56125/1/__lse.ac.uk_storage_LIBRAR... I…

> The Cayman islands along with a few other tax havens play a nasty and selfish role in today's financial system that gives rich companies and rich people a massive advantage while hurting everyone else.

This is where you demonstrate your ignorance and bias.

Yes, there are American laws which allow US companies to minimize their global tax burden, but those are on America, not Cayman. The best we can do is ensure the money is well documented and visible, which we do.

Cayman is used not because of tax friendliness, but because if you’re going to put money somewhere which isn’t a major economy Cayman is the easiest and safest place to do so. It’s a neutral third location.

It’s easy because we comply with every global financial interop and transparency regulation. It’s safe because we have a large and strong financial services industry with British law.

And Cayman does not “generously skim” for ourselves. We have pretty minimal fees and a local economy of professionals. The primary way we benefit is services and expertise, which is how we level up our country and a contribution to the global economy.

Re: SVB customers who lost their deposits remain on the hook for loans

#139

Post by DelaneyM »

PragmaticPulp wrote: post #58
DelaneyM wrote: post #51

Earlier quoted context omitted.

As a Caymanian I’m doing to take exception to your non-sequitur about Cayman being a “well-known tax haven”. Cayman is one of the most financially transparent, if not _the_ most financially transparent, location in the world. We fully comply with FATCA, CRS, and AEOI, to the extent that it takes even a native Caymanian multiple weeks to open a local bank account. The reason most foreign investors use Caymanian interm…

> The reason most foreign investors use Caymanian intermediaries is actually just that transparency, particularly when they’re being scrutinized by foreign regulatory bodies and don’t want their money to disappear into a Delaware numbered company. > It is, however, a particularly easy place to keep global funds in a law abiding and transparent way. I don’t doubt that Cayman is strict for individuals like yourself ope…

There’s tax mitigation and tax avoidance, and I feel like you’re conflating the two.

If your country allows a company to locate money somewhere else and not be taxed on it, that’s on your county, not on us. The best we can do is make sure it’s visible, which we do.

Re: SVB customers who lost their deposits remain on the hook for loans

#140

Post by SilverBirch »

>Those investment firms were stunned in late March when they found out their deposits weren’t protected, and the FDIC—acting as SVB’s receiver—had drained their bank accounts, The Wall Street Journal reported previously.

I don't really understand the reporting here. Really? The investment firms with funds in a tax haven were 'stunned' when they found out their deposits weren't protected? That doesn't sound credible to me. They're bloody investment firms! Figuring out how to manage money is literally their job, it's not credible to turn around and go "Gee, I'm just a simple guy trying to pay for groceries, I don't understand this complex banking stuff". Why write an article like this - other than you've been in contact with someone looking for a sympathetic write up to pressure regulators.

If they really are this stupid - and I don't believe they are - get a list of their names and send the IRS after them because there's no way they successfully structured their companies to dodge the tax.

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