Will My Bank Fail?

[rvwnsd]

3 hours ago, rvwnsd said:

h 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.

 

Forget what I said. First Republic has agreed to stop processing wire transfers.

I hope someone buys them.

[Kevin Slater]

7 hours ago, Pensant said:

Futures were + after the bailout report.

...and by 6 am (East Coast) they're already flat to negative.

Kevin Slater

[+ Pensant]

3 hours ago, Kevin Slater said:

...and by 6 am (East Coast) they're already flat to negative.

Kevin Slater

Sadly, yes. It’s going to be an ugly week. Probably headed into a recession. 

[pubic_assistance]

Sadly, I had money at Signature Bank too. ( although not a huge amount ).

So annoying that I have to be dodging bullets like this.

First Republic and Signature were the last of the "gentleman's banks" for upper middle class business people who wanted a personal relationship with a live person, a comfortable chair to sit while attended to and the last shred of dignity, where for a few hundred thousand, you felt important.

Now you need to be a billionaire to get any service or respect from any bank.

[+ Charlie]

The S&L crisis in the last century was what caused me never to put all my money in a single bank. I keep the majority of my funds in a one major bank, but always keep enough in a second bank to survive for a few months.

[BtmBearDad]

18 minutes ago, pubic_assistance said:

Now you need to be a billionaire to get any service or respect from any bank.

Pretty much - banks are now focused on who they perceive to be HNWIs. 

Another point that’s been touched on here is staff turnover at branches. At one point your local branch manager would be in place for years, if not their entire career, and he/she made it their business to know their customers. That’s gone the way of the dodo. 

I rarely go into my bank in person - I usually just call my banker and say I need X, and I want to collect it from Y branch on Z day. Even then the service is shocking. 

 

12 minutes ago, Charlie said:

never to put all my money in a single bank.

That was my mother’s mantra too. It was, to be honest, a bit of a pain when she passed making sure no account was overlooked, and just when you think “ok, that’s it!” I’d come across a statement for a CD or savings account somewhere else. Apparently what she used to do was when she noticed an account was nearing the insurance max, she would take out X % to open a new account somewhere else. I think at the end there were 5 or 6 different banks, plus brokerage accounts. 

[+ BenjaminNicholas]

On 3/12/2023 at 12:08 PM, ThroatCummer said:

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.

You guys are fortunate to have not put all of your eggs into one basket.

Roku, not so much it seems.  They're in a world of fucking hurt right now.

[+ BenjaminNicholas]

1 hour ago, pubic_assistance said:

Sadly, I had money at Signature Bank too. ( although not a huge amount ).

So annoying that I have to be dodging bullets like this.

First Republic and Signature were the last of the "gentleman's banks" for upper middle class business people who wanted a personal relationship with a live person, a comfortable chair to sit while attended to and the last shred of dignity, where for a few hundred thousand, you felt important.

Now you need to be a billionaire to get any service or respect from any bank.

I understand what you mean.  Old school banks are a dying breed.

I have accounts with Brown Brothers Harriman because my family had accounts with them when I was growing up.  It's one of those banks like you describe, albeit they now have fewer brick & mortar locations than they used to.

Sure, I like the convenience of big box banks and their newer tech/apps, but there's something comforting about having a banker who you know, who's known you for awhile and you can reach easily and directly during working hours.

[pubic_assistance]

4 hours ago, Charlie said:

I keep the majority of my funds in a one major bank, but always keep enough in a second bank to survive for a few months.

Unfortunately I chose a "second bank" that collapsed just at the same time the main bank is struggling to keep everyone from jumping ship.

I stopped by the branch office today. It was like that scene from Titanic when everyone was panicking while the band still played. They were doing their best to put a good face on it. Some very elegant mature woman greeted me at the door. I think she was senior management. You could see the panic in their eyes and hear it in the crack of their voices as they assured me everything was just fine. "Only a bump in the road", they claim.

Edited March 13, 2023 by pubic_assistance
grammar

[+ augustus]

On 3/12/2023 at 11:07 AM, Lucky said:

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

Very little wait.  Even in the past, people were able to access their money in a couple of days.  The FDIC moves very fast.

[+ augustus]

19 hours ago, Luv2play said:

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

Yellen claims that assessments on banks will cover the cost of this unlimited guarantee.  That simply passes the costs on to taxpayers through higher borrowing costs and lower interest on deposits.

[+ augustus]

I don't like the executives at SVB selling their shares of the bank en masse a week ago.

[+ augustus]

I don't like blanket bailouts like this.  SVB was comically mismanaged. 8 months without a risk officer!  SVB intentionally decided not to hedge its interest-rate risk.  The notion that its depositors, the most highly educated and compensated people in the US, were unaware of FDIC insurance limits is not believable.

[+ ThroatCummer]

29 minutes ago, augustus said:

The notion that its depositors, the most highly educated and compensated people in the US, were unaware of FDIC insurance limits is not believable.

I argue that they're all mostly aware, but it is simply not feasible to spread funds out across 50, 100, or 500 bank accounts. It's an operational nightmare and simply not possible for anyone except the smallest coffee shops or local restaurants. $250k might sound like a good amount of money to most people, but in the normal course of business, it is peanuts when you're running SG&A (payroll, payables, receivables, etc.) on a regular basis for any company that has over say 10-15 employees.

