[hizanberg]

We banked at SVB and got 0% interest, it was just the bank recommended for Startup’s to use.

It seems the risk was not choosing a top 3 bank since no one can survive a Bank Run and the largest banks are too big to fail. Which is terrible for competition if everyone’s essentially forced to use a top 3 bank just to have confidence for your money in a US Bank to be safe.

[ethbr0]

> Which is terrible for competition if everyone’s essentially forced to use a top 3 bank just to have confidence for your money in a US Bank to be safe.

Isn't that the whole point of this decision -- giving depositors at non-top banks confidence in the system?

If the FDIC et al. had done the opposite here (let SVB depositors take losses) then the takeaway would have been "bank only with a top-3".

[Zetice]

It's not true that "no one can survive a bank run", though, and that's why SVB is at fault here, and not just a victim of circumstance.

[hellcow]

Well, yeah, that’s why SVB no longer exists, all the execs are canned, and shareholders are losing their shirts.

But depositors trusting a highly rated bank with a 40-year history shouldn’t be a “big bet” or gamble. For the risks startups take, this is about the lowest of the bunch.

[cma]

The risk is low because of the assumed bailouts.

[nostrebored]

SVB collapsed with 3% of depositors asking for their money back?

[hizanberg]

SVB failed after depositors tried to pull out 42B on Thursday, which small US bank has enough liquidity to satisfy 25%+ of all deposits in 1 day?

[nostrebored]

SVB locked in losses after a 3% run that caused them to seek outside capital.

They couldn’t cover a third of the previous mandatory fractional reserve without realizing losses. That’s insane. Anyone banking with a bank that doesn’t do liquidity testing is bonkers imo.

[hizanberg]

What is the exact % liquidity that your bank can withstand? Should it be the responsibility of every US person to independently and periodically validate their top US 20 Bank has enough liquidity to withstand unforeseen variable economic conditions that bank regulations are supposed to protect against?

No, people are just going to move to a top 3 bank that's too big to fail to hold their business and personal life savings.

[bradleyjg]

Should it be the responsibility of every US person

What percentage of Americans have $250,000 in cash?

[bodhiandphysics]

Again this is not about people but about businesses... in this case startups which are somewhat unusual businesses since they have tons of cash an no income, and often don't spend money on things like CFOs that aren't really necessary for them yet.

[hizanberg]

No idea, how many? Up until now I would've thought keeping your money in a bank was the safest liquid asset class.

Is 250k the threshold where you need become a financial bank analyst and independently validate US Banks liquidity tolerance to withstand variable economic conditions? If that's the case everyone's just going to consolidate to using a top 3 bank when exceeding that limit.

[bumbledraven]

> every US person

Every US person with more than $250k in the bank, perhaps. That is a tiny percentage.

[anticensor]

Organisations such as businesses also have legal personhood, that also suffer from this very issue.

[freeopinion]

I've put my life savings in chickens. It has paid off fabulously this year.

[bagels]

Is this serious? You started a chicken farm or something?

[lupire]

They were completely foreseen, and officially announced.

[hizanberg]

> They were completely foreseen

Sure which is why their stock crashed 60% in 1 day and their entire 40 years existence wiped out within the week.

[isignal]

Did you consider buying us treasuries instead?

[hizanberg]

Never, the funds are just what's left over after business operations, the entire purpose of which is to conservatively reinvest back to help grow the business and build a buffer to withstand future economic downturns.