Exactly.

Only withdrawals by account holders, regular bank employee salaries, and corporate salaries depending on the bank can be undone in a matter of minutes. Never executive bonuses.

/s

It does not seem unreasonable that SVB employee bonuses for "great job done in 2022" should have been delayed given the clear evidence on Thursday that the bank was imploding.

In jobs like this bonuses are also not just "great job" money, they're a predictable part of compensation that people depend on.

Banks are supposed to be one of the bedrocks upon which the economy rests and they are given certain privileges (like access to low interest rates ordinary people cannot get) as part of that role. Its clear the financial sector needs to have an extremely close eye on it to not cause all sorts of destruction across the economy, which it still manages to do pretty regularly out of a fun mix of short-termism, stupidity, and greed.

So from a signaling perspective, if the org is sitting on a lot of risk and employees may have benefitted during the accrual of that risk, shouldn't they also face consequences? Wouldn't that cause each employee in a bank to pay some more attention to the fundamentals of the org, to put pressure on any situation where large risk accrual happens? Wouldn't that cause the internal structure of banks to change so that more eyes were on these large risk accrual moments, because talented people wouldn't join unless they knew their livelihoods weren't at risk by one bad decision? Regulations can't be the only form of pressure for banks to not fuck up.

Those contracts are with a company that doesn’t exist anymore… so I’m not sure that’s a good argument.

I get that this is part of the compensation that people rely on (I’ve seen Christmas Vacation), but it’s a really bad look. Paying out bonuses right before your company is taken over by the Feds is a horrible PR image. Regardless of if it is the right thing to do or not.

the company existed when the payment was made though, so why would your comment anything at the time of the payouts?

A predictable part of compensation is being paid your regular wage on time and for many clients of SVB this is probably not possible this week coming.

They should have halted the bonuses.

Every payroll processor worth their salt has a big red abort button. Worst case: funds hit flagged and are then reversed.

However almost every bonus is not a CXO bonus, and I think clawing those back would be the wrong decision, and could be quite harmful to many.

I got my bonus for 2022 paid out on March 3rd. Everyone in my company knew the bonus payout date months ago.

Somehow, it's always unrealistic, and somehow, these scenarios always repeat.

> it's a tiny fraction of the money,

No, allowing people to steal is a moral hazard no matter how much money it is.

Suppose I steal a $1000 TV from WalMart, and use the argument that this is a tiny fraction of their profits. No one would buy that.

So why should we buy that when it's orders of magnitude more money?

HR, especially in places where they don’t talk to treasury, may have the power to request for payments to be made but they aren’t likely to have the ability to approve or authorize payments.

SVB chose to invest in 10-year duration MBS that was yielding only 1.5% when higher rates were known to be just around the corner. The risk/reward in no way made sense.

Simple incompetence and/or greed.

If the executives running payroll knew there was material risk of insolvency, this is fraudulent conveyance and could (and should) be flawed back. Those employees’ claims then go into the stack with other creditors.

That said, the FDIC probably signed off on this because what will zero the value of the franchise is every employee who earned a bonus jumping ship over the weekend.

What was it that judge said? If they were to go to prison it might affect them negatively.