It's also unrealistic to hold the view that every 10-15+ person company should do a stress test on their bank’s balance sheet every three months just to hold a deposit account.

Edited March 13, 2023 by ThroatCummer

[+ ThroatCummer]

I'd love to debate the entire notion of fractional reserve banking though. Let's look at it from the other side of the room:  Casinos are required to hold 1:1 dollars for every chip on the floor at all times, with absolutely no exceptions, ever. 

So why do we let banks take in $100 and only keep $1 of that in their vaults? (<-- rhetorical, I know the answer)

[+ glutes]

I was just at my local First Republic branch, they were overstaffed and accommodating (free premium coffee, doughnuts, umbrellas!). I had to wait 25 minutes to see a representative, but I had full access to my checking account to make a large withdrawal.

We'll see where we are by weeks end?

[Luv2play]

The shares of a lot of regional banks got hammered today. Halt trading in eleven or so. It looks like more will need to be done to restore confidence in the banks. 

And I don't think coffee and donuts is going to cut it. 

Edited March 13, 2023 by Luv2play

[+ FrankR]

12 minutes ago, glutes said:

I was just at my local First Republic branch, they were overstaffed and accommodating (free premium coffee, doughnuts, umbrellas!). I had to wait 25 minutes to see a representative, but I had full access to my checking account to make a large withdrawal.

We'll see where we are by weeks end?

I havent been to a branch in weeks. That being said, I got calls from bankers at two major banks today to “check in” and see if I needed assistance. They probably hope to help existing clients move money to them from smaller banks.  Didnt speak to them - just my conclusion from listening to the voicemails they left for me.

[+ glutes]

2 minutes ago, FrankR said:

That being said, I got calls from bankers at two major banks today to “check in” and see if I needed assistance. 

And I had a email from my Schwab broker with offer to bring $$ over to their money market accounts paying 4.5% APR.

[pubic_assistance]

1 hour ago, augustus said:

I don't like blanket bailouts like this.  SVB was comically mismanaged. 8 months without a risk officer!  SVB intentionally decided not to hedge its interest-rate risk.  The notion that its depositors, the most highly educated and compensated people in the US, were unaware of FDIC insurance limits is not believable.

Apparently SVB's Chief Administrative officer Securities was a former Lehman Brothers executive....so I am thinking this is more than just a coincidence. I smell a rat in the pudding.

[pubic_assistance]

41 minutes ago, ThroatCummer said:

So why do we let banks take in $100 and only keep $1 of that in their vaults? (<-- rhetorical, I know the answer)

It needs to stay rhetorical, as the politics forum remains closed for repairs.

[GTMike]

2 hours ago, augustus said:

I don't like blanket bailouts like this.  SVB was comically mismanaged. 8 months without a risk officer!  SVB intentionally decided not to hedge its interest-rate risk.  The notion that its depositors, the most highly educated and compensated people in the US, were unaware of FDIC insurance limits is not believable.

I don't think that SVB and Signature Bank are getting bailouts as you may be thinking. Depositors are getting their Federally Insured amounts up to the max of $250k.

These banks are being seized and then having their assets and accounts frozen and evaluated. If they can't be sold during an organized regulated process then remaining assets eventually are distributed to uninsured account holders at a pro-rata discounted amount. Executives at these banks typically get fired and recent large compensation to employees can in some cases be recovered.

Signature apparently was heavily into Crypto based depositor exposure among other risky and real estate related type businesses.

Regarding your comment about highly educated and compensated people not being aware of insurance limits you are correct.

Moderator's note: politics redacted.

[Mike44]

1 hour ago, pubic_assistance said:

I moved my funds ( well half of them ) to the new AMEX High Yield savings program ( Also 4.5% )

I'm only getting 3.5% at Amex High Yield Savings...how'd you get 4.5%?

[Luv2play]

14 minutes ago, GTMike said:

I don't think that SVB and Signature Bank are getting bailouts as you may be thinking. Depositors are getting their Federally Insured amounts up to the max of $250k.

These banks are being seized and then having their assets and accounts frozen and evaluated. If they can't be sold during an organized regulated process then remaining assets eventually are distributed to uninsured account holders at a pro-rata discounted amount. Executives at these banks typically get fired and recent large compensation to employees can in some cases be recovered.

Signature apparently was heavily into Crypto based depositor exposure among other risky and real estate related type businesses.

Regarding your comment about highly educated and compensated people not being aware of insurance limits you are correct.

Moderator's note: politics redacted.

That's not what Biden said today. Depositers at SVP are being covered for all of their deposits including those above the insured limit of $250,000.

[GTMike]

7 minutes ago, Luv2play said:

That's not what Biden said today. Depositers at SVP are being covered for all of their deposits including those above the insured limit of $250,000.

If Biden's most recent comments today were that all the uninsured depsitors would be able to get their funds back in full that's because once the regulators took over and was able to assess the situation there were/would be enough assets in a disposition in order to satisfy the full amounts of Deposits.

If there wasn't then the uninsured may not have been able to recover the full amounts. My point was that after a seizure there is a process and in this case that is a different process from the comment I was responding to which stated he did not like "bail-outs". (The inference being that the Company was being rescued at taxpayer expense and would continue operating further with additional goverment supplied taxpayer funds). Which in this case is a different process.

Edited March 13, 2023 by GTMike
Grammar correction and additional information