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.
