How to Diversify Your Deposits for More FDIC Protection – Episode #382

Banks need to be considered safe and stable places to keep people’s money. There’s a plethora of problems that occur if people lose faith in that fact. On this episode of the Dentist Money™ Show, Ryan and Matt examine why there was a run on Silicon Valley Bank deposits, the history of bank failures, and the role of the FDIC to ensure people have confidence in the banking system.

 

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Podcast Transcript

Ryan Isaac:
Hey everyone. Welcome back to the Dentist Money Show, sponsored by Dentist Advisors. A no commission fiduciary, fully comprehensive financial advisor just for dentists all over the country. Check us out at dentistadvisors.com. Today on the show, Matt and I are talking about a recent news story about SVB, and some news stories about other bank collapses. What does a bank run mean? What does it mean when a bank collapses? More importantly to a lot of client questions, what is the FDIC? How does it work? Am I insured I’m I taken care of? Is there anything I need to do with my cash, my business and personal life to protect myself in case this happens to my bank? Very great questions. A lot of stress and anxiety around this time, very understandably so. Many thanks to Matt for doing some research and breaking down kind of this, most recent news cycle and what’s going on.

Ryan Isaac:
I’m sure by the time this episode comes out, we will have learned even more that might have not even be included in this episode. So lots to come, but I hope this is a helpful episode for the ways that, your money, your cash can be protected under the system in the FDIC insurance program in your various banks. Reach out. Of course, if you ever have any questions, we’re happy to help. Dentistadvisors.com is a place where you can go and schedule a chat with an advisor to ask your money questions. We love to help point you in the right direction. Thanks for being here. Enjoy the show.

[music]

Jess Reynolds:
Hey, there, it’s Jess with Dentist Advisors. Did you know we recently launched a new service called the Dentist Money Membership? It’s an affordable way to support your personal financial strategy with cutting edge technology, and guidance from dental-focused CFP advisors. The Dentist Money membership includes the Elements Financial monitoring app, an annual financial checkup, CE courses, an automated investment platform, and more. To learn more about the Dentist Money Membership and to get started, go visit dentistadvisors.com/money.

Announcer:
Consultant an advisor, or conduct your own due diligence when making financial decisions. General principles discussed during this program, do not constitute personal advice. This program is furnished by dentist advisors or a registered investment advisor. This is Dentist Money. Now here’s your host, Ryan Isaac.

Ryan Isaac:
Welcome to the Dentist Money Show, where we help dentists make smart financial decisions. I am Ryan and I’m here with Matt. Welcome everybody. Welcome Matt. What’s happening buddy?

Matt Mulcock:
Yo, Ryan.

Ryan Isaac:
Here we are.

Matt Mulcock:
How are you?

Ryan Isaac:
We’ve had an interesting week. It feels like… The news to me feels like being in ’08, this week. Do you feel the same way?

Matt Mulcock:
Yeah. Yeah. I think there’s aspects to that news…

Ryan Isaac:
In some way. I mean you feel PTSD.

[overlapping conversation]

Matt Mulcock:
You’re seeing a lot of articles about… And we’ll hit this, but you’re seeing a lot of articles or tweets or whatever.

Ryan Isaac:
Tweets.

Matt Mulcock:
About biggest bank collapse since 2008, which is true. So that doesn’t mean it’s 2008. We’ll talk about that.

Ryan Isaac:
Does not mean we’re in 2008.

Matt Mulcock:
Yeah. But it does feel like that a little bit. Yeah. It’s like a…

Ryan Isaac:
In the news.

Matt Mulcock:
COVID. It was like a COVID 2008-feel the last week about. Just the level of anxiety across the board, it feels like.

Ryan Isaac:
Yes. Anxiety. Do you Matt feel, as an advisor to many people, do you feel like there’s ever a time when there’s not bad news in the economy or in the news cycle?

Matt Mulcock:
No, that’s what a news cycle, I think is built on.

Ryan Isaac:
It’s only like, I was trying to think about that.

Matt Mulcock:
It bleeds, it leads.

Ryan Isaac:
It does, man. I was trying to think about it and just thinking about client conversations I’ve had recently about some things, but I was just like, “I don’t think this ever ends.” And people who are usually newer in their businesses, or newer to being investors, whether that’s in real estate or stocks or whatever, I think the newer you are, the more scary and more like novel this stuff seems. But I’m just trying to think. I don’t know if there’s a time when there’s not something to be scared about, in the news.

