In 2022, 34 banks were required to undergo the Fed stress-tests (pg 13). All passed. Top Category I has 8 banks. https://www.federalreserve.gov/publications/files/2022-dfast-results-20220623.pdf
2023 stress-tests are in progress.
One unintended consequence of the SVB Bank failure may be that uninsured US bank deposits may move soon to the these banks. The SVB Bank also had several overseas branches, and foreigners are confused how can their money have problems in a bank from the richest country in the world. I have only seen the UK move fast on containing the fallout in the UK.
It is also unfortunate that many startups (not just in CA, but across the US and several foreign countries) were required to hold substantial deposits at the SVB Bank as part of their startup funding through the VCs + SVB Bank. This even if they had concerns or reservations about the SVB Bank.
Scenes from First Republic Bank in CA on Saturday (lining up for deposits or withdrawals?), https://twitter.com/CitizenFreePres/status/1634691876178780160
https://twitter.com/DailyMail/status/1634701406761529344

The rags are putting out lists of who they deem to be at risk of fallout from SVB. Most of the banks are ones I don't hear people saying they use. But Ally is on most lists that I have seen and has been popular. This messy list is from MSN since it isn't behind a paywall. I wonder if making such lists produces a run on the banks.

10 banks that may face trouble in the wake of the SVB Financial Group debacle

Here are the 10 showing contracting margins over the past year, or the smallest expansions of margins:
Bank Ticker City Net interest income/ avg. assets – Q4 2022 Net interest income/ avg. assets – Q3 2022 Net interest income/ avg. assets – Q4 2021 One-year contraction or expansion
Customers Bancorp Inc. West Reading, Pa. 2.61% 3.10% 4.03% -1.42%
First Republic Bank San Francisco, Calif. 2.28% 2.53% 2.50% -0.22%
Sandy Spring Bancorp Inc. Olney, Md. 3.10% 3.34% 3.29% -0.19%
New York Community Bancorp Inc. Hicksville, N.Y. 2.10% 2.06% 2.20% -0.11%
First Foundation Inc. Dallas, Texas 2.35% 2.98% 2.41% -0.07%
Ally Financial Inc. Detroit, Mich. 4.04% 4.20% 4.09% -0.05%
Dime Community Bancshares Inc. Hauppauge, N.Y. 2.98% 3.20% 2.95% 0.03%
Pacific Premier Bancorp Inc. Irvine, Calif. 3.34% 3.34% 3.27% 0.07%
Prosperity Bancshares Inc. Houston, Texas 2.72% 2.78% 2.65% 0.07%
Columbia Financial Inc. Fair Lawn, N.J. 2.69% 2.78% 2.60% 0.09%
Source: FactSet

Thanks @MikeM & @Sven for the additional thoughts. Glad the robo worked Mike. My guess is that consumers staples held up better than most of the market Friday. And, of course bonds ripped higher. @Derf - “deer in the headlights” - Yes, for sure! / I was comfortable buying a bit Friday because exactly 1 week earlier I’d sold risk assets “across the board” as I put it in @Crash’s thread - “Or Does this belong in fund discussions …. “. Had raised fixed income to 20%. After Friday’s buys fixed is around 19.25% which is still on the high side compared to 6-12 months earlier. (Don’t make too much of that number because the various allocation / balanced funds also hold fixed income.)
It’s hard for even me to prefer riskier investments to cash or short term high quality bonds at the moment. One thought is that if I had a big slug in cash yielding 5-7% and if the markets or my favorite funds bounced 15-20% over 3 months, than I’d face the prospect of moving into equities at a more expensive price. And that income from 3 months worth of cash might amount to 2 or 3% annualized. No one knows of course. Just to say that avoiding the dash to cash isn’t quite as dumb as it appears on the surface.

I am puzzled by how few accounts were insured. Here's why:
About fifteen years ago, I worked for a small company in the SF Bay Area that was building up cash to purchase a permanent home. Folks on that end of the company were not happy with the treatment they were getting from Wells Fargo. So they went shopping around. They ended up going with Bank of Marin, because it claimed that it could break up the large sum into more than one insured deposit account.
Another example of this would be where I have my taxable investment account. The sweep account is not a money market fund, but an FDIC insured deposit account. While it is not a feature that I have been able to enjoy,

the last time I checked, they advertised that they could break my hoard of spondulicks into multiple accounts if I bought a winning lottery ticket, and needed to park the cash.

