A few days ago, two readers asked me the same question.
The two readers sent pictures respectively, as follows:
It can be seen that the source of the two pictures sent by readers is from the headline of an English report in the Wall Street Journal. The title is "The Pain of Silicon Valley Bank's Collapse Is Being Felt by These Depositors." The subtitle reads: "Customers that banked at SVB's Cayman Islands branch have had their funds seized by the FDIC." The subtitle means "Customers depositing money at the Cayman branch of Silicon Valley Bank, whose money is seized." ”
The problem lies in the word seize, which does have the meaning of confiscation. But in this subtitle, is it the kind of "confiscation" we understand?
The best way to answer this question is to look at the text of the story.
I originally wanted to see the text of this report, but I had no channels, so I had to confirm or falsify the above two pictures in some other way.
Like everyone, when I saw the above two pictures, I was also puzzled when I saw the word seize. However, I don't think that seize here is the kind of "confiscation" we understand. I don't believe what the readers sent on those two pictures.
I really found a lot of things.
FDIC is the abbreviation of "Federal Deposit Insurance Corporation", FDIC provides guarantees for money stored in US banks, but according to federal laws and regulations, this guarantee is not absolute.
First, there is a limit to the amount of deposits, and as long as the certificates of deposit do not exceed $250,000, the FDIC must guarantee these deposits after the bankruptcy. If it exceeds $250,000, whether to provide a guarantee depends on the mood of the federal government and the FDIC.
Secondly, only deposits will be guaranteed, and no investment in the form of securities, treasury bonds, stocks, life insurance, property insurance, etc. will be guaranteed. Even if the amount of these investments does not exceed $250,000, the FDIC will not guarantee them.
Third, bank certificates of deposit amounting to less than $250,000 are guaranteed by the FDIC. Look at the picture below, I finally searched for it.
This is taken from Section e(2) of Chapter 12 of the CFR.
This basically means that if the bank where you deposit your money is located in a foreign country, then the FDIC will not guarantee you.
Where is Silicon Valley Bank Cayman located? Located in the British Cayman Islands, it is not a U.S. territory or possession, so the Cayman branch of Silicon Valley Bank meets the "institution located outside any state" in the above statute, which means "a depository institution located outside any U.S. state." Note that "State" herein, as defined, is defined in accordance with paragraph e(1) of this section referred to in paragraph 12. U.S.C.1813. (a) (3), including the capital of the United States, Puerto Rico, American Samoa, Guam and other U.S. territories.
There is no doubt that Silicon Valley Bank is an American bank, but if your money is stored in a branch of Silicon Valley Bank outside the United States, then according to federal laws and regulations, this money will not be guaranteed by the FDIC.
The FDIC reiterated this issue in 2013. Below is a screenshot of a Reuters report on September 10, 2013, which I also found.
This means: The FDIC clarified that foreigners who deposit money in U.S. banks will also be guaranteed, and we will treat them equally. But if you keep the money in an overseas branch of a Bank of America, we will not provide a guarantee. (The Cayman branch is a branch of Silicon Valley Bank.)
Therefore, this problem has long been solved, and 10 years ago, the FDIC clarified and reiterated it, so there is no doubt about this.
Fourth, as long as the regulations are met, then the FDIC provides guarantees not only for Americans, but also for foreigners. If it does not meet the rules, even if it is a US citizen, the FDIC will not guarantee it. This guarantee does not depend on the nationality of the depositor.
Looking at the figure below, it is the c of Article 330 of Chapter 12 of the CFR.
This means that the guarantee of deposits is not limited to U.S. citizens and people living in the United States. Citizens and residents of other countries who deposit in the United States will also be guaranteed by the FDIC.
Reading this, the answer is clear. According to federal laws and regulations in the United States, money deposited with the Cayman branch of Silicon Valley Bank is not guaranteed by the FDIC.
People who keep their money at the Cayman branch of Silicon Valley Bank are responsible for the risk of their deposits. I believe that it is impossible for someone who can afford to keep money in the Cayman branch without knowing this law and regulations in the United States.
Since the Silicon Valley Bank has failed, isn't it normal that you have money in the branch and are not guaranteed by the FDIC? What does this have to do with what we understand as "confiscation"? What does this have to do with the so-called "Anzac gang spirit"?
Of course, I've seen reports that depositors at the Cayman branch of Silicon Valley Bank woke up to find that all their deposits in the Cayman branch had been transferred to an account called SVB Receiver. This account is actually the FDIC. Then they found that their balance had become zero.
I really don't understand the financial knowledge in this operation. But according to common sense, since the Silicon Valley Bank has collapsed and does not exist, then your account in this bank, of course, is gone. The FDIC, the federal agency that handles the bankruptcy of Silicon Valley banks, transfers these unobtainable pieces of paper wealth into its own hands, perhaps for accounting, financial management and other reasons.
Because, whether it is laws and regulations, or the actual situation, these people who save money in the Cayman branch, on their own, can no longer withdraw money.
But I've seen reports that the FDIC is trying to help people who are saving money in the Cayman branch, what are they helping them? Help them get their property back. It is definitely unrealistic to get it all back, see if you can get some of the money back.
In fact, the FDIC also urges depositors who deposit their money in its Cayman branch to hurry up and apply for money on the FDIC's website. As shown in the following figure:
According to the chart above, the FDIC said: If you have deposited money at the Cayman branch of Silicon Valley Bank and want to get your money back, you must apply by July 10, 2023.
Where is this like "confiscation"?
Therefore, the FDIC should transfer paper balances to its own accounts for this purpose, not only is it not the kind of "confiscation" we understand, but it is also to help these depositors.
I guess someone might jump out and say: Why is the money of the overseas branches of Bank of America not guaranteed by the FDIC? Isn't this the United States taking predation by force?
Not really.
First of all, others have long said that there will be no guarantee for this part of the money, and it is not after the bank goes bankrupt to tell you.
Second, in fact, the mainland also stipulates that money deposited in overseas branches of mainland banks is not guaranteed by the mainland. Unbelief? Take a look at Article 2 of the China Deposit Insurance Regulations.
Third, in 2013, there was a trillion dollars of money in Bank of America's overseas branches, of which about $400 billion was in Bank of America's branches in the UK. As shown in the figure below.
Therefore, I felt particularly speechless when I saw the phrase "Gang Spirit" in the picture that the reader sent me. Who did the United States rob? Britain that robbed the same as "Onsa"?
I didn't see the depositors come out and say anything, but those who didn't save money there were very excited.