There won’t be a bailout for SVB, as per Secretary Yellen:
If the public panics, the bank is toast whether or not they’re indeed solvent.
I have some (small amounts) with Ally in their money market, and no penalty CD. Do you know whether their MM is covered by FDIC? I’m unsure about the status of MMs in general.
Politics at work. I don’t necessarily disagree with this decision, but you can bet that if the clientele wasn’t a combination of tech unicorns and wineries, that the calculus of the decision might be a bit different.
Agreed. If the contagion spreads to other regional banks that serve average people, there might be a change in policy. But how bad does it have to get first? Reminds me when Treasury implemented rescues after Lehmann went belly up and markets began to freeze.
Checking the FDIC insurance status of an account needs to be part of opening it. If you do not have the terms and conditions you probably received when you opened the account, it is worth a visit to their website. If that does not clear it up, give them a call but be sure you get whether the account is insured in writing. If it is not insured, I suggest you pull your money out.
Average people dont have accounts that exceed the insurance limits and need to be bailed out.
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Generally, money market accounts are insured no differently than savings. Money market mutual funds are not. Not sure how many, if any, exceptions there are to that ‘rule’.
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This was my thought as well… but a bank run on a community bank could impact small businesses with deposits in excess of $250,000. As I said before, the political impact of that looks a lot worse if it’s an independent auto repair shop or a mom and pop restaurant versus a winery or tech startup.
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Politically, at least in this context, a business with a $500k cash bank balance is one of the evil rich, no matter how “small” the business may be.
Do business accounts/entities receive FDIC coverage at all? I’d assume those opened with a SSN would be covered under the owner’s standard coverage, but what about corps using TINs?
Let’s try to move the “run on the bank” discussions here.
Interesting insight into cash reserves of small businesses.
Median cash reserves across all sectors of small business is just over $12,000.
And 75th percentile in high-tech manufacturing is only $142k (sector with highest typical cash reserves in the report)
I suspect the percentage of small businesses at risk from exceeding FDIC insurance limits is much much smaller than the percentage of small businesses at risk from being under-capitalized 
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I’ll try to make this relevant to “individual stock discussions” rather than bank failures 
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Holy crap that is a lot lower than I would have thought. I would be on pins and needles trying to make payroll twice a month with that kind of money. Perhaps I am more risk averse than average… but a median of 12k, really? What happens when the water heater goes out? Or when rent is hiked up?
I get that idle cash on a balance sheet means those are dollars that can’t be used for growth… but a rainy day fund is a necessity, no?
These are all small businesses and the absolute amount is not relevant. Maybe the median business doesn’t have a water heater or rent? The only thing relevant, I think, is that the median cash buffer is enough for 27 days of expenses for that median business. Doesn’t seem unreasonable to me.
Also these are all Chase Business customers. I wouldn’t keep any reserves at Chase either – their interest-bearing accounts are barren.
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And for many small businesses, the owner continuously siphons off free cashflow. And considers their own pocket to be the rainy day fund, should it be needed.
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SIVB-now-SIVBQ and SBNY resumed trading otc today, having been kicked off Nasdaq. I covered my shorts. They are $0.30 and $0.13 per share respectively as I write this, down 99.x%.
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Congrats on a very nice move. I’ve given up on (been scared off of) shorts and now only buy puts. I misread Amazon terribly, and while rewarded in the end, Zitel bent me over more than expected before finally paying off.
2023 Q1, total returns
I guess banking crisis really are good for gold, but moreso for Bitcoin. Let’s hear it for the crypto bulls, back to mid '22 levels but up nicely off the lows.
| ticker | type | Q1’23 |
|---|---|---|
| BTC | bitcoin | +73% |
| QQQ | tech | +14% |
| EFA | foreign (developed) | +14% |
| SPY | large caps | +10% |
| GLD | gold | +7% |
| JNK | junk bonds | +5% |
| IWM | small caps | +5% |
| CPI | inflation (est) | +2% |
| BND | bonds | +2% |
| USD | cash | +1% |
| PFF | preferreds | -0% |
| EEM | foreign (emerging) | -2% |
Woulda been better to just be long SPY, but where’s the fun in that?
S&P500 stocks YTD - big tech, big winners; others up more modestly overall.
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The total Stock market Index ETF, VTI, is up 7.2%
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FRC, the most troubled of the non-bankrupt banks, looks to be headed for zero. They ran up into earnings and then have been collapsing every since. Layoffs, half their deposits left, trying to fire sale half their assets, and the Feds making noises like maybe they won’t let them keep borrowing lots of Fed money to make up for their lost deposits for much longer.
When a bank loses their customers’ (or regulators’) confidence, its game over. I was short some and now I’m short a lot more.
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BBBY is down to 12c or so, bankrupt, with the business headed for liquidation and the stock headed for delisting. I’m no longer short as much, but this was pretty obvious unless you joined a cult of supportive meme stock “bagholders” trying to relive their glory days of GameStop.
Here’s a nice recap. BBBagggY
this is an article for nobody. Perhaps some large language model AI will eventually ingest it, and it will make the the internet a slightly less baggy place one day. But it is not this day. Look at the below, and weep for humanity
And some of the sad stories of misguided investors
Last week
Oh, and
Gift Cards . Use em’ or lose em’ folks. The debtors will accept them for fourteen days!
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