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Bank run in Wellesley

Bank Run Scene from "It's A Wonderful Life" (1946)

WCVB reports customers were lining up outside the Wellesley branch of the Silicon Valley Bank after news broke that the bank collapsed today.

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that's a link to a movie

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Link fixed, thanks.

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would today surely may be making some some great films based on the insanity of these times.

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Your money is in a start-up that generates electricity with your toilet.

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became unnecessary after the Great Depression formed the FDIC.
Accounts are guaranteed up to $250K.
Unless you're foolish enough to have more than that in one account, as opposed to spread out in multiple accounts, your money is insured and you don't need to run to the bank like in It's A Wonderful Life.

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I wish to amend my own statement on bank runs.
After doing a little more research on FDIC, it turns out that individual account holders are insured up to $250K regardless of how many accounts in the same bank.
The run on banks by people with more than 250K is warranted.
I'm not in any kind of financial shape to have to concern over that, but I would say that anybody with more than 250K should put it in different banks to insure each account.

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You act as if the FDIC is swift and solvent.

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I'm not aware of a single case where insured depositors didn't quickly regain access to their money.

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Poor Mary became a spinster librarian. Lol.

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is that they took over Boston Private Bank & Trust in 2021.

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they must be smart, fer sure.

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Boston Private Bank was a failing business when SVB took them over. they had been hemorrhaging money, clients, and managers for years. SVB buying them out to get a foothold in Boston and boost their balance sheet is part of the larger pattern that got them where they are now: in the shitter.

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Good. We’re not bailing you out this time either

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People have described it as "a SWAT operation with guns and clipboards" when a bank collapses and the FDIC comes in. (I don't know if the guns part is literally true, but they do send in some Very Serious Accountants who aren't messing around.) Their goal is to get people access to their money again as quickly as possible, with the goal of maintaining faith in the banking system.

...which is what makes this interesting to me. Usually people *do* have a good deal of faith in the system, thanks to the hefty FDIC deposit insurance. There's no reason for most individuals to pull their money out if they think their bank is collapsing; the FDIC is there to make sure that bank runs don't happen. (If you can reassure people that a bank run won't hurt them, they won't *participate* in the run, so it might not even start.) So what does that mean about the VCs that started the run? Did they have holdings well in excess of the insured limits, and had failed to diversify their cash holdings between banks?

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If you read the article Adam links to, it seems a lot of the VCs had uninsured money in the bank. Not smart.

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With more than a handful of employees, you're going to need over $250K in cash on hand (and in a bank) to cover payroll, rent, and pretty much all other business expenses. So yes those startups pulled cash out of SVB so they'd actually have enough money to operate and cover silly things like employee salaries. It's not really feasible to split the payroll account among dozens or hundreds of banks.

Back during the global financial crisis, the FDIC temporarily made the full amount of non-interest-bearing accounts (used mostly by businesses) insured in order to avoid the kind of messes we're likely to see when a bunch of these startups can't make payroll.

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I hadn't really done the mental envelope math of how much liquidity a company would need vs. how many banks they'd need to spread their assets between.

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The Very Serious Accountants are armed with special Accountant Guns that shoot poverty bullets.

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Don't know about armed but a bank failed in the early 90s in the old glass front building that ran from the Congress St bridge to the Summer St bridge (replaced with another glass front building since then due to structural issues from flooding). I used to cut across there on my way to work and saw the back swarming with Feds with boxes, folders, clipboards at like 7 am on Friday morning. It's to prevent the destruction of documents (i.e. evidence). Glad it wasn't my bank that morning.

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the colorized version?!?

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This is like a giant commercial for local credit unions. They aren't as tied up in this sort of stuff as other banks.

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which is a new bank in New Hampshire where I've recently opened an account. All of its loans are related to food and agriculture in New England, so you know your savings are actually being used for something good, rather than being used to finance fossil fuel companies and asinine tech startups and whatnot.

I can't figure out what the difference is between a mutual savings bank and a credit union, but they both are member-owned. Theoretically that means they're less hostile, although that doesn't always shake out in practice. But so far Walden is the most humane banking institution I've been in contact with, by far.

(Also, the interest rates on their accounts are *excellent*.)

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Good luck raising sufficient amounts of food with no fossil fuels

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so I don't see what's stopping us now.

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Walden's savings rate is 2.5%. Which is better than many banks, but still not near the top of what's listed on bankrate.com.

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Phenomenal bank in all of my experiences. Wonderful people, hold your loans, and great rates.

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Their online banking was cranky and limited, they sent me scam-like junk mail ("IMPORTANT BANK INFORMATION" and then there's like some kind of life insurance offer with their name on it), and then they started charging me $5/month for the privilege of having an account with $10k in it and not doing anything with it. "Account inactivity fees" are absolute bullshit. (That's my kid's savings account. Of course it won't have much activity in a given year.) I had them reverse those charges, and then after some contemplation, closed out the account and put the money into Cambridge Savings Bank, which hasn't pulled any nonsense on me yet.

I've also tried Winter Hill Bank and Community Credit Union (of Lynn), both of which were unpleasant. They closed my online account access and cancelled my ATM card after about a 3 month period of disuse! So most of my savings are still back in Virginia, at the community credit union I grew up with. So much for local banks.

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and they have a similar deposit insurance setup, the National Credit Union Administration, to ensure that depositors below $250,000 don't lose their money.

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Any institution can fail but it brings me back to 2008. I believe my local credit union, Metro, at one point had one foreclosure while the national banks were foreclosing on entire city blocks. Studies showed these local banks were more careful about who they loaned to and more likely to work with borrowers when things went sideways.

What happened with Silicone Valley bank doesn't seem like even a remote possibility with the locals.

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Silicon Valley is in the Bay Area.

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Ok, thank you?

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Run, Do not walk to DCU, Digital Federal Credit Union.

Seriously a good bank, based on customer service. They are my mortgage servicer and I have to have a checking account. Every time I've ever had to interact with the loan office or the general customer service for the bank.. I've never been disapointed. Friendly knowlegable staff who really want to help.

I also have Metro CU and I dont have many good things to say about them, except they are a block from my house, which is why I keep them. Customer Service is lack luster.

But DCU man, never an issue. My only real complain is that they don't have any branches closer than Waltham. I'd love a branch in the city and I would dump Metro in a heartbeat.

Best thing is I feel like my home is partly owned by DEC, Digital Equiptment Company, who started DCU as an employee credit union. Even some of the staff I talked to in the Loan department were all accounting ppl at DEC.

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Good distraction from pickleball drama.

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For the toaster?

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Wellesley you say?

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Maybe the wealthy tech wizards who live there can fix it online.

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