Silicon Valley Bank (SVB) Collapses

[UncleDave]

Doesn't this seem like a simple solution once you create software and achieve cooperation between multiple banks?

Having 10, 100, or 500 banks holding your money can be easily managed by a banking system and software that can deposit or withdraw a little from each account. It's like running a database or excel spread sheet. Doing this manually would be a PITA but a payroll company can make this happen no problem in my layman's view. I guess the red tape and legislation could be problematic. I can't be the first guy that has thought of this.


Makes me wonder if Elon would want to buy the bank and connect it to Twitter somehow. I can see all these tech bros pulling their money out because Elon bought it though.

You arent the first guy that thought of it.

it "seems" simple. I do know that firms offer deposit splitting as a service, but it's highly manual in nature.

 

[RhondaHonda]

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Makes me wonder if Elon would want to buy the bank and connect it to Twitter somehow. I can see all these tech bros pulling their money out because Elon bought it though.

For large companies, I’m not sure why they couldn’t or wouldn’t just buy a bank and handle payroll through it. They could use it only for cash management and not make risky investments with deposits. Of course there’s always the possibility (likelihood?) they get greedy and start using cash to make risky investments.

 

[PWMDMD]

You arent the first guy that thought of it.

it "seems" simple. I do know that firms offer deposit splitting as a service, but it's highly manual in nature.

Fidelity sweeps their Cash Management Account automatically to 5 banks meaning $1.25M of FDIC insurance. No intervention is needed by the end user who just sees the original balance in their Fidelity account.

 

[mk378]

The low limit means that the FDIC is intended to protect the personal savings of individuals, not business capital.

Can't a corporation buy insurance or self-insure against bank failure? This is really the same as having a factory burn down or a key executive die in an accident-- they insure against those things.

 

[UncleDave]

Fidelity sweeps their Cash Management Account automatically to 5 banks meaning $1.25M of FDIC insurance. No intervention is needed by the end user who just sees the original balance in their Fidelity account.

Split depositing is only part of the battle - your payroll service needs to keep these straight and you need to pay and reconcile the different accounts.

If anyone here actually has this figured out Id love to have a private conversation with you.

In the meantime the best way to predict future individual contributor performance is past performance.

 

[PWMDMD]

Split depositing is only part of the battle - your payroll service needs to keep these straight and you need to pay and reconcile the different accounts.

If anyone here actually has this figured out Id love to have a private conversation with you.

In the meantime the best way to predict future individual contributor performance is past performance.

View attachment 144667

Payroll company pulls from our bank the day before payday. The money is with them for a day or two before it is transferred to employees' accounts. Why would it be any different for them to sweep than it is for Fidelity? It's just computer stuff. As I said, as the end user it is completely hands-off what happens to my money with sweeps and from my POV it's always sitting at Fidelity in one account. The technology exists...

 

[JeffKeryk]

In general, I think we're past the idea that the market will "work it out". Long gone is the idea that the individual/company will do "what's right" because that is what's best in the long term. I don't think anyone could've imagined the magnitude of greed that exists today. These execs make decisions that are best for them, make enough money to never work again, and move on long before they ever take any blame. Regulations are needed for one thing - to attempt to contain greed. Not that it always works...

In 2018 banking was further deregulated, reducing mandatory reserves and ending stress testing, which enabled even more risky practices. Business has one purpose; to maximize the wealth of the shareholders. Anyone who thinks otherwise or believes the market will fix things does not understand economics or business. Markets and business are brutal, which is why oversight is necessary.
SVB did nothing illegal or broke any regulatory rules as far as we know. Who is gonna pay for this?

 

[slo town]

Split depositing is only part of the battle - your payroll service needs to keep these straight and you need to pay and reconcile the different accounts.

If anyone here actually has this figured out Id love to have a private conversation with you.

In the meantime the best way to predict future individual contributor performance is past performance.

View attachment 144667

Joseph Gentile personifies what's wrong. A coil spring to his face. (See my previous post).

Scott

 

[mk378]

Something happened in 2007 and he couldn't work for a major bank any more.