Matt Mulcock:
No.

Ryan Isaac:
And that’s not downplaying, I’m not saying that any of these things should be downplayed and aren’t scary. I’m just saying.

Matt Mulcock:
You should just be put it in context.

Ryan Isaac:
It’s context. The world marches on while we deal with this stuff along the way, but it just seems like it’s constant. It’s just always present. It’s always with us.

Matt Mulcock:
Yeah, I mean, yeah, it is. It’s a double whammy, right? Because there’s two aspects of this. There’s your brain, all of the… Human brains are wired for negativity, right? They are.

Ryan Isaac:
Yeah, totally.

Matt Mulcock:
Like we are wired for negativity.

[overlapping conversation]

Matt Mulcock:
We like notice it. Study after, study after, study on this, yes. You notice loss or you feel loss, twice as much as you do gains, right? So that’s prospect theory from our guide, Richard Thaler. So there’s that aspect. There’s the evolutionary aspect of it. Our brains are just wired to feel threats more.

Ryan Isaac:
Yeah. Danger.

Matt Mulcock:
Right? Danger, right? So our brains are wired for that. But then you’ve got the 24-hour news cycle, that is built on negativity, because they’re not interested in telling you. “Hey guys, overall the world’s actually better in pretty much every aspect, every measurable aspect than it was 20, 30, 40, 50, years ago,” even 10 years ago.

Matt Mulcock:
That’s not gonna be something. And they’re not gonna sell you on methodical positive gains. They’re gonna sell you on freaking you out. So you keep tuning in.

Matt Mulcock:
And it’s only gotten worse since basically they turned it into the 24-hour news cycle. Right?

Ryan Isaac:
Yeah. I’m just curious, do you think that, when people hear bad news and they’ll either call you or reach out and they’re like… There’s always rumors built up with bad news. Like there’s…

Matt Mulcock:
Always.

Ryan Isaac:
A whiff of bad news and there’s like always a lot of hype and rumors. It always seems like it just never plays out as bad as people think it’s going to. Every once in a while, I guess it does, and that’s what surprises us, but.

Matt Mulcock:
Sure. Yeah.

Ryan Isaac:
It seems like the hype in the rumors never kind of meet up with the hype in the rumors.

Matt Mulcock:
I think that’s probably true. I think we’re good. Again, and the other aspect of this is like social media, we’ll talk about this and the role that played in this particular incident.

Matt Mulcock:
But I think, yeah, I think we catastrophize a lot more, and like before, let’s say again before social media, before the internet, it didn’t grow as quickly as it does now. Like it goes from zero to a hundred so quickly.

Ryan Isaac:
And then disappears though, just as…

Matt Mulcock:
And then disappears quickly. Like cycles move faster.

Ryan Isaac:
Yes.

Matt Mulcock:
News move faster and disappears faster. So yeah, I think everything just feels way worse usually because of the environment we’re in now.

Ryan Isaac:
How fast…

Matt Mulcock:
And how fast news moves.

Ryan Isaac:
Yes. I can’t use these examples, because they’re not appropriate. [laughter]

Ryan Isaac:
But…

Matt Mulcock:
Now you have to use those examples.

[laughter]

Ryan Isaac:
That was a great lead in. But I’m thinking of the, so I’m in my 40s. How old are you Matt? You and your late 30s?

Matt Mulcock:
36.

Ryan Isaac:
Okay.

Matt Mulcock:
I’ll be 37 this year.

Ryan Isaac:
Do you consider yourself mid or late 30s?

Matt Mulcock:
I feel like I’m entering mid.

Ryan Isaac:
Are you going mid?

Matt Mulcock:
Oh, you’re saying, late… Sorry, I thought you were saying midlife.

Ryan Isaac:
Yeah. No, 30s.

Matt Mulcock:
I’m late… I’m late 30s.

Ryan Isaac:
You go late 30s. Okay.

Matt Mulcock:
Well, I’m entering late ’cause I’m 36.

Ryan Isaac:
You’re entering late.

Matt Mulcock:
I’m entering the late stages of 30s.

Ryan Isaac:
Is that the seven? Is the late… Seven is when it turns late.

Matt Mulcock:
Seven is late. Yeah. So I’m still mid. So you can say I’m still mid-ish.

