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Bank run on Silicon Valley Bank

techcrunch.com

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Re: Bank run on Silicon Valley Bank

#381

Post by oa335 »

airstrike wrote: post #254
ticviking wrote: post #93

Earlier quoted context omitted.

Savings. Frugality. Only consuming what we can actually afford. Investment with real skin in the game. If you have to take on much higher risk to get returns we will find ourselves being more careful about those returns actually happening.

so the economy grows annually at ~0.0% meaning no real value gets created because productivity basically never improves and labor participation tanks congratulations, you've taken us back to Feudalism

This is incorrect, in standard macroeconomics, credit theoretically has no effect on the long term growth rate of an economy. The only thing that grows an economy are increases in worker productivity, theoretically driven be technological advancement. See https://www.stlouisfed.org/on-the-economy/2015/june/what-dri...

Loans are just move the money around and create “business cycles” of booms and busts. Which in my opinion exacerbate wealth inequality as opposed to reduce it.

Re: Bank run on Silicon Valley Bank

#382

Post by notyourday »

ryan_j_naughton wrote: post #314
notyourday wrote: post #49

Earlier quoted context omitted.

> Per account. Per account "type" and structure. For DDAs if you are married it will be: You: $250k Your+your wife: $250k You POD your wife : $250k Your wife: $250k Your wife POD you: $250k

DDAs?

Demand Deposit Account - the kind of account that allows for cleared funds to be withdrawn without advanced notice. Probably 99.999% of accounts such as checking and savings one can write checks/do ACH payments/send wires/transfer money from fall into this category.

Re: Bank run on Silicon Valley Bank

#383

Post by postalrat »

recursive wrote: post #296
rootusrootus wrote: post #217

Earlier quoted context omitted.

Nah, especially among older folks, 100K+ in a bank account is fairly common. My mom does, my grandmother did, my stepmother does, and trust me none of these folks are 1%ers or even close.

Huh. Well, I'm surprised. $100k in a bank account is earning next to nothing, and is probably (opportunity) costing at least $5k/year. I would have assumed that people that can afford not to care about that would be in the highest tiers of wealth.

Gotta keep some petty cash for small purchases.

Re: Bank run on Silicon Valley Bank

#384

Post by toss1 »

willmadden wrote: post #136
helsontaveras18 wrote: post #89

Earlier quoted context omitted.

Mercury is great! I bank with them. But I'm not worried about Mercury, I'm worried about their partner bank. Anyone know if Evolve is in a similar situation?

Not to spread FUD, but a friend of mine shared this with me some time ago. It's a good article. I suggest reading it. https://fintechbusinessweekly.substack.com/p/evolves-problem...

Looks like the key info is that Evolve is partnered with MANY other services, including some in crypto land and they are having issues, so some VCs were advising people to move money off of Evolve and onto Mercury's other partner, and a bit of that happened. Here's the quote:

>>"Multiple VCs, including Sequoia and Craft Ventures, have advised their startups to move funds away from Evolve-backed platforms, resulting in about $200 million being moved off Mercury, according to multiple people with knowledge of the matter.

>>Immad Akhund, co-founder and CEO of Mercury, didn’t deny that the funds had been moved and characterized the amount as “not really material,” saying the company has “billions of dollars in deposits across 100K customers and [is] profitable.”

>>Akhund characterized the money movement as “primarily folks diversifying, rather than full churning,” by moving funds to Mercury’s other bank partner, Choice, or into Mercury’s treasury management product."

Re: Bank run on Silicon Valley Bank

#385

Post by necubi »

dheera wrote: post #322
rippercushions wrote: post #15

From https://techcrunch.com/2023/03/09/silicon-valley-banks-share... : Becker said the bank has “ample liquidity” to support its clients “with one exception: If everybody is telling each other that SVB is in trouble, that will be a challenge.” Pro tip: if you're CEO of a bank that's facing a bank run, don't tell the press that you'll be in trouble if everybody takes their money out.

> if you're CEO of a bank that's facing a bank run Or just don't mess with money that belongs to customers. Be the world's first reliable bank.

The Narrow Bank proposed a structure like this, where they would take deposits from customers and just park them at the fed, passing along the fed rate minus a small cut. This is more or less perfectly safe: the Fed basically defines what a US dollar is, and cannot be insolvent.

But the Fed won't let TNB open an account. The basic reason seems to be that they worry that this model is destructive to the US economy, which relies on banks making loans so people can buy houses and cars, and businesses can operate. If everyone banked at a narrow bank, the economy would seize up from lack of capital.

Whether or not you agree with this take, the reality today is that you cannot run a bank like you've described in the US.

(This is all covered in more detail by Matt Levine: https://www.bloomberg.com/opinion/articles/2019-03-08/the-fe...)

Re: Bank run on Silicon Valley Bank

#388

Post by smt88 »

gnicholas wrote: post #305
honeybadger1 wrote: post #291

Earlier quoted context omitted.

It seemed like a tongue in cheek joke about people projecting that women are strong(like south park style joke I guess) and if you say they are not..you are cancelled? I dunno, I appreciate humor, but yeah that was swift admin action on that.

I think the vast majority of flagging is by regular HNers (with some karma threshold), not admins. I try not to make too many jokes on HN. They have to be very clearly funny and/or very spot-on to survive HN's this-isn't-reddit ethos, which seems to be pretty strictly enforced.

> They have to be very clearly funny and/or very spot-on to survive HN's this-isn't-reddit ethos

I downvote jokes even if they are funny, and it is (partly) the "HN-isn't-reddit" methos. Reddit has so much noise-to-signal that it's not particularly valuable. It's like junkfood.

HN is better because every comment (per the official rules) is supposed to be substantial. Jokes that are funny but not satirical or insightful aren't substantial in my opinion.

(I should also say that I often find reddit to be hilarious, but that's not what I'm looking for when I come here.)

Re: Bank run on Silicon Valley Bank

#389

Post by freddie_mercury »

FormerBandmate wrote: post #60
rippercushions wrote: post #15

From https://techcrunch.com/2023/03/09/silicon-valley-banks-share... : Becker said the bank has “ample liquidity” to support its clients “with one exception: If everybody is telling each other that SVB is in trouble, that will be a challenge.” Pro tip: if you're CEO of a bank that's facing a bank run, don't tell the press that you'll be in trouble if everybody takes their money out.

This is how every bank has always worked since banks were invented

The very earliest banks didn't do fractional reserve banking so it isn't true to say it is how every bank worked since banks were invented. The first known instance of fractional reserve lending was with an medieval Italy but banks have been around since 2000BCE.

You are right that it definitely explains 99.99% of banks in history. But there are a handful of historical examples -- even after "modern banking" began in medieval Italy -- that don't fit. A recent example is The Narrow Bank which was shutdown by the Federal Reserve. But in the past you had things like the Bank of England in 1844 which went to 100% reserves for a period. Or banks under the Louisiana Banking Act of 1842 -- which was why banks in Louisiana were unaffected by the financial crisis of 1857.

Re: Bank run on Silicon Valley Bank

#390

Post by grensley »

I don't really understand why anyone would keep more than the FDIC insured amount in a bank.

Also, I'm constantly fascinated by how many smart people fundamentally don't understand the economics of banking and how these (often private) institutions create and destroy money.

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