Ask HN: What US bank post-SVB would you recommend? | Hacker News Reader

Ask HN: What US bank post-SVB would you recommend?

25 pointskparjaszewski64 comments

Given recent developments, Ask: what US bank post-SVB would you recommend, for USD, EUR and GBP checkings?

As long as it is not First Republic Bank or Signature Bank, I wouldn’t overthink the decision too much.

What you should worry about is reducing the various risks you face by:

1) Having at least 2 distinct banks with no overlap in who has admin access. This is the most important step. In the US, an insider at your company is way more likely to commit fraud or get phished than your bank failing. Just like you’d never operate your production app from one availability zone, never rely on one bank.

2) If you have $10mm or more, consider having a portion of your funds at each bank going into a money market sweep. These off balance sheet facilities might take a few days or more to access from an operational standpoint during a bank failure, but are not subjected to the bank’s credit risk. However, money markets have their own different risks so I’d never recommend having more than 50% in them.

3) If you have more than 36 months of runway, having a portfolio of T-Bills. While U.S. Treasury Bills are often referenced as “risk free”, that ignores the fact that they can lose resell value, purchasing and holding them often involves some sort of counterparty risk, and there is always operational risk.

Please do not use one of the big four banks. It is just making the system less safe, and there are plenty of times when that decision is going to bite you (a la PPP in 2020).

For specific recommendations:

1) A credit union or community bank with a branch you can readily access. While you should never have to go in-person, it can be really useful to have it as a backup option.

2) If absolutely wanted to go with a big bank, Capital One is not a bad option.

Re: #3

The interest rate risk on 4 week treasuries is almost nothing and if you have a four week ladder, 1/4 of your money is always less than a week away.

They are currently yielding 4.66%.

A systematically important bank. They are subject to the most regulation (small, regional, and credit unions lobbied for looser rules) and have an implicit government backstop.

The top 3 are JPM-Chase, BoA, and Citi.

If you store large amounts of money, I would recommend that you have (i) multiple accounts, and (ii) make sure the account-to-account transfer links are set up, and you've tried them, potentially with large sum xfers.

Kindof like making sure you have backups and they work.

Posting as top-level comment because my original post was downvoted a ton for some reason:

I like https://mercury.com and have been using them for a few years. It's a bank wrapper, but your money is in a real bank (Evolve bank). [0] I recommend them because:

* $1M FDIC insurance for your cash [1]

* Business banking features I use work great (paying vendors, receiving wires)

[0] https://mercury.com/how-mercury-works

[1] https://mercury.com/security

I love Mercury. Their interface is dream, a world apart from TD, Chase, BofA etc. Merucry is online-only so nothing requires a branch, ever. Wires are free and take 1 min to initiate. I don't have more than $1M in the bank but if I wanted FDIC insurance or a large institution guarantee I'd just put the excess somewhere and do 1-2 transfers a year between them.

I've heard spotty results about Evolve's responsiveness to customers, and while there may be a wrapper, that's not always who you talk to, and certainly not who is setting the rules you have to abide by.

Your original post was probably downvoted because of the referral link.

Why? It's $100 for you and nothing for me, I think. Here's what I see on that page:

https://wakatime.com/static/img/ScreenShots/Screenshot%20202...

Edit: Now I notice the "Referral payout" column. I guess that means I get something too, but I didn't think that was the case when posting the link originally.

Maybe because it looked like you were only suggesting the app for monetary gain?

I'd be very wary of using a fintech as your window to a real bank. Mercury as a company is much more likely to fail than a bank. In that scenario, you are going to face a similar operational disruption as folks are facing with SVB today. You might go several days or even weeks without the ability to access your funds.

The regulation is very light right now on how to handle the situation when a fintech partner goes under (although is an area of focus and should mature over the next few years.

I used Azlo before Mercury, which was very similar... a wrapper around a bank. Mercury is way better. When Azlo closed they gave a month's notice and required every customer transfer their money out.

Seems a lot of people are recommending large banks. That was one of the "fears" I read somewhere this SCB failure will give these big banks more "power". But, I also saw SVB was the 16th largest bank in the US. So going to a big bank mat not be good.

Me, I would look into local banks and do some hard work "research" and pick one of them. They tend to be more tuned into you community. Maybe a Credit Union ?

It’s unclear to me exactly what role a local bank is supposed to play in the modern era. In the old days when banks did real underwriting, a local banker would know a small business or would-be homeowner’s reputation and take it into account (for better or worse.)

Now banks just originate mortgages and use the standardized underwriting criteria provided by the buyer, usually GSEs.

All other consumer lending is almost strictly driven by credit scores.

Even medium sized businesses now have access to debt and equity markets. There are national companies that specialize in things like factoring.

I guess maybe local banks are still making loans to hyperlocal businesses like pizza shops and hair salons?

