# 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:** 6
**Author:** ![kenobi\_65](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kenobi_65/32/13178_2.png) [@kenobi\_65](https://boards.straightdope.com/u/kenobi_65)\ **Post date:** [March 12, 2023, 6:22pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/101 "2023-03-12T18:22:28Z")
> [@Riemann](#): > > The best advice for an investor is to ignore stuff like this. Completely agreed. OTOH, as Tommy Lee Jones said in _Men in Black_: “A person is smart. People are dumb, panicky, dangerous animals, and you know it.” The market tends to overreact to news (good or bad). ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 12, 2023, 8:02pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/102 "2023-03-12T20:02:16Z")
> [@Riemann](#): > > This was a liquidity squeeze, but all reports I’ve seen are that assets are sufficient to cover the bulk (if not all) deposit liabilities. Even if no buyer is found, I’ve seen nothing to suggest that depositors won’t get most of their money back. That’s what I saw also. I was just noting that this is not a mom and pop depositor situation. Nor a 2008 situation. ---
**Author:** ![DKW](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dkw/32/3118_2.png) [@DKW](https://boards.straightdope.com/u/DKW)\ **Post date:** [March 12, 2023, 8:05pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/103 "2023-03-12T20:05:32Z")
I thought this was pretty funny. > > > Austin Federa @Austin\_Federa I’m just going to wait for this mess to sort itself out. Credit unions don’t go for high-risk investments, so I think I’m safe. ---
**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 12, 2023, 8:10pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/104 "2023-03-12T20:10:21Z")
> [@Voyager](#): > > I was just noting that this is not a mom and pop depositor situation. Nor a 2008 situation. Yes, sorry - I shouldn’t have posted as though I was refuting something you had specifically said. It was more a general observation that discussions of the large sums involved here are misleading. As you say, this is not 2008 where in some cases the asset side went to zero. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [March 12, 2023, 8:38pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/105 "2023-03-12T20:38:23Z")
> [@Riemann](#): > > The moral hazard created by an assumption of complete bailout is unhealthy. Yeah, that ship sailed after 2008. I called the moral hazard problem then, and here we are. People stopped paying attention to bank health when it was assumed that the government would bailout anyone that failed, and that the new regulations would make a bank failure impossible. So now we have a problem. If the government bails them out, the moral hazard gets worse. But if they don’t, and the market has been driven in part by a belief that risks were being socialized, then the harsh reality that bailouts are not coming could in fact cause a run on other banks. SVB is not a small bank - it’s one of the top 12 banks in the country. If you are a business owner with your working capital in an even smaller bank, you’re going to be thinking hard about pulling that money and putting it into one of the ones ‘too big to fail’. This could cause a consolidation of finances into three or four banks that could in the end drive up systemic risk even further. We have been living on stimulus, Covid money and zero interest rates for a long time, and that’s caused a whole lot of bad investments and sketchy companies with poor business models. Easy money made Silicon Valley incredibly sloppy. I listen to a podcast run by four VCs (the ‘All In Podcast’), and they’ve been banging the drum for Silicon Valley to smarten up for a while. The burn rate of money in Silicon Valley is insane. Just in the past four years some of the big companies like Twitter, Facebook and Google multiplied their work forces to an insane degree. These guys on the podcast have been having meetings with their lendees for months telling them the good times are over, that they have to get their costs under control, etc. Few of them listened. So one of the problems SVB had was that their deposits started going down with the economy, while the withdrawals kept up because companies refused to scale back. Exacerbating the problem is that Silicon Valley entrepreneurs and even bankers skew young, and most never worked through the dot-com crash and many weren’t even in the biz in 2008. So they have known nothing but low interest and easy money, and don’t have the discipline born of experience. That was a contributor. But blame also has to land at SVB, which put way too much money into long term bonds, which opened them up to this problem once interest rates went up and cratered bond values. Their risk management was terrible. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [March 12, 2023, 8:50pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/106 "2023-03-12T20:50:15Z")
