Should I Bury My Money in Jars in the Backyard?

 So, if you did not know, or what not paying attention, one of the largest banks in the US basically failed. 

The Silicon Valley Bank out on the West Coast.

It was a bank heavily involved in the tech start up world. It also was THE bank in the wine country of the Napa Valley. 

It cause a run on the bank's branches with people trying to pull out their cash. And caused another run on a West Coast bank also involved in the tech world, First Republic. As of this morning, at 6AM shares of stock in First Republic were down 70%. 

Simply, these banks go used to what is termed as " Free Money" in other words, the money they were able to acquire had next to no interest rates and to pay it back to the bank by the consumer, it was really low. Folks, I remember when car loans for the best risks were around 15-17% in the 1970s-1980s. 

The West Coast banks simply grew too fast with loans....They were saying they had grown 400% in the last few years, and when the Fed upped the interest rates, well, their economics failed. And people stopped taking out or couldn't afford to take out loans.

Part of this is the bond portfolio being upside down. Again, interest rates.

Of course, deposits are insured up to $250,000 by the government. 

Yesterday morning Sec. of the Treasury Janet Yellen was saying on the talking head shows that the government was not going to bail out depositors over $250,000. 

By 8pm yesterday, both Yellen and the Federal Reserve had stepped in implying that the government was going to step in and insure all deposits, no matter the amount. 

The trouble is, so many of these tech companies and wine companies are looking at payday on Weds. of this week. ( The 1st and 15th in many business situations are paydays. I even taught in a school district that paid on the 1st and 15th......unlike the Buna ISD, which pays on the arbitrary date of the 20th, once a month....Most government entities pay on the last day or first day of the month,)

Will these banks be able to come up with enough cash for these businesses to make payroll. And I know some of you are thinking just how much is payroll? I imagine places like even STI's payroll each pay period is in the millions of dollars. I can't even fathom what payroll accounts look like for places like Exxon-Mobil or even St. E.  

So, Mr. Thomas......What do I do?

If you have less than $250,000 in your account, well, I'd do nothing. It is insured. 

If you have more in an account, well, I might move some around.( Once again, I am NOT a CFA, I don't play one on TV like Tom Keen.)

You might think about keeping a little cash on hand. 

Not much, but maybe enough to keep you going for a a week or two. 

At this point, what can you do? 

It disturbs everyone, and if all the banks fail, well, we're all in the same boat together anyway.