Will My Bank Fail?

[+ Lucky]

It's amazing to me that this Silicon Valley Bank has failed. People and companies stand to lose millions and millions. The Wall Street Journal then suggested, or so I saw it, that First Republic Bank might be the next to go. Well, that's my bank. Yes, I have (much) less than $250,000 with them, so it is insured. But wouldn't there be a period of time that the money is unavailable as the FDIC gets it in gear? I like First republic, I don't want it to fail.

[BuffaloKyle]

1 hour ago, Lucky said:

 But wouldn't there be a period of time that the money is unavailable as the FDIC gets it in gear?

The FDIC said everyone should have access to their money by Monday. So we'll see. But yeah I didn't know the FDIC only insures up to $250,000 per account. Might be a good idea then for people to break up their money into multiple banks if they have well over $250,000 in an account. Roblox I believe it was as well had a good amount of their money at that bank in mutual funds which are not insured at all.

[+ glutes]

Let's hope it is not contagious!

https://news.yahoo.com/svb-fallout-spreads-around-world-154331383.html

[Kevin Slater]

The NY Times reports today that 87% (I think it was) of all assets held at the bank were above the 250k insurance limit.

Kevin Slater

[pubic_assistance]

1 hour ago, Lucky said:

wouldn't there be a period of time that the money is unavailable as the FDIC gets it in gear? I like First republic, I don't want it to fail.

I tried to move my money ($200k) from First Republic and they told me I have to wait two weeks for the transfer to be "authorized". So much for it being "MY" money.

[+ Lucky]

That's odd. They are letting me move a much smaller amount on Tuesday...assuming that they are still in business!

22 minutes ago, pubic_assistance said:

I tried to move my money ($200k) from First Republic and they told me I have to wait two weeks for the transfer to be "authorized". So much for it being "MY" money.

 

[pubic_assistance]

3 minutes ago, Lucky said:

That's odd. They are letting me move a much smaller amount on Tuesday...assuming that they are still in business!

 

That's the problem.

Larger amounts are delayed because that's their concern. Losing their bigger customers.

At least I had the common sense to limit my exposure. First Republic is a boutique bank that caters to an upper crust clientele that apparently aren't very savvy and multiple customers are apparently exposed because their deposits exceed the FDIC limit of $250K

[Kevin Slater]

8 minutes ago, pubic_assistance said:

That's the problem.

Larger amounts are delayed because that's their concern. Losing their bigger customers.

At least I had the common sense to limit my exposure. First Republic is a boutique bank that caters to an upper crust clientele that apparently aren't very savvy and multiple customers are apparently exposed because their deposits exceed the FDIC limit of $250K

My read is that it's less about losing the customer than losing the cash at this particular moment.  SVB was simply a run on the bank.

Kevin Slater

[+ ThroatCummer]

I have a tech startup. Not only do we have (had?) and account at SVB, but a couple of our VC partners did as well. It's a complete cluster fuck at the moment. Word on the street is that there should be an announcement by tomorrow morning that either a) the FDIC will back all the accounts regardless of the limit or b) they are being absorbed into JP Morgan Chase or one of the 'too big to fail' banks. This is what happened to WaMu (Washington Mutual) in 2008. 

All I know is we have four vendors who have all stopped operating at the moment, and we are in crisis mode here. For example, we use Airbase.com for payments, and their operations were with SVB. Any payments "in transit" as of late-Thursday are up in the air with no date they will be delivered. 

Luckily we had three* banking partners and our money spread out so SVB won't bring us down. But I also know at least half a dozen startups whos payroll couldn't run on Friday and they're shit out of luck unless something happens tomorrow morning. Everyone is watching. 

*We had four banking partners but Silvergate Bank was one of them and they folded two weeks ago, but that's a whole other story.   Between them and SVB, we're down to two banks. While airplanes can fly on two engines, I prefer four since we're in a moderate/high risk industry.

Edited March 12, 2023 by ThroatCummer

[BuffaloKyle]

9 minutes ago, Kevin Slater said:

My read is that it's less about losing the customer than losing the cash at this particular moment.  SVB was simply a run on the bank.

Kevin Slater

Or making sure it's a legit transaction. Whenever I deposit checks at my bank it goes through automatically. I came in not too long ago with a check around $10,000 and they said it was gonna take 5 days to clear.

[Rudynate]

2 hours ago, Lucky said:

It's amazing to me that this Silicon Valley Bank has failed. People and companies stand to lose millions and millions. The Wall Street Journal then suggested, or so I saw it, that First Republic Bank might be the next to go. Well, that's my bank. Yes, I have (much) less than $250,000 with them, so it is insured. But wouldn't there be a period of time that the money is unavailable as the FDIC gets it in gear? I like First republic, I don't want it to fail.