I often see “so and so development funded by Super Local Bank of the US” signs in front of new commercial developments. I’m guessing they’re hooked into the local business community and help facilitate “riskier” transactions like buying pizza shops and hair salons?

Maybe. I had thought the Blackstones of the world had gotten very deep into the commercial real estate market at this point.

Two. One that you like, and one with a AAA credit rating.

JP Morgan or Citibank but not sure if they do multi-currency in the US. I bet HSBC US does but they're only taking on Premier customers.

C. Hoare & Co. https://www.hoaresbank.co.uk/ is the one if you need stability and quality, no question.

If you are worried about bank runs you can divide your deposits into $250,000 chunks and divide it between banks. (or whatever the insured amount in your country is)

Except this insurance never applies to business accounts.

This is not true for FDIC.

(in the US) FDIC insurance treats business accounts the same as personal accounts. Bank accounts for corporations, partnerships, and unincorporated associations get the full $250k in FDIC coverage, separate from any owner or member of the organization.

(in the EU) the sum is $100,000 and also applies to companies.

FDIC insurance covers business accounts up to $250k per institution. The FSCS scheme in the UK covers business accounts up to £85k per institution. Where are you getting this idea from?

OP asked for a U.S. bank. A foreign bank is probably not the best suggestion.

I clicked on your link, and some dude in a super fancy suit just barged into my house and took the money out of my wallet. That firm exudes the sickly sweet aroma of the hanger-on class.

If you are in Switzerland and you want a deposit over 100k to be safe put it in a Kantonalbank which is backed by the Kanton if it fails to meet its obligations. However there are some Kantons that don't do this so check first. One of the ones considered to be the safest is the zkb in Zürich.

Whatever bank offers the best services to meet your needs.

Then do treasury management. Put excess cash in short term treasury bonds (and their non-US equivalents). These are backed by the full faith and credit of the issuing country and the markets in them are very liquid. I’m sure there is some service that will automate this for you, for a small fee.

What about brokerages like Fidelity, Schwab, Vanguard, etc?

Are holdings in money market funds/accounts in such typical brokerages protected / owned like a security? Or should one regard it also like cash, and not FDIC insured greater than $250,000? (but while also trusting those institutions are unlikely to fail or have risky policies)

Money market funds are securities, and are covered by SIPC.

Money market funds are not guaranteed. Google “broke the buck.”

The value of the money market fund is not insured, no, but the failure of the brokerage is. That said regulations are significantly stronger now for MMFs than they were when pre-2008. I guess it depends on what you're trying to protect against exactly. [1]

[1] https://www.sipc.org/for-investors/introduction

Does anyone have experience with https://www.brex.com/ ?

They require $400k MRR, $1M in VC funding and 50+ employees so we still need to mature a bit

Is there a bank you can pay to have a 1:1 backing? Essentially a vault that can do Wires, ACH, Checking, etc, but for a fee?

Ironically, SVB, or whatever its new name will be. Like how the safest airline to fly is the one who just had an accident.

SVB no longer exists.

that's kind of a "Ship of Theseus" debate, really

No, it’s not. DINB exists to sell the remaining assets of SVB, it’s not going to take new deposits.

Will it be as easy to open an account for foreign entrepreneurs as before? I'm not foreign, just heard that's why some people used SVB because the others won't even open an account for them.

I think there's some evidence that SVB UK might have been even more entrepreneur-friendly (compared to its peers) than its US parent. "Silicon Valley Bank collapse: UK tech firms at 'serious risk' from failure, warns Chancellor Jeremy Hunt" <https://news.sky.com/story/silicon-valley-bank-collapse-uk-w...>, which is much more serious than anything Janet Yellen has said.

Isn't as true as you think. Some airlines have atrocious safety records, mostly they are in countries with low regulations.

Take from that what you will.

https://en.wikipedia.org/wiki/Aeroflot_accidents_and_inciden...

MH370 + MH17

Like how the safest place to stand is where lightning just struck.

https://en.wikipedia.org/wiki/Independence_(probability_theo...

Put your eggs in multiple baskets.

JP Morgan - it's shares went up 2,5 pct. on Friday..

Good liquidity...

We will see who is liquid after Monday and then Wednesday of next week.

I think it is insane to think that JPMC will go insolvent, or will be allowed to

Signature just closed

At this point, keep your money under your mattress.

I'd say this will make it hard to exist online, but then I remembered that at least Mullvad accepts cash payment by postal envelope ;)

Can your mattress run payroll and invoicing?

No, but it allows me access to my money, which is infinitely better.

Rolling around in your own money is better than paying your employees?

Rolling around in money is better than not even having money to pay employees.

> Can your mattress run payroll

If your employees will accept an envelope filled with sweaty bills instead of a check or direct deposit, then sure.

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