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Comment by hizanberg | Hacker News Reader

SVB failed after depositors tried to pull out 42B on Thursday, which small US bank has enough liquidity to satisfy 25%+ of all deposits in 1 day?

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SVB locked in losses after a 3% run that caused them to seek outside capital.

They couldn’t cover a third of the previous mandatory fractional reserve without realizing losses. That’s insane. Anyone banking with a bank that doesn’t do liquidity testing is bonkers imo.

What is the exact % liquidity that your bank can withstand? Should it be the responsibility of every US person to independently and periodically validate their top US 20 Bank has enough liquidity to withstand unforeseen variable economic conditions that bank regulations are supposed to protect against?

No, people are just going to move to a top 3 bank that's too big to fail to hold their business and personal life savings.

They were completely foreseen, and officially announced.

> They were completely foreseen

Sure which is why their stock crashed 60% in 1 day and their entire 40 years existence wiped out within the week.

Should it be the responsibility of every US person

What percentage of Americans have $250,000 in cash?

No idea, how many? Up until now I would've thought keeping your money in a bank was the safest liquid asset class.

Is 250k the threshold where you need become a financial bank analyst and independently validate US Banks liquidity tolerance to withstand variable economic conditions? If that's the case everyone's just going to consolidate to using a top 3 bank when exceeding that limit.

Up until today that was the threshold. This FDIC limit is printed on every document from every bank, so you should have seen it before.

As of today the rules were changed in the middle of the game and there is no limit. Must be great to have powerful friends.

If that's the case everyone's just going to consolidate to using a top 3 bank when exceeding that limit.

So what? How is this worse than the status quo?

> Up until today that was the threshold. This FDIC limit is printed on every document from every bank, so you should have seen it before.

Right, so you are saying every person or business that reaches that limit needs to become an independent financial analyst on a bank's liquidity.

> As of today the rules were changed in the middle of the game and there is no limit. Must be great to have powerful friends.

What a condescending toxic tone, you're blaming the people and business that maintain their savings in failed banks for their failure? and accusing them of being apart of some interconnected powerful network of friends that's somehow instructed the FDIC to step in to strengthen public confidence in the US banking system?

> So what? How is this worse than the status quo?

If you can't see the problem with all but the 3 top US banks failing and forming an impenetrable oligopoly free from competition, nothing else needs to be said.

Again this is not about people but about businesses... in this case startups which are somewhat unusual businesses since they have tons of cash an no income, and often don't spend money on things like CFOs that aren't really necessary for them yet.

I would have said this shows that’s are necessary but it turns out you’re right. Who needs a CFO when you have the nation’s politicians in your pocket?

IF they have tons and tons of cash they are rich. Which means they should know much better. They have less than zero excuses. They are often not making positive money so they should be extremely prudent with their finance. Tells a lot that nothing is expected from them and they should be treated like kids...

> every US person

Every US person with more than $250k in the bank, perhaps. That is a tiny percentage.

Organisations such as businesses also have legal personhood, that also suffer from this very issue.

I've put my life savings in chickens. It has paid off fabulously this year.

Is this serious? You started a chicken farm or something?

Murray McMurray officially started his chicken business in 1917. He had always been interested in poultry as a young man and particularly enjoyed showing birds at the local and state fairs. He was in the banking business at this time and sold baby chicks through the bank to area farmers and hobbyists. When incubators became available he was able to purchase several small Buckeye incubators to hatch and sell his own stock. In 1919 he sent out his first catalog and price list and continued to carry on both the banking and the hatchery business. During the early stages of the depression his bank went broke. It was then he decided to go into the hatchery and mail order baby chick business full time.

https://www.mcmurrayhatchery.com/history.html

I was joking, but I didn't realize the tie between bank failures and one of the biggest names in poultry.

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