Ryan Isaac:
Off air. I will tell you these, but I’m thinking of a couple examples. When we were, this would’ve been like elementary, middle school, even early high school age when… And I heard this because I was listening to a podcast and this person who’s my age was saying, “Hey, do you remember in middle school, there was this rumor going around and how… ”

Ryan Isaac:
Oh, I know exactly what you’re saying. I know exactly…

Ryan Isaac:
And she was like, “How on earth?” Okay, this person grew up in…

Matt Mulcock:
Did that spread.

Ryan Isaac:
She grew up in New Jersey. I grew up in Utah and I know everyone around the country heard the same rumor. I know [laughter] I know they did. I can think of two specifically.

Matt Mulcock:
And I guarantee you if you’re around our age, in our decade…

Ryan Isaac:
You know exactly what we’re…

Matt Mulcock:
You know exactly what we’re talking about. It was a rumor that spread across the country somehow.

Ryan Isaac:
Yeah. But the thing is like that rumor took, must have taken so long to spread and it stuck around for so long, simply because there was no way to cycle it through in and out quick. There was no mechanism. Besides one kid moves from a middle school in Wisconsin to Ohio and spreads the rumor. And then they SMS.

Matt Mulcock:
Or writes a letter.

Ryan Isaac:
Or writes a letter to someone or gets on the phone.

Matt Mulcock:
Has a pen pal.

Ryan Isaac:
And so, but then today I look at my kids and they will come home and say all kinds of things that I have to Google and be like, “What does that phrase mean? And I want to say it and sound cool.” But then like, I’ll joke about it.

Matt Mulcock:
A week later. You’re no longer cool.

Ryan Isaac:
Honestly, I will say it like a month later and they’ll be like, “Dad, no one says that anymore. That’s so embarrassing. You shouldn’t say that.” [laughter] So to your point we just live in a world where things move so quickly, there will be a hint of real news, factual news, then all kinds of social media swirling around it. We build up stories about what it is or what it isn’t, and then it’ll play out and it’ll disappear and be gone. And it… Usually won’t end up being anything we thought it was gonna be in the first place.

Matt Mulcock:
Yeah. And then we’ve moved on and we’ve… We’re on to something else.

Ryan Isaac:
Every once in a while, something in the world happens that I think ends up being way bigger and more impactful than we thought. COVID comes to mind. When that was rolling around, it seemed like, “Alright, I give it a few days. Give it a couple weeks. And I think we’ll get through this.” What wasn’t there like, “Give it two weeks and we’ll be through this.” And then two weeks. And then two weeks, and then two weeks and then two years later…

Matt Mulcock:
And then I remember there was a time during… Yeah, there was a time during COVID. That was probably the first time, because ’08, ’09, I was in college. Sorry. So [laughter] I wasn’t like, it didn’t really… I didn’t feel ’08, ’09. Like I don’t have visceral feelings of like the disaster that that was right? Because I was just a… I was a dumb college student.

Ryan Isaac:
Me and Reese were sitting in the office together, like wondering what on earth we were doing.

Ryan Isaac:
Yeah. Exactly. So you feel that, like…

Matt Mulcock:
I remember that so bad.

Matt Mulcock:
You have PTSD.

Ryan Isaac:
Oh yeah.

Matt Mulcock:
But like COVID was the first time for me that I can remember really, especially as a professional that I was like, “I don’t know what’s going to happen here.” Like this is like, it was very scary.

Ryan Isaac:
Very, very unknown. Very scary. That’s one thing to me that played out much bigger than anyone thought it was going to. We can move on. The point of all this, and I’m glad that we went down this path, is that, we’re gonna be talking about, just in a factual way. I think we’re still waiting to see, there’s a lot that’s still to come. There’s still effects on other institutions right now, and there’s a lot we’re gonna learn over the weeks and months to come. But we’re gonna be talking about the SVB situation, how that impacted people. And we’re gonna be addressing questions that… I’m getting a lot of this week in and texts and emails and I’m sure everyone is about FDIC insurance, what that means. How to protect your deposits, things like that.

Matt Mulcock:
And disclaimer, right? This is coming out a week. Like you were recording right? Right now on the 15th. It’ll come out a week later. So a lot can happen by the time you’re listening to this.

Matt Mulcock:
But I think we’re just gonna, like you said, give the facts of like what actually happened with Silicon Valley Bank. I think there’s a lot of people out there. You’re probably on the spectrum somewhere where it’s like you’re well versed on this on one end. Maybe, you know, every little detail. You followed it up to the, you know, again, the exact detail or you’re on the other end where this might be the first time you’re hearing of this. I can’t imagine that’s true. You probably you’ve have heard something. But we just wanna break this down again, like you said, Ryan, factually.

