Etsy Delays Seller Payouts due to Run on Silicon Valley Bank

By: Ina Steiner

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by: Fruitylovesyou

So Etsy is the depositor which covers up to 250K per holder but I think depending on how they classify it then it can cover much more. I wonder are those accounts listed as For Benefit Of (seller name) or are they pooled only under theirs. Etsy is required to have certain reserves I'm sure.  Now I wonder if they And others are having any probs with getting paid from their payment processors.

Remember when that cowboy drove all the way to Cali to pick up his money when Payup didn't have his loot

by: Rexford

How convenient for Etsy.

by: toolguy

This snowball has just got started

When you can't pay sellers, sellers stop selling!

Etsy's in BIG trouble. . .

by: LDWCallsOut

Etsy will find any excuse to hold on to a massive pile of seller funds.  I literally laughed out loud when I read this.  While I do empathize with the shop owners who haven't been paid, there is a saying ''fool me once, shame on you; fool me twice (or, in Etsy's case, multiple times), shame on me''.   I let my Etsy shops go inactive when sellers were required to use Etsy Payments where available because Etsy is too flakey to handle funds from purchases.

by: The End

Ya figure an Etsy would be using a well known successful bank.

by: GetAGrip

I would think the 16th largest bank in america is kind of well known.

by: Snapped

Wonder how many major Etsy shareholders might own a piece of SVB.     Wonder which of the bank’s ‘investments’ dried.  Wonder why Etsy, who has assumed control over transaction processing for those affected, isn’t nevertheless liable for and now lawfully delinquent in disbursing ‘delayed’ payout funds.

Wonder if this could conceivably trigger the Fed to legislate requirements for venues who have assumed control of payment processing and disbursal - and who ‘act’ like a bank when ‘questioning’ transaction ‘propriety’ - to have backup contingency plans in place, funded by reserves from profits to the extent they receive payments, to use for disbursements when their ‘other’ banks mismanage themselves into insolvency.  

That would be a wonder, wouldn’t it.

by: toolguy

@The End

Silicon Valley Bank is well known!

16th largest bank in the US

Been in business for 40 years

by: The End

Oh...
I mean Old Money is more dependable.
16th is WAY down the totem pole.
I'd never use 'em.

by: Sierra

by: Stone Cutter

*** Associated with the rapid increase in interest rates ***

1) Inflation occurred
2) Tech companies began to downsize
3) Small startup companies began to “go under”
4) SVB was downgraded
5) Due to the downgrade there was “a run on the banking system”.

It is said that because the Federal Reserve increased interest rates TOO FAST, is why the banking system couldn’t adjust fast enough. And all those low yielding bonds the SVB had acquired had lost value due to interest rate increases....so SVB didn’t have the money to bail out their financial problem because their bond values crashed.

I heard last night that over 1000 companies will not make payroll for their employees because of the default.

This is scary. And Etsy was part of it.  

by: iheartjacksparrow

This story just made the top of the page of Daily Mail online. They quote sellers as saying they can't pay their mortgage or feed their children.  

by: Stone Cutter

*** Where is your money? ***

Even if FDIC insured, it can take up to 60 days to release funds. Next week, I plan to open up another personal bank account with another bank; just to be safe.

What is the Federal Reserve to do? The only tool they have to fight  inflation is to increase interest rates, however this SVB default was an unintended consequence.

Keep an eye on your money and your bank.  

by: toolguy

@Sierra

From Yahoo Finance: The fallout for the venture capital world from SVB’s issues is likely to be severe. The bank has said it had relationships with more than 50% of all venture-backed companies in the U.S., and some 93% of its $161 billion in deposits are uninsured. “If those accounts get frozen, deals can’t get met, software can’t get paid for—these kinds of delays, even by a few weeks, can be really catastrophic for business,” one venture investor told Fortune Thursday.

"and some 93% of its $161 billion in deposits are uninsured."

by: Sierra

@toolguy - I agree with that and it sucks for the companies, their employees, and everyone on down the food chain.

Based on my very limited research into IntraFi this morning, I have to wonder why more companies aren't using it. Maybe it's harder to get involved with, I don't know the details, but I think I understand the general concept ... with IntraFi being a middle party between the depositor and MULTIPLE banks, ensuring that none of the participating banks hold more than $250,000 for each depositor.

by: flybuy

Sellers will leave Etsy if they are forced to accept payments through them. Hopefully this will result in scrutiny of other platforms payment processors such as Ebay.

by: GetAGrip

No one should worry. The taxpayer will bail out the banks AGAIN. Just like the auto companies they are to big to fail.

by: Stone Cutter

*** SVB is looking for a buyer ***

The U.S. government doesn’t ALWAYS bail out every bank. Years ago, Washington Mutual and Bear Sterns defaulted. JPMorgan Chase purchased both banks.

SVB is looking for a buyer.

Some say SVB is a niche market for VC investing, however, I plan to distribute my money into different banks. Get to know what your bank invests into. Currently, the housing market is dead as a box of rocks due to high interest rates, and this could be the next shoe to drop if people begin to lose their jobs while defaulting on mortgages.