$151.5 Billion in uninsured deposits - 85% of all deposits not insured by FDIC. Why???
No bail-out - no? no? no?
Only the first $250,000 is FDIC insured.
If you have $10,000,000 in the bank (which is idiocy), only $250,000 of it is guaranteed.
Accounts are insured up to $250K. If you are a business, you are likely to have tens of millions in your account.
That’s why.
1. The bank owners are stating the government should bail THEM out. They don't want to lose money.
2. A lot of deposit accounts had much more than $250,000 in them. The FDIC only insures up to $250,000. Banks only pay insurance premiums on that dame $250,000. The depositors know this. However, they can ask for their deposits to be brokered across multiple banks, assuring they get FDIC insurance for each $250,000 increment. In this case, it may bot have happened.
The depositors’ money is still in loans that are being paid and investments that are, too, but selling off investments today to allow depositors to access cash (by freeing up where their cash had been invested) is very costly, when outside of what was planned. Peter Thiel and others may have encouraged this, in fact.
If everyone had kept going with the same use of cash, the bank would likely have been okay today.
I don't believe bank owners should get any money before cash depositors get back all of their monies.
Because they exceed the $250K per person/account insurance limit. With careful planning in the way you title accounts you can get to 7x $250K as maximum coverage. My guess, knowing some folks in Silicon Valley, is that they are wealthy enough not to care about FDIC coverage limits.
The deposits were well in excess of the FDIC maximum of $250k. The part of each deposit under $250k was insured, the rest is not. No one "opted out" of FDIC insurance to save money.
No matter how much you might not like the thought of a government bailout, the problem is that a significant part of the US competitive advantage around the world lies in Silicon Valley startups, who had large parts of their funding in SV Bank.
I don't like the thought of a bailout at all, but this is going to influence the future American economy as much as the collapse of GM would have, and we bailed GM out. Blighting the whole startup process will influence a lot more than just the companies with money in that bank.
BC this bank funded a lot of VC deals that REQUIRED that the funded company use SVB banking for payroll and general deposits! Whoops;)