FINAL UPDATE: Should hopefully tide over this issue for the foreseeable future — FDIC, Fed & Treasury guarantee all deposits for SVB and Signature Bank

Joint Statement by the Department of the Treasury, Federal Reserve, and FDIC

Latest news

FDIC has brought SVB under receivership

This is the system working as intended

Rippling used to run payroll via SVB but has made an accelerated switch to JPM; already in-progress payroll cycles are in limbo. UPDATE: follow instructions sent by Rippling

A primer to claim FDIC insurance

Crisis introduced by ~25% of SVB’s deposits being withdrawn in a single day

Circle has funds tied up at SVB which is (temporarily) affecting the USDC peg

Facts

• $250,000 in assets in each category of account in each institution is protected by FDIC for a given depositor. So if you have 2 banks with a checking and savings account each, your theoretical maximum insured amount is $1M. But if you have 2 checking accounts with the same institution, you’re only insured $250K.
• Anything more than that is likely but not guaranteed (legally / by regulation) to be available
  • This is likely to be resolve over the next 1-2 business days. People are no doubt going to be working OT over the weekend to “bail out” SVB. A large bank may step in in this case, but it may not be JP Morgan or Bank of America, since they’re blocked by regulation from getting much larger via acquisition… but an exception is possible (see here).
• This may be affected (in a good way) by whether you had funds in sweep accounts. With sweep accounts, funds are held with with third party custodians, and are not on SVB’s balance sheet. SVB specifically worked with Morgan Stanley and Blackrock (potentially others). These funds may stay difficult to access for a little while until logistics are sorted out, but all things equal, they should be more protected than uninsured deposits that were custodied by SVB. To try to find out more on the status of this, see below. Credit to Chris Seidensticker, who’s hands down one of the best operators / CFO advisors I’ve seen.
  • Black Rock, 1.800.441.7450. “They're working on a way for each of the companies that have sweep account funds w/them to open direct accounts. And then, SVB will need to communicate with them the exact amounts each company had invested. No timeline for getting that information from SVB, but I was able to give the Black Rock rep my information, and he's going to email me the account opening info required.”
  • Morgan Stanley, 1.888.378.1630. “They said that opening a direct account at Morgan Stanley wouldn't help b/c funds would apparently still somehow have to go through SVB (even though it's in receivership) and then back to Morgan Stanley. I gave them my contact info, too, though.”

No regret moves

• Diversify your capital base — spreading capital across different checking + savings + treasury accounts
• Ensure a high ratio of insured to total deposits (e.g., at AbstractOps we have 2 checking accounts, one savings account, and 3 treasury accounts; >>80% of our balances are FDIC or SIPC insured)
• Direct investments in US treasury bills are still only insured to $500,000; however, there is the secondary “protection” of the full faith and credit of the US government. So, investing directly in US T-bills is one of the safer things you can do.

<aside> 👇 Our playbook

</aside>

Open a checking, savings, and treasury account with Mercury — you can apply in under 10 minutes here, and they’re working the weekend to improve SLAs