Since our last update over the weekend, there have been several changes to the ongoing failure of Silicon Valley Bank and Signature Bank. In the spirit of keeping you informed, we wanted to provide you with another brief update. If you have not read our previous update, you can do so by clicking here.
Our team is encouraged by the actions of the U.S Treasury Department, Federal Reserve, and FDIC who have taken measures to protect depositors of SVB and provide much-needed support to the regional banking system. This swift action is good news, which has been acknowledged positively in financial markets today.
All banks have insurance on a portion, but not all of your deposits. In a crisis such as this, bank money markets could be at risk should an institution fail. With that in mind, yesterday we began converting a significant portion of your money market funds to individual T-Bills. The trades across the firm were very large, so we were unable to post them to your account yesterday. Today you should see those trades as well as further conversions to T-Bills. Given the strength of the institutions with which we partner, this may be an overly conservative move, but we want to ensure your capital is safe until this banking crisis dissipates.
We are concerned about clients who have assets outside of our management that may not be getting this attention to risk management. If you have significant money market balances outside of our management, we urge you to consider having us help you convert these to T-Bills. Please let us know how we can assist you and we can put “the wheels in motion” to protect your assets.
During this liquidity crisis, there may be eventual investment opportunities in the highest quality banks - such as First Republic, Schwab, or some of the others. We are diligently working on this research.
The banking industry was in much better financial shape before going into this crisis – especially when compared to prior banking crises such as 2008, or1990. One hopes that in hindsight this will be viewed as ending this week andthen back to business as usual. However, one never knows, so we want to do all we can to protect your assets during these periods.
We hope this update finds you healthy and safe and feel free to reach out with any questions or thoughts.