Ive been banking with First Republic for nearly 20 years and been very happy with them until recently.  I dont know whether it's a problem with the company or just a branch manager who isn't very service-oriented and/or knowledgeable.  I asked his assistance with a trust and he said "no, we don't do that."  First Republic NEVER says "we don't do that."  I called someone I know at the main office and asked her to give him a call.  He called me a day or two later and said he would be happy to take care of it.  I had a check from a tenant bounce last month and they actually assessed me a fee for the returned check.   I called and reminded them of our long association and they reversed the returned check charge.  It might be because he doesn't know me - I havent been into the branch since before the pandemic.  I had great relationships with the previous two managers. 

 

[pubic_assistance]

8 minutes ago, Rudynate said:

Ive been banking with First Republic for nearly 20 years and been very happy with them.

I was happy with them for years until the pandemic. I called my private banker who told me they were only helping their landlord accounts who held over $50M in assets. (So basically told me to go fuck myself.) I refinanced my commerical loans but unfortunately kept quite a bit of cash in my personal accounts until this past week.  I've been planning to move it to a high yield AMEX for a while and just got lazy about it. I hope my laziness doesn't bite me in the ass. 

Edited March 12, 2023 by pubic_assistance

[Rudynate]

18 minutes ago, pubic_assistance said:

I was happy with them for years until the pandemic. I called my private banker who told me they were only helping their landlord accounts who held over $50M in assets. (So basically told me to go fuck myself.) I refinanced my commerical loans but unfortunately kept quite a bit of cash in my personal accounts until this past week.  I've been planning to move it to a high yield AMEX for a while and just got lazy about it. I hope my laziness doesn't bite me in the ass. 

That's it exactly - I'm not talking about your dollar amounts, my assets are insurable, but they don't seem to value the customer the way they used to. 

[+ Lucky]

The woman whom I dealt with for years retired and now I know no one at the bank.

[pubic_assistance]

3 minutes ago, Rudynate said:

my assets are insurable

My accountant advised me to get out even though First Republic is now owned by "too big to fail" Bank of America. 

I watched this show before in past bank failures where everyone thinks it's an isolated incident and then suddenly they start falling like dominoes setting off another recession. 

I moved my cash to AMEX who has a high yield savings program with (supposedly) full access to your funds with no penalty for withdrawal

[Luv2play]

4 hours ago, Lucky said:

It's amazing to me that this Silicon Valley Bank has failed. People and companies stand to lose millions and millions. The Wall Street Journal then suggested, or so I saw it, that First Republic Bank might be the next to go. Well, that's my bank. Yes, I have (much) less than $250,000 with them, so it is insured. But wouldn't there be a period of time that the money is unavailable as the FDIC gets it in gear? I like First republic, I don't want it to fail.

I was with Washington Mutual for my Florida banking when it failed in 2008. It was a huge bank failure, larger than SVB. I only lost a few dollars as I wasn't parking a lot of money there when I was back in Canada. I kept my plastic issued by them as a souvenir.

I remember Canada having a couple of bank failures out west in the '80's when the price of oil collapsed but those banks were small potatoes compared to Canada's largest banks, which have never had any problems and are tightly regulated.

[+ Vegas_Millennial]

My parents told me about their experience during the Savings and Loan crises of the 1970s/80s.  They said always have your money in two separate FDIC insured banks.  If your money is tied up in one for a few days or weeks, you'll be able to access the other bank.

This advice proved wise in the 2008 financial crisis.  My primary bank, Washington Mutual, was taken over by FDIC just as I was trying to buy my first house.  Thankfully I had a second bank with enough money in my account to cover expenses until my Washington Mutual funds became available.

To this day, I still keep my money in two separate banks.

Edited March 13, 2023 by Vegas_nw1982

[Rudynate]

26 minutes ago, Lucky said:

The woman whom I dealt with for years retired and now I know no one at the bank.

Same here.  The branch manager who openend my accounts had been with First Republic for years and years and retired. She was replaced by young woman who I liked just as much.  The current manager I have never met because I haven't been into the branch since the start of the pandemic. I think it was  just a day or two before the mayor declared the lockdown - there was a long line in the lobby and security was only letting people in one at a time.  It was all very spooky so I haven't been back since.

[Luv2play]

1 hour ago, pubic_assistance said:

My accountant advised me to get out even though First Republic is now owned by "too big to fail" Bank of America. 

I watched this show before in past bank failures where everyone thinks it's an isolated incident and then suddenly they start falling like dominoes setting off another recession. 

I moved my cash to AMEX who has a high yield savings program with (supposedly) full access to your funds with no penalty for withdrawal

I just checked and the information I read was that First Republic was sold by Bank of America back in 2009-2010, one year after they acquired it. It is now owned by private investors. Obviously if this is true it is not protected by a bank that is "too big to fail".

