So yes it personally did affect our life and we got to see SVB up close and very personal.
We were very fortunate to get paid on Wednesday March 8th. My DH's payroll is through rippling and they took the money out March 7th to pay his company. So they had around $10m at SVB. They also fortunately had a super smart accountant who put the rest of their money into treasuries. So they used to be chase private clients but they found it hard when starting out because Chase saw a $6M deposit and held it for 90 days. So how were they supposed to be paying payroll, bills, rent, etc when money given to them by VC wasn't liquid and the "bank" didn't want to release the funds? It wasn't happening. So a VC partner said "hey got to SVB, they understand start ups. They understand how money in millions comes in, they'll let run your start up and use your money."
So they moved a portion of their money to SVB and the rest the accountant suggested treasuries. $10m was 25% of their money and about 8-12 months of burn. That seemed very reasonable and it seemed secure. I mean it was in a savings/checking account earning pretty much NOTHING. The CEO wasn't about to risk his company and he thought he was nervous about losing money and not making payroll. So solid "checking/savings" account and investment in "treasuries separate". Good plan.
But then the week of March 6th the CEO, and yes this is first hand, my DH called me and we were away for the March 10th weekend and the CEO called us and as was trying to figure out how to access his treasury securities just in case. He was told by the same VC investor (and probably others), that SVB was in precarious shape and he should get his money out. He tried. He put in 4 separate wire transfers trying to get his money out. He got out around $2.5M of the $10M and justifiably was freaking out.
The $2.5M he told us was around 2-3 months of burn so we were fine. The company could meet obligations and have time to cash in their treasuries and still be okay. Yes they had lost about $7-8 million dollars but it wasn't the end of the world. I mean it sucked royally that they had "lost" their investment through no fault of their own except believing money in a bank checking/savings account should be safe.
So yeah I'm pissed. I do think that the federal government should FORCE the SVB excecutives to give back their bonuses and salaries for 5 years and attempt to cover ALL depositors their deposits. The company my DH started with 7 other guys in 2021. I type on here, we're normal people. We aren't multi-millionaires playing. He sunk in his time and took a huge risk, and we truly believed that his company's money was safe and they thought they were doing the "right' thing. They are growing the business to 60 people now in 2 years. Isn't that what it's supposed to be be? A small business growth? That they will likely be revenue positive soon and have been growing like crazy.
They did everything right but you don't want to "bail out" these depositor who just thought that putting money in a checking/savings account would be safe? Then why even put money in banks? How do you want small businesses to run? How do you expect people to start companies and be innovative without some sort of belief that the BANKS are inherently safe?
Where do you want them to put their $10m? Where? How should they have it to pay my husband and his employees? How should they keep it liquid? Does this mean that small businesses shouldn't be allowed to start or grow? What if it were $1m and that covered the business for 1 year burn? It should be in 4 banks to cover it by FDIC?
Or should there be some sort of faith/justification that putting it in a bank means it's safe? What about people? Guess this means if you have more than $250k personally you should not be leaving it anywhere near a bank.
That's the problem SVB is going to teach us. That banks aren't to be trusted. Well maybe really big banks only. It's just a difficult thing to wrap your head around. That banks suck. That putting your money into a bank and not "investing" it but seriously just putting it into a checking/savings account = risk seems nuts. But is this the new norm?