Ryan Isaac:
Yeah. Factually. And I actually have a quote I was gonna share right now, but I’m gonna share it later. It’s not a financial quote. It was actually like a health and fitness quote, but it had a line in there like…

Matt Mulcock:
We don’t ever do that. You don’t…

Ryan Isaac:
[laughter] Freaking… Use those analogies. I freaking love it. So I’m gonna save it for the end. To recap, so let’s just start with what is SVB? Some people might be like, “What’s an SVB [laughter]?” Is that an IRA?

Matt Mulcock:
How much could I put in my SVB.

[laughter]

Ryan Isaac:
Does SVB have good performance? All that stuff.

Matt Mulcock:
Is SVB curable or… Yeah.

[laughter]

Ryan Isaac:
“My doctor said I should talk to him about SVB.” Wow. Do, give us a rundown. What, who is, what is, what happened? What’s the situation as of March 15th, 2023. That we even know of. What was the deal?

Matt Mulcock:
Yeah. So SVB is Silicon Valley Bank. Most people, I think outside of maybe the VC world, like venture capital world, startup tech world, probably had never even heard of this bank.

Ryan Isaac:
I was gonna ask, did you, before this week, did you… Were you aware that SVB was a giant place?

Matt Mulcock:
So yeah, I didn’t know the magnitude. I’ve heard of SVB. I have friends and some like people, some acquaintances in that world. So I had heard of them. I knew they were kind of like the bank for the VC world, right? But I didn’t know the magnitudes until this happened. I had to like… I started reading and researching about it. And I was like, “Oh man, this was… ” It was the 16th largest bank in the country at the time.

Matt Mulcock:
So just to… I think just quick backup. I think to give some context here. I think it’s good to give a quick refresher of, ’cause I think this will set the stage.

Ryan Isaac:
Great.

Matt Mulcock:
What is a bank? What are the two main purposes of a bank? Right?

Ryan Isaac:
Yes.

Matt Mulcock:
Quick summary Bank, number one, the number one priority is to hold your money, right? You deposit your money, so you don’t have to put it under the mattress or your closet where someone can come and steal your money, right? So it takes deposits. Number two, is they give out loans, right? To people that need for houses for businesses, for a car, whatever. People are probably like, “Okay, yeah, cool, I get it.” But it’s important to understand this dynamic. So when you deposit money to a bank, that deposit on the bank’s balance sheet is a liability to them, they owe you that money, they have costs to run their business. They’ve got staff, they gotta keep their lights on, like they gotta house their building or their… You know, they gotta put their people somewhere.

Matt Mulcock:
So they have all these costs. So they’ve got these liabilities on their balance sheet. They’ve gotta take that money and do something with it. They’ve got two options. Either they take that money and they loan it out again, mortgages, businesses, house, or cars, whatever it may be. Or they invest that money. So I think that’s a critical context-setter to understand what actually happened here and why we got to this point. To the, by the way, this was the… This is what this was. It was the fastest bank run in the history of America, it happened in 30 hours.

Ryan Isaac:
Thirty? Was I looking at this from you or did I see this news that this is the first bank run started by Twitter?

Matt Mulcock:
Yeah. Honestly. It honestly, so that’s a huge factor here. Twitter was big as to why this, again, we talked about it earlier, like news moves so quickly. So it started and it went so fast.

Ryan Isaac:
Wow.

Matt Mulcock:
It took 30 hours to collapse. So it was crazy. So…

Ryan Isaac:
What’s a bank run? How about we say that? That people hear that term. If you watch ‘It’s a Wonderful Life’, every Christmas Eve like I do, then you’ll know… You’ll have heard of a bank run. The famous scene where he’s about to go on his honeymoon and live his dreams. Finally, that poor guy.

Matt Mulcock:
Finally live his dreams.

Ryan Isaac:
And then he drives down and he sees his family bank and there’s a line outside and everyone wants their money at the same time. What’s a bank run? And that’s probably…

Matt Mulcock:
And he’s freaking out. That’s a classic movie, by the way.

Ryan Isaac:
I know.

Matt Mulcock:
A lot of references to ‘It’s a Wonderful Life’.

