$250,000 will be available initially, which is doable for payroll of up to 15 to 25 people for one month, generally if you're a startup.
FDIC website indicates remediation time in the months-to-years. This is the concern.
FDIC website indicates remediation time in the months-to-years. This is the concern.
> The FDIC will pay uninsured depositors an advance dividend within the next week.
This will likely be a substantial fraction of the uninsured deposits. Take a look at the FDIC website.
https://closedbanks.fdic.gov/dividends/
Pick a bank, say, "IRWIN UNION BANK & TRUST CO". The first dividend was almost 47% of the uninsured amount, and anoth 25% or so over a decade.
The failure of SVB as reported is not nearly as bad.
In effect, it encourages concentrating deposits in a single bank. Benefits the bank, does not benefit the depositor.
So if you had "substantially more" than that, you should be financially savvy enough to insure your accounts and pay for the insurance on them as a cost of doing business.
That's why we insure anything - in case something happens.
So if banks offer more insurance for a fee, I can't easily tell how to do this. My business banking account has nothing about such a feature, either online search or looking at the fees schedule.
I'd consider this obscure, even esoteric information. But I'd expect a CFO should know this. And I'd expect a venture capital fund would have an info sheet on avoiding consolidating deposits in a bank, given the 2008 experience. And yet... nothing.
But I think it's not common because there are other treasury management strategies besides "keep all your eggs in one pure-cash basket".