Hacker News Reader

Comment by boppo1 | Hacker News Reader

97% of depositors exceeded the FDIC limit.

That stinks, and I feel for them. Let's hope people will learn a lesson from this - never keep all your eggs in one basket.

Aren't we talking about hundreds of millions/billions of dollars? At that scale, not a lot of baskets available.

Could a tech company have split their accounts into separate $250k accounts? I'm not sure if the bank would offer that.

No, FDIC insurance applies to account owners, not accounts.

Fun fact, if you're married, you can actually turn that into 3 * FDIC insurance limit.

- Account 1: You

- Account 2: Your spouse

- Account 3: Jointly you and your spouse

Even more: single, joint, retirement, revocable and irrevocable trust accounts all fall into different categories and are insured independently for each account owner in each bank (the joint account is 250k for all co-owners): https://www.fdic.gov/resources/deposit-insurance/financial-p...

Or you could hold short-term t-bills for any extra money over the FDIC insurance limit. Then you are good unless the US Gov goes bankrupt, which is a non-zero risk but much lower and different.

Yes, I don’t understand what systemic forces are making this not the standard practice.

SVB and its depositors most likely felt that SVB was too big to fail and that the government would just bail them out

You'd need to split across multiple banks.

This can be done manually, with some logistical challenges.

This can also be done automatically, e.g. via CDARS.

What about this other lesson: bankers need to be punished harder.

Or perhaps the other lesson is VCs shouldn’t create a run on the bank they holds their funds and the companies they invest in funds

We don't punish bankers in this country.

Then they should have understood the risk they were taking.

And chosen a better bank.

Besides common strategy in my country: have more money than 250k spread it around at multiple banks.

There are services that do that automatically.

Reply on news.ycombinator.com