Posted on 03/10/2023 4:04:21 PM PST by marcusmaximus
Silicon Valley Bank was aptly named: It held the funds of hundreds of U.S. tech companies and was a crucial player in the valley’s economy. But on Friday, it became the second largest bank failure in U.S. history after a rapid run on its deposits. Some $175 billion in customer accounts were taken over by the Federal Deposit Insurance Corporation (FDIC), which is now tasked with returning money to the bank’s customers.
But more than 85% of the bank’s deposits were uninsured, according to estimates in a recent regulatory filing. That’s because FDIC deposit insurance is meant for everyday bank customers and maxes out at $250,000. Many Silicon Valley startups had millions, or even hundreds of millions of dollars deposited at the bank—money they used to run their companies and pay employees. Right now, nobody’s sure how much of that cash is left.
(Excerpt) Read more at time.com ...
Uncle Joe to the rescue with our money! That’s what it means!
as bush said: “Too big to fail.”
“Uncle Joe to the rescue with our money! That’s what it means!”
Yep. Maybe they will divert some of the money aimed at Ukraine to bail out SVB. Right?
Question: If you put $250,000 in four banks that are FDIC insured, is all the money safe from failures?
Just change the name to First Ukrainian Bank and they’ll be given all the $ they need, and more.
Can I ask a stupid question?
This reflects how little I know of banking and accounting but,
Doesn’t they Bank as a business entity have a balance sheet and don’t the assets and the liabilities balance out?
On the bank records, all of our deposits are actually liabilities from the standpoint of the bank.
But then the bank takes our cash and they will invest in government bonds or loan it out in which case the loans receivable would be assets of the bank.
Pardon my ignorance I did take Accounting 101. But I’m just wondering was there a severe mismatch between assets and liabilities/ cash deposits? Why exactly did this Bank fail
I’m sure the tech start up millionaires were as concerned about the good people of East Palastine as I am about those lost millions in Silicon Valley.
The $250,000 is per depositor per bank. So, $250,000 in each of four banks is $1,000,000.
Companies scramble to meet payroll, pay bills after SVB’s swift failure
“Question: If you put $250,000 in four banks that are FDIC insured, is all the money safe from failures?”
Supposedly yes. If you are married and/or have a significant other as a signature co owner, as a couple you are insured up 500,000 $.
Deposit Insurance - FDIC
Federal Deposit Insurance Corporation (.gov)
https://www.fdic.gov › resources › deposit-insurance
Mar 1, 2023 — The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.
Important Update!
Revocable and Irrevocable Trust Rule Change Effective April 1, 2024
Mortgage Servicing Accounts Rule Change Effective April 1, 2024
All the rules discussed in this section are current through March 31, 2024. The FDIC approved changes, on January 21, 2022, to the deposit insurance rules for revocable trust accounts (including formal trusts, POD/ITF), irrevocable trust accounts, and mortgage servicing accounts. For most trust depositors (those with less than $1,250,000), the FDIC expects the coverage levels to be unchanged. However, the new rule may reduce coverage for those depositors who have placed more than $1,250,000 per owner in trust deposits at one insured institution. The new rule (PDF) combines the revocable and irrevocable trust account categories into one insurance category, eliminates some complex rules, and utilizes a simple insurance calculation. You can learn more about the new changes, including for mortgage servicing accounts, by reviewing this fact sheet (PDF). The changes are effective April 1, 2024, giving bankers and depositors time to adjust to the new rule, including making any changes to avoid a potential reduction in coverage. We suggest depositors and bankers review the new rules for time deposits with maturities beyond April 1, 2024.
If only Dear Leader Biden knew what his government was doing to people! /sarc
I feel schadenfreude.
It had hundreds of billions invested in low yield government bonds that no one wants to buy because of high inflation.
In general,I've no knowledge of this incident, remember the "loans receivable" are assets, but subject to market valuation. The bank takes your cash, let's say a hundred dollars. The "loans receivable" are assets, subject to market value adjustments. The bank owes you 100, the 100 (actually a multiple) they invested is now worth 90. From an accounting standpoint, they're insolvent
I wondered if getting paid the $250k in one bank endangers one’s ability to collect FDIC insurance from an account in another bank.
I realize that, in truth, if you have four banks failing at once there are some mighty big problems happening in the country.
In the small print, FDIC has 99 years to make insured depositors whole.
No sympathy! IIRC deposits are insured up to $250,000. Don’t know if that’s per account or per depositor.
My sister and I spoke of this, this afternoon. Both of us could not figure out why anyone would would put more than 250,000 in any one bank..but than either of us have those kind of savings.
Strong suspicion that bank was used to launder Chinese cryptocurrency. Wonder how much stock in Silicon Valley firms was transferred to third parties with this bank as an intermediary. Also the Biden Administration will be sure to make some of those foreign depositors whole without loss.
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