> [@DKW](#): > > I thought this was pretty funny. So you think it would be great if Silicon Valley VCs lose all their money? I take it you don’t want any more innovation out of Silicon Valley? That you’d like to shut off the flow of goods that come out of that place? The people who are getting hurt the worst out of this are the small startups. They are the people creating the next generation of products that will benefit us all. The huge companies are not exposed to SVB at all, or not much. It’s the companies building the new products around AI, new environmental tech and other technologies that are going to be hurting. That will hurt economic growth in the future. ---
**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 12, 2023, 8:53pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/107 "2023-03-12T20:53:05Z")
> [@Sam\_Stone](#): > > But blame also has to land at SVB, which put way too much money into long term bonds, which opened them up to this problem once interest rates went up and cratered bond values. Their risk management was terrible. Yup. It’s not as though this is opaque financial wizardry. It’s elementary risk management. > [@Sam\_Stone](#): > > that ship sailed after 2008…People stopped paying attention to bank health when it was assumed that the government would bailout anyone that failed, and that the new regulations would make a bank failure impossible This may be a good opportunity to reset expectations. The losses here are really peanuts, there’s no systemic risk. Regulations _should_ be strict enough that it is literally impossible (absent fraud) for a large depositor to lose more than ~25% of their money in the most extreme failure. That leaves plenty of scope for banks to compete freely and be profitable under those parameters. Banks should not be hedge funds. But large depositors should be exposed to that ~25% risk, otherwise they have no incentive to scrutinize the banks they put their money in and to penalize stupid bankers and reward prudent ones. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [March 12, 2023, 9:08pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/108 "2023-03-12T21:08:23Z")
I agree with all of that. ---
**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 12, 2023, 9:23pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/109 "2023-03-12T21:23:31Z")
The Washington Post says the feds are _considering_ covering all of the deposits at SVB, not just the insured ones. ([Gift link](https://wapo.st/3JAXvkW) to the article.) ---
**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 12, 2023, 9:34pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/110 "2023-03-12T21:34:24Z")
There’s an offer for the U.K. subsidiary. > **[Silicon Valley Bank: Offer made for UK arm of failed US lender](https://www.bbc.com/news/business-64934348)** > > UK firms have been warned they might not be able to pay staff from Monday without intervention. ---
**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 12, 2023, 9:48pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/111 "2023-03-12T21:48:21Z")
> [@Sam\_Stone](#): > > I agree with all of that. I think the most likely outcome here is that they will find a buyer and depositors will lose nothing. I almost feel that if any bank goes into FDIC receivership, whatever the ultimate outcome there should be a mandatory 10% deduction from all uninsured deposits, paid into the FDIC fund. It would probably just lead to a gazillion lawsuits though. ---
**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 12, 2023, 10:50pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/112 "2023-03-12T22:50:08Z")
> [@Dewey\_Finn](#): > > The Washington Post says the feds are _considering_ covering all of the deposits at SVB, not just the insured ones. ([Gift link](https://wapo.st/3JAXvkW) to the article.) And they _are_ covering all deposits at Silicon Valley Bank. [Link](https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm) to the statement published jointly by the Department of the Treasury, the Federal Reserve and the FDIC. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [March 12, 2023, 10:58pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/113 "2023-03-12T22:58:32Z")
Banking regulators have shut down New York’s Signature Bank, citing systemic risk. > Signature is one of the main banks to the cryptocurrency industry. As of Dec. 31, Signature had $110.4 billion in total assets and $88.6 billion in total deposits, according to a securities filing. > **[Regulators close crypto-focused Signature Bank, citing systemic risk](https://www.cnbc.com/2023/03/12/regulators-close-new-yorks-signature-bank-citing-systemic-risk.html?view=story%3F__source%3Dandroidappshare)** > > U.S. regulators on Sunday shut down New York-based Signature Bank in a bid to prevent the spreading banking crisis. ---
