Sorry but isn't this only a problem for those with more than $250k, and that frankly is a lot for an individual. And even then you could just create another account at another local bank and you're golden. If you have a million cash, then handling four bank accounts is really not a bad problem.
And lots of local businesses. 100 employees at 48k a year gets you to 200k a month in payroll. Never mind the money it takes to run that business.
Even if you are under the 250k mark, if your bank closes on a pay day your staff is the group that suffers.
The specific problem for SVB was that many VCs got their companies to agree not to do this, specifically to keep all the money in SVB.
What was in it for the VCs???
I work for a six-person startup; our CEO landed on Brex after SVB, and one of the reasons he gave was that it does exactly this (up to 9 banks). See https://www.brex.com/product/business-account
(1) SVB taught you that the feds will let a bank run happen
(2) They won't save the poor saps that were too slow moving their money
(3) The systemically important banks are too big to fail. A bank that can't pay depositors back is failed. Ergo, the SIB are too big to lose customer deposits.
So you flee your regional bank because the single most important thing about a bank is that they don't lose your money.
This fear is unfounded. Depositors were bailed out. (That said, yes, utilising the bank’s sweep feature would be wise. As would having a second bank account.)
You can't prevent a bank run if people are going around whatsapp groups of major depositors telling each other to get their money out.
> (2) They won't save the poor saps that were too slow moving their money
They absolutely did, even when the rules didn't say they had to?
Sure you can. You close the bank when it's insolvent and people are saying to get your money out.
>They absolutely did, even when the rules didn't say they had to?
Yes and my post was to illustrate why. Perhaps that was not as clear as it could be.
How does this materially differ from what happened? Is there a federal power to temporarily close banks? Doesn't the run immediately continue when reopened?
Regulators have broad power to close banks. They could have done so when SVB failed to raise equity or really before that. Run stops because deposits are transferred to a healthy bank.
Perhaps, but does this mean you just leave your cash exposed to almost a complete loss? Surely there are services/software that could manage this for you? Seems like a lazy and incompetent accounting department.
Just ask ChatGPT how to do it <sarcasm>