# Have you checked your bank account today? You better, Silicon Valley Bank is crashing **URL:** \ **Category:** Miscellaneous and Personal Stuff I Must Share\ **Created:** [March 10, 2023, 10:58pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997 "2023-03-10T22:58:31Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Dr.Strangelove](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.strangelove/32/6613_2.png) [@Dr.Strangelove](https://boards.straightdope.com/u/Dr.Strangelove)\ **Post date:** [March 11, 2023, 6:50am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/61 "2023-03-11T06:50:25Z")
Well, I didn’t call her an idiot, though I did imply she was bad at critical thinking. In retrospect, I would say it’s more that she didn’t express her point clearly and the wording is deceptive even if technically correct. What I did say is that you don’t get the distribution from the chart. Which is true. And I think that’s a significantly more relevant factor than the raw percentage. Again, all the low percentage tells you is that they cater to businesses or high-net-worth individuals (it appears to be mostly the former). If anything, the low percentage makes it much _less_ of an ouch than it might otherwise be. It’s much more painful for 10,000 small businesses to lose half their $500k accounts than for one person to lose all of $5B. ---
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [March 11, 2023, 8:21am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/62 "2023-03-11T08:21:24Z")
> [@Dr.Strangelove](#): > > I would say it’s more that she didn’t express her point clearly and the wording is deceptive even if technically correct. I have no vested interest in defending this person, she is not my mum. But however many times that you repeat claims that she’s somehow at fault, I simply don’t agree. I don’t think the failure to read what she wrote correctly is even 5% on her. She made a straightforward restatement of the unambiguous and highly relevant statistic in the attached table. If the subject of the second sentence is not explicit, the obvious place to look is the first sentence; and it is _especially_ obvious that the subject is the same in both sentences when they include percentages that that add to 100%, of the form: > 3% of cats are fundamentally good. > 97% are the spawn of Satan. People criticizing her in this thread _inferred_ a subject that had no foundation in anything she wrote and made absolutely no sense in he context of the attached table or her first sentence. And then one person hyperbolically called her “multi-dimensionally stupid” for something that _they_ invented out of thin air that she didn’t write. That deserves a little pushback on her behalf. ---
**Author:** ![Dr.Strangelove](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.strangelove/32/6613_2.png) [@Dr.Strangelove](https://boards.straightdope.com/u/Dr.Strangelove)\ **Post date:** [March 11, 2023, 9:05am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/63 "2023-03-11T09:05:52Z")
> [@Riemann](#): > > That deserves a little pushback on her behalf. Sure, agreed. I don’t think I was particularly hyperbolic, but I’ll acknowledge that her statement is correct given a certain reading and that there was, at the least, a failure to properly steelman her statement. Nevertheless, I’ve read over her tweet a few more times now and I still find the phrasing bizarre. “Only 2.7% of Silicon Valley Bank deposits are less than $250,000” is almost incoherent. You can have an account with less than $250,000 in it. And you can have the $250,000 portion of a larger account that is covered by FDIC. But saying some fraction of deposits are less than $250k? It is very strange phrasing at best, and clearly I’m not the only one that thought so. But it _would_ have been clear phrasing if she had been saying that 2.7% of accounts (“deposits” being the lump of money in said account) were under $250k. IMO, that would have been the plain reading if it weren’t inconsistent with the chart. There were many ways she could have phrased things unambiguously, or at the least without the reader having to dig into her source, but she didn’t. I’m not going to give her credit for that. ---
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [March 11, 2023, 9:47am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/64 "2023-03-11T09:47:44Z")
> [@Dr.Strangelove](#): > > “Only 2.7% of Silicon Valley Bank deposits are less than $250,000” is almost incoherent. You’re obviously going to persist with criticizing her, but I’m just going to keep disagreeing with you. You could not deduce what this means without basic financial literacy, without knowing how FDIC insurance works. But if you do, it’s obvious that this is shorthand for “only 2.7% of the dollar value of deposits is covered under the $250,000-per-account insurance limit”. And it’s obvious why that’s a sensible and relevant statistic to cite. The table (that she didn’t compile) uses similar wording. > [@Dr.Strangelove](#): > > But it _would_ have been clear phrasing if she had been saying that 2.7% of accounts (“deposits” being the lump of money in said account) were under $250k. I don’t know what you’re saying here. This would not have been clear phrasing, it would have been _wrong_ phrasing. The statistic does not refer to the number of accounts, it refers to the value of deposits. ---
