Mea Vita: Carpe Diem: banking

Sunday, March 12, 2023

Silicon Valley Bank

Tomorrow, the FDIC will allow access to Silicon Valley Bank (SVB) accounts up to the insured amount of $250,000. FDIC insurance is something that's not available in the crypto world (just ask SBF and FTX). I'm guessing that all of SVB bank accounts will probably recoup at least 80% of their deposit when the dust settles. This is why billionaires buy many obscenely expensive homes since those investments can be insured to 100%.

Last week, the CEO of SVB sold $3.6 mm in stock as part of a trading plan. I don't think there's much to see with the CEO's stock sales if the cash ended up in SVB, not some other bank. If not, he'll have a tough time explaining that.

Although I haven't had any personal experience with SVB, a good friend of mind did when he, as CEO of a startup, raised $2.5 mm about 15 years ago. Part of his fund raising deal was that SVB would loan his company $500K provided that all the funds were kept in a SVB account, which he did. In 2009, when times became tough, my buddy's startup had $600K in cash. This wasn't a problem until SVB invoked their MAC clause (material adverse change), swooped in, and pulled his $500K. Unfortunately, the corporation's fellow board members didn't want to fight SVB because they had other deals with the bank. In other words, these directors put their own business interests ahead of the corporations. But what can you do?

My buddy didn't have kind words for SVB when I asked him for comments on Friday.

Monday, June 12, 2017

My Luck With Banking

Last month, I withdrew $200 from a San Diego ATM. Unlike New York, where ATMs dispense $20, $50, and $100 bills, San Diego's ATMs have always spit out $20 bills, in my experience. But, last month I got a pleasant surprise when, instead of receiving ten $20 bills, I received nine $20 bills and one $100 bill. Suspected jackpot!

My first thought was that I had either received $280 in cash or, perhaps, I received $180, plus a counterfeit $100 bill. I immediately spent the "Benjamin" without any problem. On Friday, I looked at my bank statement and saw that I was debited $200, as expected. I spoke to a local corner market owner who refills his store's ATM and he told me that there would be no record of the extra $100 bill since the ATMs can't distinguish between bills – everything's a $20 bill to the ATM. Reaffirmed jackpot!

I figured that I would be free-and-clear of the extra $80, but it wouldn't surprise me if, at some point in the future, that money might be debited from my bank account without notice. So, I sent a message to my bank, describing what happened and this was their response:

Dear Mr. Moreno,

Thank you for your message. I appreciate your honesty!

As it turns out, [we] can file a dispute when you are not paid enough, but we do not have a resolution process when you are overpaid [...] it sounds as though you may have had a lucky draw!

Confirmed jackpot!

Bad Luck With Banking

In the mid-1980s, I withdrew some money from a Marine Corps West Federal Credit Union on Camp Pendleton. I heard some paper crunching inside the machine as the money was dispensed, jamming up the cash dispenser. When I walked into the bank to report the issue, the banker looked at me with suspicion and skepticism as I told her what happened.

"We'll look into it," she said, dismissively.

About a week later, I followed up with her and she made me whole. She seemed a little defensive when I asked what happened and how they confirmed it. She simply said the extra money was discovered jammed in the ATM cash dispenser feeder. A minor hassle for me before the age of e-mail, but it all worked out.

One day, I'll write about how, in the mid-1990s, my landlord deposited my rent checks, but he wasn't credited for them. My bank, which was a different institution than his, was adamant that he was "almost positively" lying. He wasn't, but it took a couple months to reconcile.

PS – Did you know that you can make actual size, hard copy reproductions of US bills in black and white? You can also make color reproductions of money as long as the one-sided reproduction is more than 25% smaller or 50% larger than genuine bills.