You might want to check what other things your accountant is telling you. 

[Rudynate]

12 minutes ago, Luv2play said:

I just checked and the information I read was that First Republic was sold by Bank of America back in 2009-2010, one year after they acquired it. It is now owned by private investors. Obviously if this is true it is not protected by a bank that is "too big to fail".

You might want to check what other things your accountant is telling you. 

I think I remember that.

[Luv2play]

Just read in NYT that the feds have come up with a package to try to restore calm in the banking world. It will see all deposits at SVB and Signature, another bank based in NY closed today, guaranteed by the FDIC.

That amounts to over $300 billion in deposits. If the money is not fully recovered through sale of assets of the two banks, all banks will share in the pain through a levy on the insurance program maintained by the government . 

So no taxpayer bailout but potentially increased bank fees by all who bank anywhere in the US. 

[Luv2play]

There are other elements to the rescue package but I won't get into them. What I theorize is that the major assets of SVB are its loan portfolio and investments. We already know their investments in Treasuries are under water given the rapid increase in the Fed rates.

What we don't know is what state their loan portfolio is in. Most of it is to VC firms we are told. Some of those may be shaky given the rapid decline in the tech sector this last year. 

The other may be in mortgages and while we are not looking at what happened in 2008, with the rapid increase in mortgage rates in the last year, loans made at 1.5 percent over 15 or 30 years may not look so hot when money costs so much more today.

Edited March 12, 2023 by Luv2play

[pubic_assistance]

4 hours ago, Luv2play said:

You might want to check what other things your accountant is telling you. 

Ha . Maybe !

But that information was more my mistake.

I started with First Republic around that time..and I didn't know it had changed hands shortly after.

So it was ME asking how much risk there was, ASSUMING it was atill affiliated with Bank of America. His advice either way was to get out before the problems expands.

[+ Pensant]

Futures were + after the bailout report.

[rvwnsd]

10 hours ago, BuffaloKyle said:

The FDIC said everyone should have access to their money by Monday. So we'll see. But yeah I didn't know the FDIC only insures up to $250,000 per account. Might be a good idea then for people to break up their money into multiple banks if they have well over $250,000 in an account. Roblox I believe it was as well had a good amount of their money at that bank in mutual funds which are not insured at all.

It is actually $250 K per depositor per institution, not per account. If John Q Public has a checking account with $100K, a savings with $150K, and a CD with $100K and they are all titled in his name with no beneficiary(s), Mr Public has $250K in insured deposits and $100K in uninsured deposits.

That being said, if Mr Public had Penny Saver as a pay-on-death beneficiary on his savings, Spend Thrift as a pay-on-death beneficiary on his checking account, and S. T. Eddy Return as a paid-on-death beneficiary on his CD, all of the deposits would be insured. The POD creates an informal trust, which is considered to be different ownership than a sole- or join-owner account. There are other ways to do this. Check with your financial information for details (they can't tell you how to structure your accounts but they can provide you with information) or see https://www.fdic.gov/resources/deposit-insurance/

10 hours ago, Kevin Slater said:

The NY Times reports today that 87% (I think it was) of all assets held at the bank were above the 250k insurance limit.

Kevin Slater

I chuckled when I read that article. The NYT, of all places, should know that 87% of deposits held at the bank were uninsured. Deposits are liabilities on the bank's books. They probably meant  "customers' assets, but still.

10 hours ago, pubic_assistance said:

I tried to move my money ($200k) from First Republic and they told me I have to wait two weeks for the transfer to be "authorized". So much for it being "MY" money.

Page 28 of First Republic Bank's Consumer Account Disclosure and Agreement (which was last revised on March 1, 2023)  states:

Advance Notice — As required by federal law, we reserve the right to require seven days’ advance written notice of an intended transfer or withdrawal of funds from any savings account, money market deposit account or certain interest-bearing checking accounts. We currently do not exercise this right and have not exercised it in the past.

While it is within their right to require advance notice, the Agreement does not state "two weeks," it states "seven days."  I'd escalate if I was you and if they don't budge then submit a complaint with the Consumer Financial Protection Bureau.  The complaint will take longer than two weeks to be processed, but a compliance officer will have to spend time researching and responding to the CFPB. If they don't respond timely, they will get hammered during their next bank exam. Having been on the receiving end of the CFPB's hammer, I assure you it is not an experience one wants to repeat.

On a general note, I don't wish tech startups or VC firms any ill will. However, anyone who places that much cash in a deposit account at a relatively small institution whose assets nearly doubled in the last year ought to fire their risk manager or hire one if they don't already have one.

One of the articles I read Saturday mentioned that SVB did not have a head of risk management for several months and had just posted a position for a BSA/AML specialist. 

In the last two hours, Reuters reported all depositors of SVB will be made whole as will those of Signature Bank, which failed Friday evening.