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Comment by epgui | Hacker News Reader

I don’t know if it’s just me that’s heartless, but I think if you’re financially sophisticated enough to bank in other countries or to have more than the insurable limit held in cash (!!! why???) then you ought to have known better or to have known the risks.

I never have more than a small amount held in cash, and even if I had a crazy windfall and made some billions, I wouldn’t keep more than a small amount in cash. For the patient folks, there’s equities… For the risk averse, there’s money markets, treasurys, real estate, etc.

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They certainly did know better. They're just hoping if they whine loudly enough now, they won't have to deal with the consequences of the risks they knowingly took and would have happily benefitted from without a word.

Play capitalism games, win capitalism prizes.

Play capitalism games, win socialism prizes. Thats what they would like.

i.e. socialize the losses, capitalize the gains.

see also COVID PPP loans

Whatever issues these may have, they are completely irrelevant to the topic or to this thread.

Any company with more than a couple dozen employees is going to have more than $250k in the bank for payday. SVB had some payroll processing companies as clients, so they each had multiple companies' payroll in the accounts that Friday. And the article mentions that the Cayman Islands branch had investment and private equity firms as clients, so they wouldn't get too far with only $250k in their accounts.

Ah… yes, well I don’t know anything about corporate banking. I was thinking about personal banking practices.

You can use multiple banking accounts at multiple banks and still maintain FDIC protection. There’s many business models set up to facilitate such things, so while you can’t hold billions in this way in practice it’s not a problem for payroll. Ex: https://en.wikipedia.org/wiki/IntraFi_Network

Alternatively, you can also buy your own insurance from a 3rd party to minimize risks.

However, you can also get incentivized to ignore the risks and keep large sums at individual institutions. Which has the obvious downsides SVB customers are discovering.

Are many payroll companies doing business out of the Caymans? No. This was investment and private equity firms.

They should take their losses.

High yield savings accounts give up to 5% atm.

In inflation-adjusted terms, it’s not that exciting: so do other fixed assets that aren’t you lending a random bank cash, such as US/Canada treasurys / government bonds.

The point is that these other instruments don’t have the same risks as lending large amounts of cash to a bank, or even just holding large amounts of cash under your proverbial mattress.

If you’re chasing returns, you’ll need to take risks (and you probably won’t be interested in a 5% savings account in this sort of inflationary environment).

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