Silicon Valley Bank

Median net worth of Americans is $141k…renters which are 1/3 of US is $6k including all savings as most people’s wealth is their home. Home equity is 85% and 401k is almost all the rest. Most people have no money. The bottom 65% are flat broke. 65% to 90% are getting by. Top 2-10% are good top 1% are great.

 

I don’t have a financial advisor. I am my own.

I agree that the $250k limits apply by bank, and if you have checking and savings those are combined. If you have accounts under different legal entities I think they get separate $250k coverage. My wife’s company is trying to sort through that.

What I am questioning and asking for more support is your assertion that all of these small banks are owned by big banks and as such they don’t get separate FDIC coverage.

 

A Cramer Contrary fund? That’s beautiful.

 

Treasury secretary rules out bailout for Silicon Valley Bank | CNN Politics

 

You can insure more than $250k if you have $250k each at multiple banks. You can also insure more than $250k if each account has different ownership / legal entity.

You can also insure more via mechanisms through Fidelity cash management accounts that will sweep your core cash into multiple bank accounts if you have more than $250k, up to a max of $1.25M.

 

To be clear, ruling out bail out means they won’t bail out shareholders. That has nothing to do with whether or not they make all depositors whole.

 

This was a pretty informative podcast episode on the origins of this issue

‎All-In with Chamath, Jason, Sacks & Friedberg: E119: Silicon Valley Bank implodes: startup extinction event, contagion risk, culpability, and more on Apple Podcasts

 

https://www.thestreet.com/etffocus/blog/inverse-cramer-etf-is-live

 

Bingo. This is why the gamesmanship over the debt ceiling and bank bailouts is concerning. Not this bailout, as I think individual banks should be allowed to fail, and I see no particular reason to bail out this bank. But hypothetically if it turned into a systemic issue. Too many people have nothing to lose, or think they have nothing to lose. In a banking collapse scenario, or societal collapse, it would actually be their very lives at stake. That is what they would have to lose. You’d see 30% unemployment. People with too little savings would go from “just getting by” from their job, to no prospect of any job and begging and stealing food. Of course some may not even value their own lives (such as so-called accelerationists and certain religious extremists). It’s still pretty shocking seeing a political party entertaining such nutjobs.

 

Ultimately if the govt choose not to substantially make whole all depositors, the result will be a loss in confidence in anything other than the largest banks and people will no longer leave any uninsured deposits in such banks.

 

Yep, each on the account are insured separately. So my wife and I would be able to insure $500K jointly. Same with IRA accounts - I have mine and she has hers. But I agree you can do this and protect most of your cash, but it's a full-time job depending on how much you have. If I won a $1B lottery, I'm handing it over to my Ameriprise advisor. Too many things to deal with and I don't want to have to manage my money 24/7.

Here's a good watch on why SVB collapsed and it's not exactly what the media has been covering. There actually was one other bank that collapsed earlier in the week, but they were far, far smaller in scope. But both share similarities.

 

Difficult seeing how this won't cause a ripple effect and contagion to some degree at least. It's the 2nd largest bank failure in US history. Once the government goes beyond their mandate in making whole depositors in SVB, they'll be expected to do so for each and every domino that falls as a result of SVB (at the bare minimum). My guess is we got a problem on our hands.

 

Sounds like they are auctioning it hopefully to be completed today.

 

Here are SVB’s 12/31/22 financials

https://d18rn0p25nwr6d.cloudfront.net/CIK-0000719739/f36fc4d7-9459-41d7-9e3d-2c468971b386.pdf#page94

Looks like it had $193B in cash, equivalents, and receivables ….. and $195B in deposit and other liabilities. With the $1.8B loss on the Treasuries, there still appears to be a significant estate to cover the bank’s liabilities realizing some or all may take some haircut.

Someone with excel on a laptop could generate a better analysis.

 

Employees just got their bonuses this week. Beautiful.

https://www.cnbc.com/2023/03/11/sil...-received-bonuses-hours-before-takeover.html#

 

I wonder if the FDIC has anything akin to a preferential payment in bankruptcies?

 

I have several 401ks and also IRAs and Roths. So I too wonder about the source and relevance of these average and median numbers.

 

They moved quickly which is good. Even better no cost to the taxpayer. Futures moving up. Biden admin delivered the goods again.