Given Mercury was a more popular contender, I'm going to bet they had an inflow of basically double-digit billions.
There is still risk of interest rates rising significantly higher, but with 3 months treasure notes the downside is limited.
edit: typoed
I.e. don’t be SVB. Hire a risk officer.
Eh, how much does BofA or Chase pay on deposits? Interest rates have gone up, so they might hit 0.05% now?
It gave them the opportunity to make the mistakes they made. It didn't cause them. If you have more deposits than you can responsibly invest, you cut your rates until you can.
They offer treasury accounts that you can move money to and buy securities if you want yield.
So I don't think they have too much risk as far as interest on deposits. But what worries me, as a small business owner that has been using and loving Mercury for a few years now is that they offer free domestic and international wire transfers and I worry that they might start charging for that. It is the first bank I have had that did free international wires and I actually use that frequently. My last bank charged $85 and I literally had to fax a signed form to them to get it done.
The thing I don't know is if there is a per transaction fee that the banks pay. I assumed that there is and that Mercury was just eating the cost as a marketing expense.
The logical move is to go bigger eg JPM.
Seems like services like this should be more popular.
The problem here is one of fiscal immaturity at startups. SVB offered ICS accounts but from what I'm seeing few startups put their money into them. My bet is that startups mature enough to have a proper CFO weren't as impacted by this mess.
was it incompetence or greed?
Presumably there's a cap for a reason, and presumably it's to protect ordinary Americans who rarely have $250K in assets, and not rich people who can literally afford to lose that much and still be rich.
otherwise 1/12th of your deposits would be the /best case scenario/ not the worst case.. it comes down to the details of how they balance the balances.
As long as your accounts are under the limits, there's no need to re-balance on outflow, just ensure you remain under the insurance limits at inflow
(That said, said service to split your eggs up doesn't need to be Mercury - they're just the VC-backed startup darling here. There's plenty of other banks that offer these services.).