News for week of 2023-03-13

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  • Comments (8)

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      @John Ramey

      Should we withdraw $9,995.00 cash from our individual banks/credit unions on Monday 3/13/2023?   I personally may do just that.

      Re: Failure of Silicon Valley Bank.   Latest info states that gov’t WILL bail out the customers for the full extent of their holdings in the bank.   They will not reimburse the owners/shareholders of the bank.     Initially Janet Yellen said 12 hours ago that these customers would not be reimbursed above the $250,000.00 FDIC limit.   Gov’t is worried that runs on smaller banks could prove “troublesome” and begin a cascade of effects on the banking system.   

      In California, and maybe in USA as a whole, customers are limited to $9,999.99 cash withdrawal each day without having the withdrawal reported to the IRS.   The bank may report a “suspicious” customer, regardless, if the amount is $2,000.00 or more.  This traces back to a law regarding money laundering.  (Of course the issue is far more complex, but this is the gist as I understand it.)

      I have very limited knowledge of financial matters.   I remember that the founder of theprepared.com was a man from Silicon Valley – @John Ramey.  Mr. Ramey  is undoubtedly very knowledgeable on this exact situation.    If so, would Mr. Ramey or a financial expert please weigh in about this issue.

      The news takes great care to describe this bank failure as a unique event because the depositors were “mostly technology workers and startups …. such as Roku” and had exposure to cryptocurrency and a limited pool of wealthy depositors.  

      “Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”

      Just 2 days ago, I was joking with family members that the time to run for the hills is when the government soothingly states that “there is no need to worry–we’ve got this”.  

      • 3

        John Ramey actually talked a lot about the SVB issue on Friday in Discord. This would be a good time to sign up for Discord if you haven’t already.

        In summary, SVB did have some minor financial problems, but it’s main problem was people overreacting and pulling all their money out. Most of its customers are startups, so when a prominent VC says it’s time to withdraw all money, lots of those startups react and it has a huge effect.

        My take on this is that the government decision yesterday to make all depositors whole will go a long way towards ensuring that this problem doesn’t spread to other banks. I won’t be doing anything unusual today.

      • 2

        My HOA had a board meeting this week and decided to open an extra account at a second bank in case their main bank had financial problems. They were mostly trying to ensure that no bank had more than the FDIC limit of $250k, but were also specifically looking for the second bank to be one of the biggest banks which are seen as more stable.

        If a lot of people are thinking this way, it could cause problems for smaller banks.

        Just found a relevant TP guide on how much money to keep in cash vs savings and investments. Sounded relevant to the “should I withdraw $10k” question. But anyone concerned about a run on their bank could also consider splitting funds between two banks.


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      Sun had a coronal mass ejection similar to the past Carrington event; it was on the other side of the sun, at least.