Well.
Sucks for them, unfortunately. They might get the money back, but it’s not guaranteed. As I understand it a new owner would need to be found, and that owner may or may not cover those accounts outside the FDIC umbrella.
Oh yes, buying a big ol’ bag of catshit wrapped in dogshit, what could possibly go wrong?
And I think this one is #2 both in absolute numbers and adjusted numbers–WAMU in '08 still has the dubious honor of being number one.
Genevieve Roch-Decter, whoever you are. 100% of SVB depositors are FDIC insured. 97.3% are not fully insured. Two totally different things.
Wells Fargo holds my mortgage. Does this mean I can stop paying them? That would free up a lotta cash.
Yeah, I got a message today claiming I had a negative balance despite the fact that my direct deposit already came through on Wednesday. It seemed to have sorted itself out by the time I got out of bed and checked on it.
Caption says this is Boston Private Bank, recently acquired by SVB. People are not looking confident.
’Twas ever thus:
Here’s Wikipedia’s list. The gap between Silicon Valley and the previous number 2 in 1984 is $160 billion.
I heard this is exactly how it went down:
The Fed is calling an emergency board meeting on Monday, wouldn’t you love to be a fly on THAT wall?
ETA: Ruh roh, looks like JP Morgan is next!
I don’t get why Security Credit Rating Agencies (NSROs) can’t identify these problems before a collapse.
I mean; how can Moody’s actually keep credibility when they can’t even keep track of assets/liabilities of a bank this size?
I heard from a CEO today that there’s talk that banks are under pressure now to start offering better interest rates on savings accounts, as the large reason companies were pulling money out of SVB was higher interest savings account rates now being offered by numerous institutions.
More importantly, the chart doesn’t give you the distribution of depositors. It’s given as a fraction of total deposits. It may be that 99.9% of depositors are fully covered, while a handful of zillionaires are screwed.
Well some people have a little foresight, for example the Silicon Valley Bank CEO:
The stock, which Becker sold at prices ranging from $285 to $302, was worthless Friday night after the bank’s sudden two-day collapse.
Yeah. That tweet – from a CFA, for god’s sake! – is multi-dimensionally stupid. She screwed up what it means to be FDIC insured. And she screwed up counting dollars vs. counting accounts.
Sigh.
A hundred years ago, she would have been (ignorantly) spreading bad rumors about your local S&L being unstable… thereby catalyzing a self-fulfilling prophecy. The internet has not made us any smarter.
Well, we did just that. Wells Fargo was still offering nothing percent on our savings, and with so many money market funds offering 5% we pulled a big chunk out and invested it in a money market fund through Schwab. We would have been happy to leave it in savings if they had only paid something.
Unfortunately, domain-specific expertise seems almost totally unrelated to critical thinking skills. Any statistic, of any kind, should prompt questions like “is there likely to be a gap between the median and the mean here?” and “what is the distribution like, anyway? Pareto, maybe?” But mostly that doesn’t happen.
I was going to nitpick further by mentioning that the $250,000 amount is per account type, so if you have checking and savings and money market and other accounts you are covered for each. But the basic tweet was so silly it didn’t really need actual research.
However the classification is not necessarily by type of account but by “category of ownership” - single, joint, corporate, trust (several types) HSA/employee benefit etc. From the FDIC page:
The FDIC adds together all single accounts owned by the same person at the same bank and insures the total up to $250,000.
Example 1: Single Account
Account Title Deposit Type Account Balance Marci Jones MMDA $15,000 Marci Jones Savings $20,000 Marci Jones CD $200,000 Marci’s Memories (A Sole Proprietorship) Checking $25,000 Total $260,000 Amount Insured $250,000 Amount Uninsured $10,000 Explanation
Marci Jones has four single accounts at the same insured bank, including one account in the name of her business, which is a sole proprietorship. The FDIC insures deposits owned by a sole proprietorship as the single account of the business owner. The FDIC combines the four accounts, which equal $260,000, and insures the total balance up to $250,000, leaving $10,000 uninsured.
“Single account” meaning an account exclusively controlled by the one person.
Your nitpick is incorrect. There are no data presented about the proportion of depositors who not fully insured.
Here’s what Genevieve said;
She is clearly just subtracting the 2.7% in the prior sentence from 100%, and correctly saying that 97.3% of deposits (by value) are uninsured.
That’s a correct reading of the data in the table, described thus:
“Exhibit 1 = Deposits less than $250K as a percentage of total deposits.”
I risk being called multidimensionally stupid too, but what she said appears to me to be quite correct.