Random thoughts on SVB collapse

Between now and Monday morning, government (not just FDIC) has some important decisions to make. 90% of SVB deposits are over 250 K FDIC insurance limit. If FDIC has to decide to make these depositors whole, that requires 2/3rd of FED, 2/3rd of FDIC, Treasury Secretary and finally POTUS all has to agree.

Another option is to sell this bank to JPM, BAC or Citi in that order. The reason I am listing these 3 banks is these are systemically important bank, that means the bank runs cannot take them down, FED and US Government are behind them. Keep this in mind if you have to keep more than $250 K deposit in a single place.

If for some reason a deal is not concluded by Monday morning and US regulators decided not to pay un-insured depositors, the only logical conclusion is every corporation across the country are going to move their deposits to JPM, BAC or Citi. This time government will start a bank run.

A very important lesson for investors

**Spread your money; Ever since GFC, I spread my investments across brokerage; likewise, we don’t have more than $250K in a single bank, we spread it; Yeah this means have ton of accounts; but a single institution going down cannot take our money with it. **

You worked hard, and earned it. It will be a shame to lose it because someone else has decided to gamble with it.