When you have treasury access you can wire as much money as you want practically instantly just like with SVB. I bank with one of the big 5.
Nothing is stopping you from going into your bank and wiring money away it's just cash that they don't want to give out without multi-day delays.
Are you sure the limits on your account would apply to e.g. a wire transaction? Of course there are limits on ATM withdrawals and some other transfer methods, but I'm not sure they'd apply if you wanted to send a wire.
Not many people (at least, people who don't deal with large sums) have experience with doing a wire transfer. Sometimes they're a bitch to deal with - but it's what you'd use if you are doing very large sums (like, in the order of 6 or 7 figures or more).
In most of Europe, wire transfers are really easy to do, and where I live, most banks now support instant wire transfers (10 seconds) under some limit (in my case, 15 000 Eur). Doing them using QR codes and smart banking apps is really straightforward and user-friendly, so people do them routinely even for small sums.
that's not the wire transfer i am referring to - it's the one where you'd use a SWIFT code to designate the bank.
Between EU countries, you need SWIFT, but within a single country, you usually don't (I think the exception is Poland, where SWIFT is the default...?).
It sounds like you are referring to something like an ATM withdrawal limit or online transfer limit which is just a risk / fraud limiting measure for those particular channels rather than a limitation on the account itself.
sure, customers will periodically get mad and take their business elsewhere, but it's a fever dream to think that elsewhere is any different.
If the funds are in a DDA (Demand Deposit Account a/k/a standard US checking account), the bank is legally obligated to honor outflow transfers of any size, at any time.
(Not physical cash withdrawals, although they have to make timely arrangements to satisfy these too)
Banks can make DDAs unattractive for large balances (e.g. no interest), but I'm not aware of any limitation on a customer's right to access their funds held in a DDA.
If banks could bend these rules, bank runs would never happen.
they should have legally obligated SVB to remain solvent!
They did!
When SVB failed to meet those regulatory obligations, the bank was seized and the depositors were made whole.
So the system worked, right?
Without these changes, the SVB's depositors would have had access to maybe 50% or more of their uninsured money immediately, and maybe 90% or more eventually. They'd maybe have been made whole eventually; but the FDIC's inability to find a buyer over the weekend suggests that the SVB's assets weren't obviously greater than its liabilities to depositors, so maybe not.
The SVB's depositors have been made whole now only because regulators intervened with emergency policy changes to rescue them. That might have been a good idea, since it stopped contagion; or it might have been a bad idea, since it encouraged future risk-taking in anticipation of a similar ad hoc rescue. It certainly wasn't any kind of rules-based system working, though.
The SVB had been insolvent on a mark-to-market or NPV basis since around September. Accounting rules on bonds they intended to hold to maturity allowed them to ignore that, but didn't change economic reality.
I'm no economist, but I think the (1-year) window for banks to borrow against the full face value of government bonds and MBS assets is interesting and probably reasonable. These are not risky investments, just illiquid. The Fed will get their money back. Providing liquidity to the system is part of the Fed's job.
> These are not risky investments, just illiquid.
It's not a question of liquidity. Similar assets trade with tight spreads, at prices very closely predicted by a textbook NPV model. The price just went down when interest rates went up, exactly as expected. There's no significant uncertainty in the price. Waiting won't make it go up, except in the same sense that waiting turns $100 in Treasury bills into $104 a year from now.
The Fed is making an undercollateralized loan. If a bank fails with such a loan outstanding, then the Fed will lose money. Interest rate risk is as real as credit risk or any other risk, and this would be a real economic loss.
From what I understand (could be wrong) the discouragement to risk taking is that the risk takers were wiped out in this case, only the depositors kept their money.
I don't think these are necessarily bad decisions--it's reasonable to make an example of the worst offender, and then help the rest survive to prevent systemic contagion. It's absolutely not "the system worked" though, except to the extent that the system is regulators making stuff up on the fly.
so it was a perfect storm, for them.
The banks have corporate customers sign a number of complicated forms to put limits on things like who can wire, who can sign, who can weite cheques etc.
There are further controls in the online corporate banking
In the US the only limits are via the ATM or Debit card. If you write a check, go in person, or send a wire, you can withdraw as much as you want, with no time delay or restriction.
> Couldn’t they just use one of their terms or conditions to delay the withdrawals and give themselves ample time to react?
That's simply not a thing.
That said, even wiring 6-7 figures isn’t a big deal as long as it’s normal for your account and there are some basic security things setup.
I have had some call backs from their anti-fraud department after putting in a wire request to make sure I wasn't falling for some scam.
Also, it's not a cash withdrawal. We just wired the money to other accounts. Cash would require tons of paperwork.
But the fake money never gets printed. It just lives in bits and bytes. You can move it around as much as you want.
Fortunately, it's as good as real money. It's just not as good as real wealth. Real wealth is in ammunition. Never goes down in price, skyrockets in price when the world gets more dangerous, and can be used to protect itself. That's where America has you beat, because we can turn fake money into ammunition whenever we want, as fast as we want.
Not to mention, it's a consumable resource that keeps well in storage but requires a high level of technology to produce. And even under non-apocalyptic conditions, it's about half as efficient as silver coins by weight and volume.
People downvoting this are politically opposed to guns because that's the fashionable thing to be in SV, but hackers have a strong gun culture. Always have, always will. Because we're practically all either anarchists or military.
Are you sure they're not downvoting you for being completely off topic while ranting about a hobbyhorse?