So. if this is still legally possible, why wasn't it being done at SVB?
I doubt I have command of the terms of art that would get a meaningful response out of google, but rather an inundation of advertising from banks.

+1.

Well, I'm not the only one who questions the present banking oversight/systems failure situation.
Edited excerpts from a current Wall Street Journal article:

Silicon Valley Bank’s failure boils down to a simple misstep: It grew too fast using borrowed short-term money from depositors who could ask to be repaid at any time, and invested it in long-term assets that it was unable, or unwilling, to sell.
In addition, nearly 90% of SVB’s deposits were uninsured, making them more prone to flight in times of trouble since the Federal Deposit Insurance Corp. doesn’t stand behind them. The Federal Reserve was the primary federal regulator for both banks.
“A $200 billion bank should not fail because of liquidity,” said Eric Rosengren, who served as president of the Federal Reserve Bank of Boston from 2007 to 2021 and was its top bank regulator before that. “They should have known their portfolio was heavily weighted toward venture capital, and venture-capital firms don’t want to be taking risk with their deposits. So there was a good chance if venture-capital portfolio companies started pulling out funds, they’d do it en masse.”
To be sure, banks regularly borrow short-term to lend for longer periods of time. But SVB concentrated its balance sheet in long-dated assets, essentially reaching for yield to bolster results, at the worst possible time, just ahead of the Federal Reserve’s rate-hiking campaign. That left it sitting on big unrealized losses, making it more susceptible to customers pulling funds.
The banking industry as a whole had some $620 billion in unrealized losses on securities at the end of last year, according to the Federal Deposit Insurance Corp., which began highlighting those late last year.
Another regulatory issue: accounting and capital rules that allow banks to ignore mark-to-market losses on some securities if they intend to hold them to maturity. At SVB, the bucket holding these securities—consisting largely of mortgage bonds issued by government-sponsored entities—is where the biggest capital hole is.
The idea behind such a bucket is that it insulates an institution from short-term price volatility. The problem this poses is two-fold.
First, a bank may not be able to hold such securities to maturity if it faces a cash crunch, as happened at SVB. Yet selling the securities would force the bank to recognize potentially massive losses.
Second, the treatment of the securities means banks like SVB are discouraged from selling when losses emerge, potentially causing problems to fester and grow. That appears to have been the case at SVB and many other banks as rising interest rates in 2022 caused large losses in bond markets.
Banks have an additional incentive to pile into Treasurys. They have to hold less capital against such holdings, supposedly because they are risk-free. However, this means banks are holding less capital to absorb losses, and Treasurys can lose value due to changes in interest rates.
Others said monetary policy over the past decade played a role. The Fed “suppressed the yield curve and made it very clear to the banking industry that [it] would do this for a considerable period,” said Thomas Hoenig, former president of the Federal Reserve Bank of Kansas City and former vice chairman of the FDIC. “So bankers are making decisions based on that message and based on that policy, and they fill their portfolio up with government securities of varying maturities, and they say they’re going to hold them to maturity.”
That suggests the need for regulators to take a broader view of the risks in the financial system.

Goldman Sachs offers a high yield savings account that pays 3.75% and is FDIC insured. I am considering this option.
Marcus will give you and and existing customer who refers you an extra 1% for three months. See if someone will send you a referral code if you're planning to do open an account there.
https://www.marcus.com/us/en/savings/high-yield-savings/referral

I’m not sure on this, but part of the issue may have to do with who legally owns the bank's assets because the bank is in the private sector, and what the FDIC and regulators are legally allowed to do with those assets in the event of a bank run and failure. It’s one thing for the FDIC/ regulators to sell those bonds immediately in its efforts to pay depositors in its standard insurance role. It is another thing for the government to hold onto those bonds potentially for years until they mature to recoup losses. That sounds like nationalization of the bank, which doesn’t happen in the U.S. historically.
Normally, in a bankruptcy there is a line of creditors with a hierarchy of who gets paid first. I could see there being legal wrangling here if the government held the bank’s bond portfolio after backstopping depositors. The argument could be that the bank investors want to seize that bond portfolio themselves to make themselves whole. A SVB stock or more likely bond investor could argue that the bank’s assets now that depositors are secure belong to investors. The government selling those assets immediately to pay depositors eliminates any potential legal ambiguity, even if that sale is at a loss.
I actually think nationalization of failing banks makes a lot of sense. Otherwise, you end up with capitalism on the way up and socialist taxpayer funded bailouts on the way down. Bailouts here are socialism for the rich. In Sweden when they had a similar banking crisis to our 2008 one in the 1990s, they conducted a structured bankruptcy of the failed banks and nationalized them:
https://en.m.wikipedia.org/wiki/Sweden_financial_crisis_1990–1994
Krugman recommended the government do the same thing here as Sweden in 2008 but was ignored. Instead, the financial sector got a big taxpayer funded gift with few long-term repercussions for any of the largest companies and the executives involved.
As for options to avoid “government-induced erosion” from rate increases, floating rate debt comes to mind. But then investors are trading duration or interest rate risk for credit risk.

