This is what a US bank failure looks like.[1] This 2009 picture shows the CEO of a failed bank near Chicago at the moment the 80-person FDIC team has arrived to take over. He's being told that it is no longer his bank.
The bank re-opened for withdrawals the next day under FDIC control, and was later sold off to another bank.
Edit: the video was relatively optimistic given the subject matter, at least for bank customers, not the owner. Assuming there's a market for buyers in such a case.
I'm curious if and how the "secret online bidding process" the FDIC runs to find bidders doesn't leak out to the owners of banks. It's possible the banker in the photo heard about it via word of mouth when it was being shopped.
The end of this video is the juiciest part: Maybe we shouldn't allow mega banks like BoA, Chase, etc. to exist because they pose systematic risk to the economy and have to be bailed out by tax payers if they fail.
The narrative that tax payers essentially gifted money to the big bad banks and evil investors is plain wrong. Most of the bailout money the large financial institutions like BoA or Chase received was ultimately paid back. Also what's often conveniently forgotten by the Occupy Wall Street crowd is that many pension funds also got bailed out.
Ironically the only consequences after 2008 was new banking rules which shuttered hundreds of small banks and reduced the market even further to 5 mega banks, who could much more easily handle the new requirements that were designed for large banks but applied equally to all bank sizes.
These calls for regulations always seem to result in that sort of thing happening.
They didn't really want "too big to fail" laws they wanted "don't ruffle the status quo, even if it harms the market long term".
In the Youtube the FDIC selling a 50yr old small independent bank to a $9 billion dollar megafirm was the real message of the video. Even if that bank was ultimately at fault for engaging in the gov-incentivized mortgage bonanza, in the years following the new rules plenty of other healthy smaller banks got swept up by bigger banks when the rules made them infeasible businesses.
And an FDIC takeover and forced sale seems like a possible outcome here as well... But the entities that have more than $250K in the failed bank will likely lose some money. As I understand it, those who have over $250K will be issued stock in the new bank so they won't likely completely lose the amount over $250K, but it won't be as liquid as the cash they formerly had either.
> But the entities that have more than $250K in the failed bank will likely lose some money
If anyone loses money in the SVB downfall, it is entirely the fault of the CEO/CFO for poor management.
Depending on your monthly cash flow and your balances, anything over $100k should be kept in CDARS. It is explicitly designed to keep your cash spread out across banks limiting risk of default at a single institution and keeping the balance at each bank below FDIC insurance maximums.
Maybe it is common in the US, and is done routinely when starting a business and business account. But if not I would be surprised if many seedround / series A startups with a couple of million in the bank do this.
In the UK I have not heard of an equivalent scheme, but then again I am not dealing with accounts.
The bank re-opened for withdrawals the next day under FDIC control, and was later sold off to another bank.
[1] https://i.postimg.cc/zGQNQmmf/bankfailed.jpg