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0 pointsphotochemsyn3y ago0 comments

What's the rationale behind not breaking up the accounts of large depositors into FDIC-insurable accounts? Apparently this is called a 'cash sweep'. Typical ad blurb:

> "Insured cash sweep is a safe and convenient service that provides FDIC insurance on large balances while giving you access to your money, as well as the ability to earn interest. Choose between demand accounts, which offer unlimited withdrawals, and money market accounts that permit up to six withdrawals per month."

I've heard some claims that SVB was offering incentives to depositors who kept their funds in one lump account, is this true and if so what's the benefit to SVB from doing that?

0 comments

balderdash3y ago

It’s called brokered deposits, there is not reason to not do it if it’s just sitting in bank acccount, but if the $ size gets large (>$25m it can be cumbersome), and if there is a lot of operational activity it doesn’t make much sense.

What’s unforgivable is why these large depositors that didn’t tend this cash for short term operational needs didn’t have the funds in govt securities in an insured brokerage account at a trust company…

Where many venture backed companies got hung up though is that the terms of venture debt provided by SVB required the borrowers to keep use SVB as their bank…

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0 pointsphotochemsyn3y ago0 comments

What's the rationale behind not breaking up the accounts of large depositors into FDIC-insurable accounts? Apparently this is called a 'cash sweep'. Typical ad blurb:

I've heard some claims that SVB was offering incentives to depositors who kept their funds in one lump account, is this true and if so what's the benefit to SVB from doing that?

0 comments

balderdash3y ago

Where many venture backed companies got hung up though is that the terms of venture debt provided by SVB required the borrowers to keep use SVB as their bank…

j / k navigate · click thread line to collapse