The type of shit that prolonged zero interest causes.
I’m generally on your side, but asking for S&P numbers is pretty lol. There’s a ton of volatility there even if Pwn is largely correct.
SVB depositors losing 10-15% by itself is just a drop in the bucket and a week of the entire financial system hunkering down to figure out wtf is going. The bigger issue is if the Fed whistles along as their rate hikes breaks things as intended. My initial reaction to SVB going under was “wow, they went broke on long term Treasury bonds… at least do it on something cool like monkey jpegs.”
Again yes the SVB execs can go fuck themselves and open to a case against the SVB depositors but their collapse is also a result of highly abnormal and unhealthy Fed policy and the Ukraine war excuse doesn’t pass muster, imo.
I’m in the position of having more than $250,000 in an account with a smallish regional bank. I have several large liabilities due 4/1, which is why I’m in this position. How worried should I be, and what would you do if you were me?
Why does the entire financial system need to hunker down for a week? You think JP Morgan, BOA, Citi and Wells don’t know what’s going on? There may be runs on small/mid-sized banks that are doing nothing wrong, and the FDIC and Fed can act very reasonably to prevent that by guaranteeing to back THOSE depositors.
We all know what’s going on, there’s no “wtf is going on” here.
It seems like you’re not reading my posts. The CEO of SVB was on the board of the San Francisco Fed. It’s not like he got caught off guard. Nor did the Fed break things “as intended.” SVB did stupid shit, failed to predict easily predictable market conditions and rate conditions, failed to hedge them once it was blatantly obvious - in fact, REMOVING their already too small hedge!
Not all companies who banked with them did anything wrong or were negligent, but many were. As to the rest, it’s just variance. Any company that can’t withstand losing 10-15% of their cash balance without going under was going under anyway. This industry got “free money” shoveled at them and it financed a lot of zombie companies. If this is how they go, this is how they go.
Again, nothing you’ve said has given any proof that there is going to be a systemic collapse. You’re not just predicting it, you’re basically calling it a certainty… Based on what?
If your answer is “fear that a bunch of mid-sized banks will collapse simply due to fear” then it seems pretty easy for the FDIC to head that off at the pass without bailing out SVB depositors.
If I could pay the liabilities early and take the balance back below $250K, I probably would. Seems like no reason not to - if you’re worried, it’s not worth 18 days of interest. That said, unless that bank has direct links to SVB I think you’re safe, because I think any contagion spreading that widely would trigger the FDIC to step in and back all deposits everywhere to prevent panic.
Oh, the first thing I’d do is thank the good Lord for answering my financial prayers though, if I had an account balance over $250K.
(Disclaimer: You know this, I think, but I’m obviously not in banking or an expert on banking.)
I’m going to start paying the liabilities early but that will take days or more to process which won’t be fast enough if the worst doomsayers turn out to be right (I don’t think they will.) I wouldn’t think there would be any close ties to SVB.
Sure, just looking for an objective measure to make it clear if there is a huge financial disaster next week or not. Because I feel like no matter what happens there going to be tons of “told you so” from the bail out the VCs / startups or fed is incompetent clubs
I have an account here:
Wealthfront uses multiple partner banks to ensure FDIC coverage of up to $2 million for your cash deposits.
They are a techbro company headquartered in Palo Alto though, so 
This sounds scammy tbh. I don’t think you can actually pool FDIC protection like that.
There are easy ways around it if you’re not talking about millions and millions.
I understand you can just open a second account with the same bank or you can add beneficiaries who would get the assets when you die and then the FDIC treats it as a revocable trust account which is then insured 250,000 per beneficiary.
It’s not millions and millions, and I have other accounts I can transfer to, to spread it. I just wasn’t sure what’s the fastest way to do this if the doomsayers end up right. I think ach’s take days to clear. I’ll have to check with bank on how multiple accounts there are insured. I actually have 2 separate accounts there I could spread evenly if that did the trick.
My guess is that if the doomsayers are right, it’s too late anyway, other than making a large cash withdrawal at open of business. But if the doomsayers are right, then they won’t let you do that.
Spreading it over a couple accounts seems prudent if possible. Not crazy difficult, no downside. Takes your risk to ~0 which is better than almost 0. Also means that in the event there’s a run and your money would have been tied up for some amount of time, that amount of time becomes a day or two.
My company has meaningful relationships with literally all of JP Morgan, BOA, Citi and Wells. Done revealing info about myself, you have clearly confirmed to yourself that contagion isn’t real by thinking about it. Enjoy the rest of your day.
My lay understanding now after 2 minutes of googling is that FDIC treats certain different categories of accounts as separately insured. 2 of the categories are single accounts and joint accounts. So it seems if I transfer some between my single owner account and my wife and I’s joint account, such that both end up under the limit, I should be covered for the impending apocalypse.
Why not? Isn’t it exactly how ICS works?
https://www.cbhou.com/Resources/Customer-Corner/entryid/237/faqs-your-guide-to-insured-cash-sweep
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I’ve repeatedly suggested how they can prevent contagion by backing deposits at other banks.
The thing people are missing is that they didn’t go bust because of a run on the bank, though there was one, they went broke because their liabilities exceeded their assets. It was just a horribly managed bank.
Our system contemplates bank runs and there is ample liquidity available to solvent banks when they happen.
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