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [March 11, 2023, 9:58am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/65 "2023-03-11T09:58:41Z")
never mind ---
**Author:** ![Dr.Strangelove](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.strangelove/32/6613_2.png) [@Dr.Strangelove](https://boards.straightdope.com/u/Dr.Strangelove)\ **Post date:** [March 11, 2023, 10:07am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/66 "2023-03-11T10:07:55Z")
> [@Riemann](#): > > This would not have been clear phrasing, it would have been _wrong_ phrasing. The statistic does not refer to the number of accounts, it refers to the value of deposits. Clear/opaque and right/wrong are orthogonal. If her source _had_ been about accounts, she could have made precisely the same tweet, except no one would have remarked on it because it would have been easily understood. ---
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [March 11, 2023, 10:08am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/67 "2023-03-11T10:08:45Z")
> [@Dr.Strangelove](#): > > If her source _had_ been about accounts, she could have made precisely the same tweet, except no one would have remarked on it because it would have been easily understood. No, she couldn’t. Because “deposits” does not mean “accounts”. In the context of discussing a bank’s liabilities, “deposits” unambiguously means the $ value of deposits, not individual transactions. (Not that deposits in the sense of individual transactions is synonymous with accounts either.) ---
**Author:** ![Dr.Strangelove](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.strangelove/32/6613_2.png) [@Dr.Strangelove](https://boards.straightdope.com/u/Dr.Strangelove)\ **Post date:** [March 11, 2023, 10:13am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/68 "2023-03-11T10:13:07Z")
> [@Riemann](#): > > Because “deposits” does not mean “accounts”. If “deposits” is strictly interpreted to be a bulk quantity of money, then “Only 2.7% of Silicon Valley Bank deposits are less than $250,000” is incoherent. The $250k is only relevant in terms of an account (actually a depositor/account class, but never mind that). ---
**Author:** ![Pardel-Lux](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pardel-lux/32/20182_2.png) [@Pardel-Lux](https://boards.straightdope.com/u/Pardel-Lux)\ **Post date:** [March 11, 2023, 10:14am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/69 "2023-03-11T10:14:29Z")
> [@Riemann](#): > > What will come under a lot of scrutiny next week is whether there are many _other_ small banks who have been equally foolish in managing their interest rate risk. But as I said earlier, this comes in a generally positive environment for the business of banking going forward. Normal interest rates are much better for business than zero interest rates. The positive environement business for banking may be only superficially so, taken out of context. The relevant context being that the banking supervision imposes an obligation on the banks, all banks, to hold a significant amount of their assets in secure assets, which are narrowly defined. Very few bonds qualify, of countries with a AAA rating. Unfortunately, those bonds fell by a lot (how much depended mainly on the time until maturity). And banks still have to hold a big slice of their assets in papers that will likely fall when (if?) rates keep raising. Peter Coy of the NYT explains it much better than me: gift link. ---
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [March 11, 2023, 10:15am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/70 "2023-03-11T10:15:10Z")
> [@Dr.Strangelove](#): > > then “Only 2.7% of Silicon Valley Bank deposits are less than $250,000” is incoherent If the objective were to explain how things work to someone who understands nothing about the financial system, maybe. Strictly speaking, it is not correct - it would take two long sentences to express it with perfect accuracy. It would have to be something like: “Only 2.7% of Silicon Valley Bank deposits are in accounts with a balance under $250,000, or represent the insured $250,000 portion in accounts where the balance exceeds $250,000.” But all language depends on context, and to anyone with basic financially literacy, what she said is perfectly cromulent. I didn’t even do a double take when I read it, I immediately knew exactly what she meant - and what the table meant, it uses similar wording, and it comes from S&P Global Market Intelligence. ---
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [March 11, 2023, 10:33am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/71 "2023-03-11T10:33:49Z")