Hi OJ, Not to answer your question, but I remain curious about why the Treasury couldn't (regs) or wouldn't provide a 'temp' bailout/backstop. Perhaps there is fear of setting a precedent. This is very complex without doubt.
As to part of what you noted about backstopping a business, versus backstopping/bailout of a financial institution that is part of the FDIC/banking system; I recall this from the market melt in 2008. The TARP program had particular criteria for receiving bailout monies. The list and description is here. The program went further into the economy other than financial institutions. Being from Michigan, I gave a lot of attention to what was taking place with the auto industry and the many ancillary organizations that supported this vast industry. If the big 3 auto were to melt away; the impact across the U.S. would be large in many industries, all the way to the local restaurants and bars.
Although insurance companies fall under state regs (to the best of my knowledge), there influence via many insurance products travel the entire country. One such very large insurance company, about 3 days before the TARP money window closed, had made and finalized the purchase of a savings and loan in Indiana, in order to qualify for TARP funds. Note: these 'loans' did carry interest and was expected to be repaid to the Treasury. The Treasury did have a profit when all was settled and done from the various loans.
The Troubled Asset Relief Program (TARP) was instituted by the U.S. Treasury following the 2008 financial crisis. TARP stabilized the financial system by having the government buy mortgage-backed securities and bank stocks. From 2008 to 2010, TARP invested $426.4 billion in firms and recouped $441.7 billion in return.

What is "government induced erosion"? It's not bank failures. SVB failed because it made a bad call on interest rates (i.e. that they would remain relatively stable indefinitely). Not because "indefinitely" didn't last forever and the Fed raised rates.
Yogi gave some places to put money - T-bills, or perhaps Treasury MMFs. Or put the money into TBTF banks. No matter what one does with cash, one will lose value to inflation. The only question is how much. And corporations are willing to eat those costs.
In Europe, during NIRP (Negative Interest Rate Policy), it was even worth their while to dump their cash into negative paying bank accounts.

As a result of the different pace of pass-through [of ECB rate changes], an increasing number of investment grade banks and more generally sound banks start charging negative rates on corporate deposits after the start of the NIRP. A few banks even lower the interest rate on corporate deposits below the policy rate. Importantly, sound banks do not experience deposit outflows even if they charge negative rates. On average, deposits increase during the NIRP period, as is consistent with high demand for liquidity and safe assets

https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2289~1a3c04db25.en.pdf

Contagion is spreading.....next week's going to be intersting....
SVB Fallout Spreads Around World From London to Singapore
https://www.bloomberg.com/news/articles/2023-03-11/svb-fallout-spreads-around-the-world-as-uk-firms-plea-for-help?srnd=premium&leadSource=uverify+wall

Not much I can add to what Yogi wrote. From the FDIC's press release, it sounds like only the insured amounts are being transferred to the successor bank, Deposit Insurance National Bank of Santa Clara (DINB). The rest of the gazillion dollars remain as liabilities of SVB, for which the depositors get receivership certificates (effectively, priority among bankruptcy creditors).
https://www.fdic.gov/news/press-releases/2023/pr23016.html
Maybe there will be investors in DINB. But no one will buy SVB's long term treasuries at par - which is what Yogi explained.
We can turn your question around: would the uninsured depositors be willing to lock up their money for 10 years (at a low interest rate) in order to be made whole a decade from now? Unless the depositors were forced to, they would not. They'd lose both the time value of their money and the use of the money for years. They'd rather take pennies on the dollar.