 

[PWMDMD]

In 2018 banking was further deregulated, reducing mandatory reserves and ending stress testing, which enabled even more risky practices. Business has one purpose; to maximize the wealth of the shareholders. Anyone who thinks otherwise or believes the market will fix things does not understand economics or business. Markets and business are brutal, which is why oversight is necessary.
SVB did nothing illegal or broke any regulatory rules as far as we know. Who is gonna pay for this?

I agree but I still hear from those who treat regulation like it's a communist scheme to take over the world about the "efficiencies" of the market taking care of it - total nonsense on their part.

 

[slo town]

In 2018 banking was further deregulated, reducing mandatory reserves and ending stress testing, which enabled even more risky practices. Business has one purpose; to maximize the wealth of the shareholders. Anyone who thinks otherwise or believes the market will fix things does not understand economics or business. Markets and business are brutal, which is why oversight is necessary.
SVB did nothing illegal or broke any regulatory rules as far as we know. Who is gonna pay for this?

I guess I'm old school. To me the primary purpose of a business was to produce a product or service that earned them a profit, the profit used to make payroll, fund future expansion, etc. Wall Street has become a speculative parasite that feeds off the system for its own gain.

Scott

 

[PWMDMD]

I guess I'm old school. To me the primary purpose of a business was to produce a product or service that earned them a profit, the profit used to make payroll, fund future expansion, etc. Wall Street has become a speculative parasite that feeds off the system for its own gain.

Scott

This is what the original proponents of our economic system envisioned - what JeffKeryk said is what it has become.

 

[slo town]

This is what the original proponents of our economic system envisioned - what JeffKeryk said is what it has become.

Exactly.

 

[UncleDave]

Payroll company pulls from our bank the day before payday. The money is with them for a day or two before it is transferred to employees' accounts. Why would it be any different for them to sweep than it is for Fidelity? It's just computer stuff. As I said, as the end user it is completely hands-off what happens to my money with sweeps and from my POV it's always sitting at Fidelity in one account. The technology exists...

So you/ your firm does it?

 

[UncleDave]

I guess I'm old school. To me the primary purpose of a business was to produce a product or service that earned them a profit, the profit used to make payroll, fund future expansion, etc. Wall Street has become a speculative parasite that feeds off the system for its own gain.

Scott

Banks became speculative parasites.

 

[slo town]

Banks became speculative parasites.

That too.

 

[PWMDMD]

So you/ your firm does it?

No, Fidelity doesn't offer business accounts but I do use it for my personal account. I'm just saying that the technology does exist. It's been 10 years since my first practice but we had a sweeps business account. The key is each account the money gets swept to has its own FDIC insurance and it's totally automatic. It can also get swept into a money market that has its own type of insurance through SIPC.

https://www.titan.com/articles/what-is-a-cash-sweep

 

[slo town]

So you/ your firm does it?

I don't see why it can't be. It's not a process that can't done manually by a team of humans. And if the process can be done by humans it can be done by a computer.

At any rate, we have a poorly run bank whose executive suite cashed in many millions of dollars of stock options just two months ago - and according to the news just awarded bonuses to some or all of their employees just hours before the FDIC seized control of the bank.

It stinks to high heaven.

Scott

 

[PWMDMD]

I don't see why it can't be. It's not a process that can't done manually by a team of humans. And if the process can be done by humans it can be done by a computer.

At any rate, we have a poorly run bank whose executive suite cashed in many millions of dollars of stock options just two months ago - and according to the news just awarded bonuses to some or all of their employees just hours before the FDIC seized control of the bank.

It stinks to high heaven.

Scott

Surely, they had to see months ago with rising interest rates that their heavy bond position had a real chance of being a problem.

 

[UncleDave]

No, Fidelity doesn't offer business accounts but I do use it for my personal account. I'm just saying the technology does exist. It's been 10 years since my first practice but we had a sweeps businsess acoount. The key is each account the money gets swept to has it's own FDIC insurance.

https://www.titan.com/articles/what-is-a-cash-sweep

We sweep cash all the time but nowhere to the level required to keep say 10M at 250 or below.

A company with 10M in the bank would have to split it between 40 banks to stay at 250.

I have all kinds of bills that are above 250K.