Posted on 03/10/2023 2:31:14 PM PST by nickcarraway
The CEO of a Boston-based health and wellness company said she has been unable to log into her Silicon Valley Bank account, where she has at least $10 million in deposits.
Ashley Tyrner, the founder of FarmboxRx, told The Post on Friday that she has been frantically trying to reach her banker at SVB, the California-based lender that is teetering on the brink of collapse.
She told The Post that she’s been experiencing “the worst 18 hours of my life.” On Friday, the Federal Deposit Insurance Corp. said regulators have shut the bank down to protect insured deposits after the bank’s parent, SVB Financial, had reportedly tapped outside advisers to facilitate a potential sale.
(Excerpt) Read more at nypost.com ...
I have 1/5th that much in Merrill Lynch/BOFA and have a personal rep that handles everything for my investments and bank needs. When I call I get a call back in 10 mins or less.
That is what makes this story so strange. Once you have 7 figures under management the bank takes notice. 8 figures should mean a personal banker in your garage.
Makes you wonder what they were offering her to hold 10M. Had to be 6-7%.
Well, unless her money was in brokered deposits, for savings, as I understand it, it wasn’t insured.
I believe brokered deposits allow a person’s savings to be stretched across many banks, each insuring $250,000 such that all the money is FDIC insured.
The article’s title is a little misleading. It seems the $10 million was her business’s bank account, not her personal account.
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. And you don’t have to …
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.
another dump hole, the bigger they get, the Harder they Fall!
Maybe her bank usually responds to her quickly as you suggest ... unless the bank's phones are ringing off the hook from other millionaire customers worried about their money.
She’s pretty hot though. Worse things can happen to a person.
“I have 1/5th that much in Merrill Lynch/BOFA and have a personal rep that handles everything for my investments and bank needs. When I call I get a call back in 10 mins or less.”
I don’t have any money, but I know how having a personal bank rep works. Imagine if you hear your bank is having problems and suddenly you can’t get in touch with your rep. That would be a very bad feeling.
You’d think a CEO would know that the limit is $250k for FDIC insurance.
Idiot.
Most of the deposits were NOT insured... In the old days there was a $100,000 cut off. I believe it’s higher now but it sure isn’t in the ten million range. She’s probably got $250,000... Again, in the old days you could open an account with your kids, husband ect and each of those accounts was ‘insured’ for the $100,000 or whatever the amount is today.
“I believe brokered deposits allow a person’s savings to be stretched across many banks, each insuring $250,000 such that all the money is FDIC insured.”
That’s my understanding also, one would think that a person SMART ENOUGH to be a CEO would know it. Each bank has a unique FDIC Number, and that’s all the FDIC cares about - keep that under $250k per FDIC Number, and you’re good, and in her case, it could be 40 accounts, and she would STILL be fully insured. What a dingbat if what we think is actually the case.
Money is now 5%.
"Ruh-Roh, Shaggy"
“She’s pretty hot though. Worse things can happen to a person.”
Good to hear - she’ll survive then.
It’s probably part of the loan terms that they have. It’s normal for banks to require you to do all of your AP and AR at their bank as part of the deal. That way they can guarantee that you have the required funds on deposit.
Well I wonder what the payroll for her company is? Will she be able to pay her employees? Shit rolls down hill.
Consider that at some point that fdic insurance won’t be worth a damn if enough stuff goes tits up
I expect there will be screams for a bailout and none of these people who made poor decisions will have their lifestyles altered in any way but if they do I’m at the point where I see zero reason to cooperate with out overlords or taxing institutions any more than needed to avoid being shot
This time last week she got a call back in 10 mins. or less also.
I would guess that the $10 million was seed money from venture capitalists. The thing to do when you have excess cash but expect to need to access it like a line of credit is to keep the bulk of it in short term treasuries. Worst case is you have to take a bridge loan for a month or 3, or cash one of the bills. Then you always have some ready cash that is insured, plus savings that are secure but which are 99.9% as liquid as cash. A mid-sized business rarely needs $10 million in liquid cash in any account, especially if it is the bulk of your money... but you can access it if you really have to while keeping it secure. And with short term treasuries you would be doing well right now making interest.
And bigger companies would have more than one account. One for general use and one for payroll for example, with different names. Then the insurance could cover two accounts. Though I imagine these days the tech companies outsource payroll to another tech company.
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