You are really not addressing my fundamental question, which is not primarily about SVB:
OK, I'm a business owner: why is it my responsibility to protect my cash reserves against government actions- ie, the Fed?
And if it is my responsibility, exactly how am 1 expected to do that? What financial mechanism exists that allows me to simply keep my company money safe from government-induced erosion while I try to run my business?

Well, SVB took in deposits that were way more than its business lending and investing activities. It then parked that excess money into low-rate Treasuries.
It didn't have to do that. It could have stopped taking the deposits by offering very unattractive deposit terms. My neighborhood bank (a MAJOR regional bank) is paying 0.01% (no mistake) on savings, and 0% on checking with a minimum to avoid monthly charges. I would be foolish to keep any money there beyond walk-around money (I do have a safety deposit box there; they have cashed my maturing EE bonds on spot; and provided Medallion Signature Guarantee when I needed it). My point is that this bank clearly doesn't need any more deposits and it isn't attracting them to just put in Treasuries.
So, SVB was responsible for its business decisions and actions. Powell isn't going to call every CEO, or you and I, to ask if it was OK for him to change rates.

Hi,
Can I contribute the maximum of the traditional IRA contribution limit after maxing out 401k as long as I meet modified AGI limit for 2022?
Thanks for clarifying.
- Mrc

@Old_Joe, imagine that YOU are deep pocket investor called for the rescue. Say, the SVB/FDIC want to unload $10 billion in 2% coupon 10-yr T-Notes. You will own this lousy-rate portfolio that will return you 2% guaranteed in 10 years, not before. So, how much cash you will provide to SVB/FDIC on Monday?
Even if the deep pocket was Uncle Sam, you would be asking it to settle a 10-yr obligation right away and it cannot be at 100%.
Moreover, there is a lack of willing deep pockets. Warren Buffett? Elon Musk? (on Twitter, somebody suggested this and Elon tweeted that he could be interested. He shouldn't joke about things like this - he should have learned from his Twitter experience.)
In situations like this, a deep pocket will demand equity and/or warrants in any successor entity, in addition to the lousy-rate T-Note portfolio, to cover 100% now.

Related from early Friday after the FDIC seizure:
Former Treasury Secretary Lawrence Summers warned that there will be “severe” consequences for the innovation sector of the US economy if regulators don’t smoothly work out the collapse of Silicon Valley Bank.
“It certainly is going to have very substantial consequences for Silicon Valley — and for the economy of the whole venture sector, which has been dynamic — unless the government is able to assure that this situation is worked through,” Summers said on Bloomberg Television’s “Wall Street Week” with David Westin.
Earlier Friday, regulators stepped in and seized the bank known as SVB after it mounted an unsuccessful attempt to raise capital and saw a cash exodus from the tech startups that had fueled its rise. The lender had plowed the tens of billions of dollars it took in from venture-capital-backed startups into longer-term bonds, a move that led to massive losses.
The Federal Deposit Insurance Corp., which has been appointed as SVB’s receiver, only insures bank deposits of up to $250,000. But a large share of the money deposited at SVB was uninsured: more than 93% of domestic deposits as of Dec. 31, according to a regulatory filing.
“There are dozens, if not hundreds, of startups that were planning to use that cash to meet their payroll next week,” according to Summers, a Harvard University professor and paid contributor to Bloomberg Television. “If that’s not able to happen, the consequences really will be quite severe for our innovation system.”
Summers said he hoped that regulators will be “aggressive about containing the problem and containing possible contagion.”
“I don’t think this is a time for moral-hazard lectures or for talk about teaching people lessons,” he said. “We have enough strains and challenges in the economy without adding the collateral consequences of a breakdown in an important sector of the economy.”
The sudden implosion of SVB delivered a deep blow to a sector already reeling from layoffs, falling stock prices and diminishing funding for startups. The bank is most known for its financing in the venture capital community but also serves as a financial supermarket for tech executives, providing mortgages on mansions, personal lines of credit and financing for vineyards.
Treasury Secretary Janet Yellen earlier in the day convened a meeting of top regulators, after which she issued a statement saying that the US banking system “remains resilient” and that regulators “have effective tools” to address developments around Silicon Valley Bank.
For his part, Summers said, “I don’t think this is likely to be a broadly systemic problem.”
The hammering of SVB’s stock triggered a broader selloff in US lenders, with the KBW Bank Index tumbling 16% for the week — the worst selloff since the March 2020 Covid shock to the financial system.
Summers said it doesn’t now look like the biggest banks had the kind of mismatch between the kind of deposits SVB had and “the ways in which they had invested their money in longer-term bonds.”
Earlier Friday, Summers said that “there may be a need for some consolidation” in the banking sector as a result of the latest developments. That could then pose a test for regulators, he said.
A number of Democrats have pushed to limit bank mergers. For example, Senate Banking Committee Chair Sherrod Brown last year called for “ensuring that bank mergers, if approved, serve American families, small businesses, and communities – not Wall Street and big corporations.”
Summers warned that “one of the mistakes the authorities could make would be — out of a fear of consolidation coming from some kind of populist concern about concentration — blocking combinations that would ultimately operate in the direction of financial stability.”
“That’s something I think that we’re going to need to be attentive to going forward,” the former Treasury chief said.
--

