“That’s how capitalism works”!!
Has he been scrolling r/antiwork and r/collapse, signing in at the Bear of Hex, keep a copy of the Communist Manifesto bedside?
Is this just a joke?
On a serious note, if it’s not, how far are the puppets in government prepared to go in what could be a cataclysmic moment of comeuppance for the Economic Terrorists of Wall St?
FDIC insurance is $250K per account type per customer per bank. Once you hit $250K in a checking account at one bank, thats it. You can't open another checking account at the same bank that will be insured. What you are suggesting is that companies with millions of dollars that they need to pay their bills (including payroll) should go around opening hundreds of checking accounts at different banks to pay their bills and have it all insured. That's not logistically possible.
That is, in fact, exactly what a lot of companies in this space are doing IIRC. It's not hundreds, but still; look at this for example. They split those startups' money into nine 250k batches, ensuring at least 2.25m$ is protected. I found these guys randomly but I'm sure they're neither alone nor the largest.
I have worked for everything from Fortune 50 companies to startup. Almost no one uses CDARS or any of the alternatives. I've never worked anywhere that used it. $2.25M is one payroll cycle at a lot of medium-sized companies. Amazon does ~$1B every two weeks just to it's warehouse employees.
deleted by creator
CDARS is still limited by the number of FDIC members. There are corporations who still wouldn't be able to meet payroll and pay their bills even if they maxed out CDARs. Amazon would almost max that number every two weeks just paying their warehouse employees.
It's almost like having entities this large is inherently problematic from an economic perspective or something.
deleted by creator
They have that mechanism! It's the Fed stepping in to magically make folks whole even though they don't have the requisite insurance. Insurance only works when it can average over lots of smaller events. It doesn't work well for things like this where this are very infrequent very massive events. So there cannot be insurance for bank failures like this. Instead, the capitalists have access to the money printer and will hold copy when shit goes wrong like this.
Maybe? I don't know as much about insurance, but they would still rely on banks to pay out claims like this, which would just cause a bank run somewhere else. The whole reason this is going so fast is that it's not supposed to happen with regular deposit banking. Banks are supposed to have way better risk management than SVB and Signature, but that's also not necessarily regulated. I would think that this is going to have to result in new regulations, but the fact that the Fed is saying that SVBs shareholders and creditor can get fucked might mean that the industry is going to start requiring new controls internally.
Or nothing will change and the industry and politicians will waive it off as an aberration. It's pretty hard to say.
You're right, but the only losers in that scenario are the workers. The porkies at the top will make it out relatively unscathed either way, but taking steps to avoid covering those uninsured deposits means payroll is missed and workers aren't paid for work already done and are fired immediately
deleted by creator
I'm sure that even in a collapse of SV startups, the evil ones will survive. Deregulation machines funded by Thiel and the Saudis aren't going to collapse because some of their cash vanished. The other major genre of startup is R&D department cost cutting, and again I imagine the established tech giants who are doing it would rather just do a cash injection than long term commitments to their own R&D. I don't necessarily think the R&D ones are always evil, but if it's not one of these two major categories I'm not sure the companies are significant enough to matter anyway lol.
They can't buy additional insurance to cover larger deposits (not FDIC)?
There is a deposit product called Insured Cash Sweeps (ICS) which moves chunks of 250k around to different banks. SVB supposedly offered this product and yet no one was using it
There's no market for that currently.
And there will never be one because of this.