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SVB’s Failure Highlights Bankings’ Dirty Secret in Corporate Cash Management – Quid Pro Quo Lending and Vast Uninsured Deposits

FEE-ONLY PLANNING BLOG

Mar 16 2023

SVB’s Failure Highlights Bankings’ Dirty Secret in Corporate Cash Management – Quid Pro Quo Lending and Vast Uninsured Deposits

By John Robinson, Financial Planner (March 16, 2023)
This week, we sent two email messages to Fee-Only Planning Hawaii and Financial Planning Hawaii clients to proactively assuage concerns over the banking crisis in the wake of the Silicon Valley Bank (and Slivergate and Signature Bank) failure. Both messages have been posted to the FPH Blog:

How the Silicon Valley Bank Collapse Revealed a Dirty Secret About Corporate Cash Management

Should Rising Dividend Investors Be Worried About Their Regional Bank Stocks?


The gist of our critical insight is that the government was prudent to step in quickly to stabilize the regional banks and to save the companies (and the jobs of thousands of their employees) that were customers/depositors at SVB, but the decision to fully insure all deposits above the FDIC limits sends the wrong message to both banks and their corporate customers.

In our view, banks should not be permitted to bribe/blackmail corporate clients to hold corporate cash above the FDIC limits in return for more favorable lending terms, and corporate execuitives should be more responsible/accountable in managing millions (or billions) of dollars of liquid capital. Corporate depositors should have been required to pay some price for their recklessness in managing their companies’ corporate cash (e.g., 80% of deposits protected or a fine for holding so much shareholder capital in uninsured, non-government guaranteed deposits).

A potential solution moving forward may be to raise the FDIC coverage limit for corporate accounts.

John H. Robinson is the owner/founder of Financial Planning Hawaii, Fee-Only Planning Hawaii, and Paraplanning Hawaii.  He is also a co-founder of fintech software-maker Nest Egg Guru.

Written by Fee Only Planning Hawaii · Categorized: Portfolio Management & Investing

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  • SVB’s Failure Highlights Bankings’ Dirty Secret in Corporate Cash Management – Quid Pro Quo Lending and Vast Uninsured Deposits
  • Everything is Coming Up Roses (Why I have rarely felt this confident investing)
  • Estate Planning is So Much More Than Drafting Documents

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Copyright © 2023 · Financial Planning Hawaii
Fee-Only Planning Hawaii is a business division of Financial Planning Hawaii, Inc., a state of Hawaii Registered Investment Adviser (CRD#153930). John H. Robinson is the sole owner and founder of Financial Planning Hawaii, Inc. Both John H. Robinson and Laurey L. Shintani also maintain separate broker-dealer and investment advisory relationships with J.W. Cole Financial, a FINRA member broker-dealer, and J.W. Cole Advisors, an SEC-Registered Investment Adviser. Financial Planning Hawaii and J.W.Cole Financial/Advisors are unaffiliated entities. Services provided under Financial Planning Hawaii’s fee-only planning agreement are entirely separate from the financial planning and wealth management services provided under their unaffiliated registered representative and investment adviser representative relationships with J.W. Cole. Fee-only planning clients will NOT be solicited to establish investment accounts through J.W. Cole Financial or J.W. Cole Advisors. Clients who sign Financial Planning Hawaii’s fee-only planning agreement should understand that ongoing portfolio management is NOT part of the agreement.

Both John H. Robinson and Laurey L. Shintani maintain state of Hawaii insurance producer licenses. However, while insurance risk management is included in the financial planning review process, no specific insurance products will be recommended or solicited as per the terms of the fee-only planning agreement.

All prospective clients are encouraged to review John H. Robinson’s and Laurey L. Shintani’s professional and regulatory disclosure histories on the Securities Exchange Commission Investment Adviser Public Disclosure website (SEC IAPD) at https://adviserinfo.sec.gov/