PRTXX. (MM.) TRP current 7-day SEC yield is 4.31%. Just curious, so I looked it up. That's where my sweep acct. money goes. It's Treasuries.

Well, after hearing from the MFO community, I've changed the title of this post, as well as my mind. The demise of SVB is multilayered and many faceted, and evidently the commonly encountered "greed and stupidity" factors were a major factor after all, as usual.
Below is a section containing severely abridged excerpts from a long article in The Washington Post.
From that section this excerpt is most pertinent to a question that I have:

The FDIC is expected to sell the bank’s remaining assets and use the proceeds to pay the uninsured depositors.

In more common banking situations the problem is that the value of bank loan assets has been significantly reduced by deterioration in the market value of those assets. That is not the case with Silicon Valley Bank- evidently their problem is mostly due to the deterioration of the PRESENT VALUE of otherwise secure government paper.
Question: If a significant source of the problem is that Silicon Valley Bank was forced, by a depositor bank run, to sell US Gov't securities at a loss because their current value is less than their maturity value, why would the FDIC or any other "rescue" authority do that? Rather than take an immediate loss, why wouldn't a "rescue authority" provide immediate funding equal to the actual maturity value of the underlying assets, and then retain those assets until they actually mature, thus minimizing the loss due to the maturity problem?
Excerpts from the WashPo article-

Federal officials faced growing pressure Saturday to bail out even the biggest customers of the collapsed Silicon Valley Bank, igniting a ferocious political debate over Washington’s role in tamping down potential threats to the broader U.S. financial sector.
Companies that did business with Silicon Valley Bank are already warning that the bank’s failure may force thousands of layoffs or furloughs, and prevent many workers from receiving their next paycheck.
Some experts worry that large numbers of companies could move to transfer their money from regional banks similar to SVB to safer giant commercial banks Monday, leading to a fresh round of destabilization.
“All the choices are bad choices,” said Simon Johnson, an economist at MIT who previously served as chief economist of the International Monetary Fund. “You don’t want to extend this kind of bailout to people. But if you aren’t doing that, you face a run of really big — and really hard to predict — proportions.”
But officials at the FDIC — which, in a stunning move Friday, took over Silicon Valley Bank during normal trading hours — are facing some calls to go beyond giving smaller customers their money back.
On Friday, the FDIC said in a statement that... uninsured depositors with accounts bigger than $250,000 — would get some of their money back, but it did not specify how much. Uninsured depositors make up the overwhelming majority of the bank’s customers.
A slew of federal regulators — including those with the FDIC, Federal Reserve and Treasury Department — have scheduled a number of private briefings with top lawmakers since the bank’s collapse, including members of the House Financial Services Committee, which oversees banking, according to two people familiar with the matter who spoke on the condition of anonymity to describe the conversations.
Unwinding the bank’s balance sheet will begin in the next few days if the FDIC can’t find another bank to take over all of SVB’s business. Customers who had uninsured deposits will receive some amount of money back by next week, the FDIC said, without specifying how much. The FDIC is expected to sell the bank’s remaining assets and use the proceeds to pay the uninsured depositors.
SVB held roughly $150 billion in uninsured deposits, according to the company’s latest financial statement, issued late last month. That amounts to more than 93 percent of the firm’s deposits, Bloomberg News reported. Many of the deposits came from wealthy venture capitalists or tech firms that Washington would face certain fury for aiding, although the precise percentage held by businesses is unknown. Roku, California vineyards and philanthropic efforts backed by venture capitalists were all among the firms that had money at SVB.

FDIC offers former SVB workers 45 days of employment (2pm EST, Saturday).