**Author:** ![OldOlds](https://avatars.discourse-cdn.com/v4/letter/o/a3d4f5/32.png) [@OldOlds](https://boards.straightdope.com/u/OldOlds)\ **Post date:** [March 12, 2023, 11:50pm UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/114 "2023-03-12T23:50:20Z")
So, um… I run a small business (I don’t own it, I’m the president of a wholly owned subsidiary of a foreign company… It’s complicated). We use Signature Bank. For everything. I’m not looking forward to tomorrow. ---
**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 13, 2023, 12:12am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/115 "2023-03-13T00:12:06Z")
> [@OldOlds](#): > > We use Signature Bank. For everything. Per the Fed statement in the post above, Signature is also fully protected. I think it’s not clear yet if you will need to find a new bank, that would depend if they find a buyer for the business as a whole or need to just sell off the assets and close it down. > Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer. > > We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer. > > Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Also: > Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law. This has to mean that the shortfall between assets and liabilities is not a huge amount. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [March 13, 2023, 12:25am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/116 "2023-03-13T00:25:41Z")
They probably had tp guarantee all the deposits to prevent a series of bank runs tomorrow. But to avoid moral hazard, they had better make sure that none of the principals of those banks get any sort of payday. I sympathize with the depositors. They weren’t trying to take on risk. They put their money in a top bank, supposedly fully regulated. If their deposits had been allowed to be frozen in bankruptcy, hundreds of perfectly viable businesses might have collapsed, and no one would trust the banking system. ---
**Author:** ![PhillyGuy](https://avatars.discourse-cdn.com/v4/letter/p/ed655f/32.png) [@PhillyGuy](https://boards.straightdope.com/u/PhillyGuy)\ **Post date:** [March 13, 2023, 1:01am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/117 "2023-03-13T01:01:34Z")
My recollection is that this is nothing new — high amount depositors almost always wind up protected just like us small fry. In theory, limiting deposit insurance incentivizes prudent banking needed to attract large unprotected depositors. And maybe it does. The theoretically unprotected deposits, above insurance limits, are indeed at some risk of loses after a bank bankruptcy. Just not a high risk. I remember a small Philadelphia bank suddenly going bankrupt around 1979 or so. My ex used it, and my recollection is that it took more than a week for her to get the modest sum of money in her checking account sent to her. It seems that the FDIC process today is more efficient. ---
**Author:** ![Euphonious\_Polemic](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/euphonious_polemic/32/3002_2.png) [@Euphonious\_Polemic](https://boards.straightdope.com/u/Euphonious_Polemic)\ **Post date:** [March 13, 2023, 3:36am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/118 "2023-03-13T03:36:40Z")
> [@Sam\_Stone](#): > > But to avoid moral hazard, they had better make sure that none of the principals of those banks get any sort of payday They already did. Bonuses paid to executives last week. CEO cashed out 2 million in stock options last week. They have already looted the till. Time for the taxpayers to bail them out. ---
**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 13, 2023, 5:12am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/119 "2023-03-13T05:12:14Z")
> [@RickJay](#): > > Welp, the stock market is going to absolutely crater this week. It’s the Crash of 2023. Futures are up 1.5%. ---
**Author:** ![Broomstick](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/broomstick/32/246_2.png) [@Broomstick](https://boards.straightdope.com/u/Broomstick)\ **Post date:** [March 13, 2023, 10:25am UTC](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997/120 "2023-03-13T10:25:22Z")
> [@Euphonious\_Polemic](#): > > > [@Sam\_Stone](#): > > > > But to avoid moral hazard, they had better make sure that none of the principals of those banks get any sort of payday > > They already did. Bonuses paid to executives last week. CEO cashed out 2 million in stock options last week. They have already looted the till. Time for the taxpayers to bail them out. There should be some sort of law about clawing back that sort of thing since it’s pretty damn certain the very reason they got those “bonuses” was because they knew the ship was about to sink. [Previous page](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997.md?page=5) [Next page](https://boards.straightdope.com/t/have-you-checked-your-bank-account-today-you-better-silicon-valley-bank-is-crashing/980997.md?page=7)