> [@Pardel-Lux](#): > > And banks still have to hold a big slice of their assets in papers that will likely fall when (if?) rates keep raising. Your link doesn’t work for me, but there is certainly no regulatory requirement to hold longer dated assets that are not matched in duration to your liabilities. And if you do, it is easy to hedge the consequent interest rate risk with futures or swaps. Silicon Valley _chose_ to take this market risk when rates were low and the yield curve was upward sloping, betting that interest rates would stay low and that they would pay less interest on their short term liabilities than they received on their long term assets. It’s called a “carry trade”. It is something that banks often tend to do to some extent - lend long, borrow short - because yield curves are more often than not upward sloping. But any competent banker knows that carry trades involve significant risk, both market risk and liquidity risk, and that the risk must be managed prudently. It is elementary banking. ---
**Author:** ![needscoffee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/needscoffee/32/1076_2.png) [@needscoffee](https://boards.straightdope.com/u/needscoffee)\ **Post date:** [March 11, 2023, 6:36pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/72 "2023-03-11T18:36:03Z")
[Here’s](https://www.nytimes.com/2023/03/11/business/dealbook/silicon-valley-bank-collapse.html?unlocked_article_code=7PCHcLoab5BvEOw6jrXGMiI8jRHV6euESqxAOAoIdiYyMFMp8gT18aVvy9eY7sdQdHfLqLJteVis42InCbHWRyloJQyiIiId5U8FfH1sPvbwihBUu67ubTEaXjwKKClPZJjnYN50oCEAvRxp-6Z6sZuHYPVZ94n3AhiQXFYTl2xyKEF5ZAukPbzERpCBF-ZsWSoYS3Md1y8GjKDQD95btQOUXJZRc9KyNVcewM2kQwSFwkP0zawWIBjfm1ilHNxtJ8FvCeEuj1L0kPYI4yCtETV7jT-reR9twXswz6ZPEBLctwRMsC91kNxvBQlfVNZScbPSfcd1ILXL4aBrCNzvS-PqyLepgHAyRDFeQapdNqs&smid=url-share) a good explanation of what happened (gift link) at NY Times. ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [March 11, 2023, 7:22pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/73 "2023-03-11T19:22:04Z")
My, people were busy overnight. So many posts to wade through. All seem to hinge on the table called Exhibit 1. It comes from S&P Global Market Intelligence and is apparently proprietary information available only to those who pay for it, since a search brings up nothing. We therefore have no context for the title: “deposits less than $250K as a percentage of total deposits”. What does it mean and why would the number be useful in a business context? One explanation is that the percentage is that of deposits that will be fully covered by the FDIC, with amounts over that presumably safe but subject to the exigencies of the individual case. Another explanation is that the percentage is that of the number of accounts with total deposits less than $250,000 as opposed to larger accounts. It’s hard to see why other businesses care about the amount covered by the FDIC. The number of small accounts, however, shows up in other hits as important business information. [A page on S&P Global](https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/total-assets-on-fdic-problem-banks-list-remained-elevated-in-q1-70505931) uses it as a measure of problem banks. > Deposits continued to increase during the first quarter, growing by $230.7 billion, but the 1.2% gain was the slowest rate of deposit growth since the third quarter of 2020. Growth in deposit accounts less than $250,000 outpaced growth in deposit accounts greater than $250,000 for the first time in over two years, according to the report. [Another SPGobal report](https://www.spglobal.com/marketintelligence/en/news-insights/research/fintech-partner-banks-bucking-industry-deposit-trends), on fintech banks, also made an issue of accounts under $250,000. > On average, the partner banks had larger numbers of accounts and therefore smaller average balances in those accounts. Looking at accounts of $250,000 or less, NBKC Bank had more than 990,000 as of June 30, which meant an average account size of roughly $450. Lincoln Savings Bank and Medallion Bank each had more than 1 million accounts, with average account sizes of roughly $830 and $1,000, respectively. But results varied, sometimes substantially. As the boxplot shows, partner banks have a wide range of deposit levels compared to non-partner banks. Their deposit levels also tended to be more volatile from quarter to quarter, as measured by standard deviation. My inference from these examples is that “Accounts under $250,000” is a term of art in the banking community meaning literally that: accounts which do not contain more than $250,000. One cannot tell the total amount of funds in these accounts just by the number of them. As shown above, the average account size may be very small. Therefore extrapolating 2.7% of accounts being under $250,000 to the statement that 2.7% of total deposits are FDIC covered is the wrong conclusion. However, @JRDelirious is correct is that the sum total of account types held by a single depositor is looked at for FDIC coverage. The proper nitpick I should have made is that joint accounts are insured at $250,000 each. Therefore a couple would not be counted in the $250,000 or under category if they had, say, $500,000 in their accounts, but all that money is fully FDIC insured. From the FDIC brochure they cited: > The balance of a joint account can exceed $250,000 and still be fully insured. For example, if the same two co-owners jointly own both a $350,000 CD and a $150,000 savings account at the same insured > bank, the two accounts would be added together and insured up to $500,000, providing up to $250,000 > in insurance coverage for each co-owner. ---
