Brew

Do you think bankers currently operate under the moral incentive to guard depositor’s money? How many bankers will gladly take your deposits in excess of $250k? One of the local banks here is advertising 4.75% on up to $10M in deposits. Isn’t that by definition not operating with the incentive to guard your deposit risk? They should cap you at $250k and send you elsewhere. Again, I can’t get my head around it. This was an investment risk failure plain and simple. The bank held large deposits with no offsetting loans for front end capitalized entities and made longer terms bets to generate income on assets classes they shouldn’t have. They should have told the depositors to lock the money up elsewhere until it was going to be needed based on their cash burn rates, but why turn away good money even if we cannot lend it. Banks have to have deposits to make loans to make money. This one had the deposits, but not the loans and decided to play stupid games and won stupid prizes.

It’s been a long weekend so I could be completely missing the obvious here, but why would fully insured deposits impact loan underwriting standards? I can’t think of anything they do that would be dictated by the FDIC coverage outside of it giving them more leverage for deposit concentrations. Right now the average person with excess cash knows to spread it around in banks. That goes away with guaranteed deposit coverage which may actually drive interest rates on deposits up as it would be more competitive and it is artificially held down with the FDIC coverag. I guess that could lead to lowering underwriting standards as they have to take on riskier loans at higher rates to make the spread.

I’m having a hard time coming up with a scenario where it doesn’t make sense for depositors to be made whole. I also can’t think of a scenario where they weren’t eventually made whole although I’m sure they exist. The catch here is the timing and guarantee and the class of assets that have to be dealt with. Generally the FDIC has a buyer in place quickly so timing isn’t usually an issue although I can think of a couple of local banks the regulators operated for quite a while after taking over.

Is it a bailout if there is no real bailout? Again, at the moment we’re talking about timing differences on access to money unless the disposition of the bank assets goes terribly wrong. Idiots are going to call it whatever they want, because they are idiots and looking for clicks on social media. I hate social media, everyone’s inherent need to share their opinions and spew garbage slowly (or maybe not so slowly any more) pushes us closer and closer to the cliff’s edge.

Did that come out of the letters to the editor section?

We do a lot of work in the banking sector and have had bank clients go under. I don’t know that I have seen any where depositors lose money although I’m sure it happens. This isn’t some big anomaly. Banks typically have the asset coverage, it just takes time to convert it to cash. They are covering the timing shortfall by allowing access today, but this is a big bank with a lot of assets to work through the liquidation process on.

Based on your pictures from stopping by the grocery store, the list of things you can’t get your hands on has to be short. Anything out there you know you are interested in? I might be willing to part with my handle of Buffalo Trace I haven’t opened yet.

Are you really this stupid? They give you examples in what you linked if you would just read them. You don’t get $250k per account type. You don’t get multiple CD’s. It is per depositor, per insured bank, for each account ownership category not type. All of the accounts you listed are added together up to $250k per depositor, not $250k per bank account type.

That in no way, shape, or form matches up with what you typed above.

In your example who is the asshole, the bank or the depositors or are they all assholes?

This is not how FDIC insurance works. Maybe you should read up on FDIC insurance.

Looks like we’re sitting on about $100k in ACH’s hung up in this mess. It’s interesting reading through the barrage of emails coming from our processor and making sure to point out it’s not their fault. Dumbasses kept processing into Friday night/Saturday morning instead of immediately blanket shutting the ACH option down when the shit hit the fan. Also, have talked to several clients with $250k CD’s with them.

Most of the borrowers that are in the scale of requiring the operating accounts to be held by the bank are going to exceed FDIC limits. $500m is excessive, but I have plenty of clients that exceed the limits. Our firm accounts exceed the limits. There is no reasonable way for a company of legitimate size to not exceed the limits operationally. Early stage funded companies that are going to need money in the future should be a lot smarter. Companies running 7 figures a week in cash in/out have to somewhat trust the banking system. There are ways to secure collateral and sweep to other banks, but neither are reasonable options for most at that level.

So reading through the original tweet, that dude bought shares of SVB on Thursday and then was part of the problem by moving all his funds he could late Thursday/Friday. Some of these people are special.

Social media and the exacerbated version of group think that apparently comes along with it in today’s world will be the end of us.

All banks do this. If you are going to use them for lending for operational purposes, they typically require your main operating account be with that bank also. I can’t think of any that I deal with that don’t require that.

My neighbor is a Region President for a bank. He ran a large local bank (small/medium size town but one of those banks where they know all their large customers well) that was acquired by one of the top 15 banks last year. He said this morning his phone hasn’t stopped ringing since this broke. They are seeing people move around funds that have large concentrations, but not just pull out deposits as of now. Going to be an interesting few days.

They will be okay isn’t really a solution just for the record. You’re in charge of Roku or any of these different affected companies, how are you managing cash and access to it differently since these guys were idiots for having so much cash in one bank. I have a number of clients with 8 figure cash accounts, I’m curious what this looks like. A few of them with limited Daily Cash needs sweep everything they can out to other banks and pay a premium for that, but their access is pretty limited so they still carry balances over FDIC limits in operating accounts. A few have pledged securities for account balances but again that is a pretty limited solution.

I’m curious, what exactly does the process of securing your deposits look like for the size companies we are talking about here that have been hit the hardest. Roku is sitting on $2B+ in cash and has expenses in excess of $1M a day, what is the most reasonable way for them to secure those deposits daily?

Here’s a (not great) picture of my wife’s 28 mm Oyster Perpetual and Cartier Tank Francaise Medium to give you an idea on comparative size. The Cartier is a bigger watch overall. She is looking for a purple face 31mm Oyster Perpetual now to get a little bigger Rolex. The 28 is a little on the small side.

We contract with a company for ACH/Credit card transactions. Looks like that company used an ACH processor that used SVB to clear those transactions. Details coming from them are limited, but it looks like we have a couple days ACH transactions held up in this at the moment. Lots of fun to be on the other side of the country reading about it and then realize you have XXXXXX amount of dollars in flux with them.

I’m good for another year.

Fat fingered it, 02 with the 7.3. Price wasn’t horrible compared to what I’ve seen, but going to keep looking.

Looks better now. 3 inch Eibach coil over lift and 315/70/17’s on the stock BD wheels. Looked at an 03 F250 to get for hauling/weekend duty, but just couldn’t pull the trigger on it.

The NFLPA article is an interesting read. I have a good buddy that is an agent, so I have a number of NFL clients and have been to and toured several stadiums. We went to Jax two years ago to see a client play and I can confirm that place is a shithole top to bottom. Training rooms, meeting rooms, the family area, etc were all on par with low end colleges. It was amazing where you meet up with the guys after the games. It was tiny so most of the families over flowed to a roped off outside area where fans were walking by.