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Bank run on Silicon Valley Bank

techcrunch.com

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Re: Bank run on Silicon Valley Bank

#511

Post by ncallaway »

jraby3 wrote: post #499
hackerlight wrote: post #496

My surface-level understanding was the federal government started guaranteeing/ensuring customer deposits in order to prevent bank runs from starting. Why is that not happening here? And if it is why wasn't it enough to prevent a bank run?

That’s for personal deposits and limited to I think) $250k. Lots of startups hold a lot more money there and aren’t protected.

I don’t think it’s only personal deposits. Corporations, I believe, enjoy FDIC protection up to $250k also. It’s just a much… less impactful amount for the average corporation compared to the average personal depositor

Re: Bank run on Silicon Valley Bank

#512

Post by Bud »

ticviking wrote: post #105
ffggffggj wrote: post #63

Earlier quoted context omitted.

If you think fractional reserve banking is “lying” how are you okay with fiat money at all? If you were consistent you’d be a true goldbug.

It is a fact that the IRS requires me to pay taxes in federal reserve notes. That makes them real enough.

[dead]

Re: Bank run on Silicon Valley Bank

#513

Post by Proven »

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

[dead]

Re: Bank run on Silicon Valley Bank

#514

Post by willmadden »

cj wrote: post #400

I just received an email from one of our investors, sent to all portfolio companies, advising everyone to transfer all of their money out of SVB at 8:30am tomorrow morning. Investment/VC funds are doing the same (we’re talking many, many billions of deposits lost in a span of a few days). There is a chance SVB will freeze assets while they deal w liquidity crunch which may impact startup ability to pay bills, pay sal…

Telling everyone to withdraw their money at exactly the same time is a great way to cause more damage to those startups by creating an actual bank run.

Do you now if that "investor" is short Silicon Valley Bank's stock, took out long puts, or has other conflicts of interest?

Because if so, they just committed a felony.

That "investor" had better hope one of the recipients doesn't forward the email to the SEC.

Are you short Silicon Valley Bank, by chance?

Re: Bank run on Silicon Valley Bank

#515

Post by csomar »

rabidonrails wrote: post #439
cj wrote: post #400

I just received an email from one of our investors, sent to all portfolio companies, advising everyone to transfer all of their money out of SVB at 8:30am tomorrow morning. Investment/VC funds are doing the same (we’re talking many, many billions of deposits lost in a span of a few days). There is a chance SVB will freeze assets while they deal w liquidity crunch which may impact startup ability to pay bills, pay sal…

Maybe you'd say it's worth the risk, but founders should be very careful about making transfers from accounts owned by their business to their personal accounts because this is literally the definition of embezzlement. I'd speak to your accountant and get their blessing first.

Embezzlement is using company funds for your own personal gain. It doesn't have to be transferred to your own account.

If you move company funds in one blob from SVB to Personal account, and then move the same blob from Personal account to Bank XYZ, and document the process, you'll be fine.

Of course, you can use your personal account for a while until you setup another business account (which you should have at least a couple if you are well funded) but while it's technically not illegal, it can massively complicate your accounting later.

Re: Bank run on Silicon Valley Bank

#516

Post by sanderjd »

jongjong wrote: post #466
sanderjd wrote: post #407

Earlier quoted context omitted.

You're wrong about whether fractional reserve banking is broadly good for people living in developed economies - it is - but you're unlikely to be talked out of this conspiracy kick you're on, so :shrug:. All the best to you!

Well it's not good for me and I'm merely a typical product of this system. The system will make plenty more of me. I was totally alone a few years ago, now I look like a moderate. Unfortunately, future contrarians may not be as curious, tolerant and understanding as me so they will probably end up blaming capitalism as a whole and demand communism... China will swoop in and 'liberate' the people. When this happen, I…

It is good for you. The fact that there is a thriving economy, that there are lots of businesses to work for, that you can start a business if you want to and get money from a bank to do so, this is all very good for you.

But sure, keep wishing we could go back to feudalism or whatever, great plan!

Re: Bank run on Silicon Valley Bank

#517

Post by [deleted] »

trogdor wrote: post #399
danielmarkbruce wrote: post #181

Earlier quoted context omitted.

Everyone doesn't need to know or care in many cases. The FDIC insures deposits up to $250k. That covers the vast majority of accounts at most banks. So a run won't occur at most banks. There were hardly any runs in 2008 for this reason - the relatively few "run type things" which happened were where big interbank exposures existed. SVB's customers are weighted significantly more towards businesses who will have more…

>The FDIC insures deposits up to $250k Per depositor, per insured bank, per account category. It’s not that difficult to keep significant excess deposits insured.

[deleted]

Re: Bank run on Silicon Valley Bank

#519

Post by malermeister »

borski wrote: post #477
koromak wrote: post #429

Earlier quoted context omitted.

its almost like making bets with money you don't actually have yet is a bad idea

This is literally the definition of fractional reserve banking, used by almost every bank worldwide.

Maybe the whole economic system just isn't viable, as we've seen time and time again?

Re: Bank run on Silicon Valley Bank

#520

Post by malermeister »

pera wrote: post #52
cdibona wrote: post #14

They're not allowing approval of wires via SMS or their app, and no one is picking up the phone there and most numbers are fast busy. Smells deeply bad. I had an account at a bank that went under a few decades ago and it took a while for ... bofa? to pick up the pieces.

Yeah sounds like textbook bank run or cryptocurrency exchange collapse, it's bizarre that this kind of things keep happening every few years.

Is it bizzarre... or just a core feature of capitalism?
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