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [March 11, 2023, 7:39pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/74 "2023-03-11T19:39:14Z")
> [@Exapno\_Mapcase](#): > > One explanation is that the percentage is that of deposits that will be fully covered by the FDIC That is the _only_ sensible reading. > [@Exapno\_Mapcase](#): > > Another explanation is that the percentage is that of the number of accounts with total deposits less than $250,000 as opposed to larger accounts. Nope. The word “accounts” does not appear anywhere. “Deposits” does not mean accounts. In discussing a bank’s balance sheet, “deposits” unambiguously means the _value_ of deposits not the count of individual deposit transactions. (And the latter wouldn’t be synonymous with “accounts” either.) > [@Exapno\_Mapcase](#): > > [A page on S&P Global](https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/total-assets-on-fdic-problem-banks-list-remained-elevated-in-q1-70505931) uses it as a measure of problem banks. No it doesn’t. The phrase in the tweeted table doesn’t appear there. There is a _different_ phrase that includes the word “accounts”. > [@Exapno\_Mapcase](#): > > [Another SPGobal report](https://www.spglobal.com/marketintelligence/en/news-insights/research/fintech-partner-banks-bucking-industry-deposit-trends), on fintech banks, also made an issue of accounts under $250,000. Again, a _different_ phrase that uses the word “accounts”. > [@Exapno\_Mapcase](#): > > My inference from these examples is that “Accounts under $250,000” is a term of art in the banking community meaning literally that: accounts which do not contain more than $250,000. It is not a term of art, it is plain English. And again it is completely irrelevant to a phrase that does not use the word “accounts”. You cannot support your mistaken interpretation that “deposits” means “accounts” by citing different phrases that use the actual word “accounts”. > [@Exapno\_Mapcase](#): > > One cannot tell the total amount of funds in these accounts just by the number of them. Which is why the table shows a more relevant statistic that has done the math and added up [the dollar value of] deposits that are under the $250k limit (i.e. the insured amount) as a percentage of [the dollar value of] all deposits. ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [March 11, 2023, 8:04pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/75 "2023-03-11T20:04:37Z")
Could you please provide additional cites from S&P Global that use the term in the way you are reading it? ---
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [March 11, 2023, 8:22pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/76 "2023-03-11T20:22:54Z")
It’s easy enough to find example bank balance sheets that always use the word “deposits” to mean a $ value. E.g. search through “deposits” here. [Analyzing a bank's financial statements](https://www.investopedia.com/articles/stocks/07/bankfinancials.asp) And _neither_ sense of “deposits” - a $ value in a balance sheet or a count of individual deposit transactions - corresponds to the number of accounts. ---
**Author:** ![HMS\_Irruncible](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hms_irruncible/32/7394_2.png) [@HMS\_Irruncible](https://boards.straightdope.com/u/HMS_Irruncible)\ **Post date:** [March 11, 2023, 9:43pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/77 "2023-03-11T21:43:36Z")
Side question here - many people are roasting SVB customers for depositing in excess of the FDIC insured amount ($250,000). I would agree that most retail customers should be able to manage this better, but a lot of the customers were businesses who kept their operating funds in these banks. It seems like it would be burdensome for a company with (say) a $10,000,000 payroll to deposit their funds with 40 different banks. Do they actually do that, or do they (like SVB) maintain excess deposits and hope for the best, or is there some other way of mitigating this risk? ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [March 11, 2023, 9:45pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/78 "2023-03-11T21:45:47Z")
I’m pretty sure that there are other ways of mitigating the risk. ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [March 11, 2023, 9:53pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/79 "2023-03-11T21:53:47Z")
I think we all know what a deposit is. That was not the question asked. ---
**Author:** ![HMS\_Irruncible](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hms_irruncible/32/7394_2.png) [@HMS\_Irruncible](https://boards.straightdope.com/u/HMS_Irruncible)\ **Post date:** [March 11, 2023, 10:09pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/80 "2023-03-11T22:09:29Z")
> [@Dewey\_Finn](#): > > I’m pretty sure that there are other ways of mitigating the risk. One might assume, but is that in fact true? What are those ways? [Previous page](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997.md?page=3) [Next page](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997.md?page=5)