Nah, FDIC-insured funds are available the next business day in every bank failure. Funds over the limit could be locked up but their primary goal is to make sure that $250k is ~immediately available.
Would that actually be case if a dozen banks failed in single day or a hundred? Does FDIC have enough man power to handle all of these banks at one time simultaneously?
I suspect that’s why they are offering 1.5-2x comp for SVB employees at the moment. They know the SVB systems. They are these power to get out of the situation.
I imagine the same would happen in other situations.
What? AFAIK the FDIC just keeps paying employees as normal. Where’d you hear about 1.5-2x comp, except perhaps in the event they’re hourly employees working overtime, which would just fall under normal overtime rules not some special FDIC bonus.
Employees at SVB have roughly the same game theory decisions to stay or leave as depositors did. It costs nothing to leave right now and go work for a rival bank, but the last person out the door is going to have a very hard time… there are only a certain number of jobs / job opening for their roles so the FDIC did indeed offer a premium to keep them around.
Dozens of banks, very likely yes, hundreds - probably not the next day but the ability to resolve dozens should be enough to prevent hundreds from needing help.
It may be irrational, but then irrational behavior is whats leads to bank runs.
Why should I keep my money there if I can hit a few buttons and move it somewhere with less perceived risk? What if every one is thinking like that? Great FDIC will step in quickly, I hope.
I think tomorrow will be interesting in general to see how things hold up.
But is it irrational to take your money out if you think there might be a bank run? If I have a large amount of money to lose, I think I’d do the same!
I was thinking to pull out my money. Maybe Redneck bank, but ultimately chose not to this morning. I have less thank 250k. I might pull out 40k for 4 week bills. But that’s just for better interest while staying relatively liquid.
There hasn’t been a reason to be in Ally for at least the past year or so, they’ve been WAY behind other banks in raising their rates along with the Fed rate hikes. Tons of competitors are offering 4-5% now on savings, and short-term T-Bills and money market funds are also above 4%.
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