Ryan Isaac:
Well, and he explains what you just said. He says, “I don’t… Well, you don’t keep your money. Your money’s in Mrs. Smith’s house. And it’s… ”

Matt Mulcock:
So he explains it. Yeah, so a bank run is basically, so again because of this balance sheet that a bank has to handle. Most of the time they’re not like, that money that’s sitting or that you have deposited, that’s a liability on the bank’s balance sheet. That money’s not just sitting in a vault in the bank. They’re out loaning that out, trying to, again…

Ryan Isaac:
Well because they couldn’t run a business if they did that.

Matt Mulcock:
They couldn’t run a business. Because all they’d have is a balance sheet of liabilities, imagine being a dentist, and your entire balance sheet is all your debt, and you have no way to make money to pay that debt.

Ryan Isaac:
Some are thinking they have that.

Matt Mulcock:
Some are thinking, “That is the case, Matt, thank you.” So yeah what a bank run is, I think what it comes down to what starts a bank run is what I’d call like loss of belief. Meaning a loss of belief in that institution to get your money back, that’s really what it is, and we’ll get into this of like the specifics of SVB and why that belief was lost so quickly.

Ryan Isaac:
And go ahead if you’re… If we’re on… Yeah, it’s… Go ahead.

Matt Mulcock:
Yeah. So we can totally jump into that. So, but so yeah, bank run is basically everyone wants their money at the same time. That’s a problem because most banks…

Ryan Isaac:
They don’t keep it.

Matt Mulcock:
They don’t keep your money in a vault. So when everyone loses their belief at the same time in that institution, they want their money back out. The bank collapses. And that’s exactly what happened.

Ryan Isaac:
And man that scene in ‘It’s a Wonderful Life’ is so poignant because that’s exactly, it’s a loss of belief. And then they go and they start talking to him and he explains what’s happening and he explains like, “You can have your money and here I’ll pay you out some and we’ll basically insure you a little bit and… ”

Matt Mulcock:
And doesn’t he take his own money and hand it out to them?

Ryan Isaac:
It’s his own money and hands it… Which is basically kind of like FDIC because FDIC is a fee paid by the banks to a fund that insures investor deposits up to a certain amount. And he kind of did that ’cause he was in the bank too. So he was…

Matt Mulcock:
[0:17:01.9] ____ call FDIC? Was it George? Is that his name?

Ryan Isaac:
George? Yeah. Yeah.

Matt Mulcock:
George. There you go.

Ryan Isaac:
Anyway, so loss of belief. Yeah, that’s a really good way to put that. And then everyone wants it at the same time, but it’s not there. And that’s a problem.

Matt Mulcock:
So this was kind of the perfect storm with SVB. So really, so back up really quick. 2019, SVB has about $60 billion in deposits. Pretty big bank and again, most of it is they literally kind of own the VC startup tech world, right? And from that point on to 2022, their deposits go over triple. So by the end of 2022, they’re at over $200 billion in deposits. They’re big. Well, why is that? The tech world, the VC world, the startup world, blew up during COVID, right? Exploded. So all these people starting businesses getting funded from their Series A, series B, whatever, well, where did do they go? They put all their money into Silicon Valley Bank.

Matt Mulcock:
So that’s great, it’s a problem. But it’s a good problem because SVB takes all this money in and they’re like, “What do we do with it?” Right? They’re not a… This is one of the specifics to SVB that caused this storm. SVB is not a traditional bank that where… First of all, a bank to be able to take that much in deposits and actually loan it out in that amount of time is basically impossible, like, there’s no way they’re gonna be able to do that. Not to mention SVB is not a traditional… Because they were in that VC startup world. Not a lot of those people are like traditional lenders. They’re not like, or loan getters. They’re not getting stuff for maybe houses. Sure but they’re not borrowers.

Ryan Isaac:
The borrower is what you’re saying.

Matt Mulcock:
They’re not getting cars. Sorry borrowers.

Ryan Isaac:
This is for small businesses. Yeah. I like loan getters. I love Loan getters.

[laughter]

Matt Mulcock:
Loan getters.

Ryan Isaac:
But you’re saying the borrowers aren’t… They weren’t normal mom-and-pop shops, and…

Matt Mulcock:
No.

Ryan Isaac:
And these are people who, yeah, they’re borrowing money to build an app that seems crazy, but will be a mysterious thing. Yeah.

Matt Mulcock:
Exactly. Well, and they’re not financing their cars. These loan getters.

[laughter]

Ryan Isaac:
Yeah. I like that.

Matt Mulcock:
These borrowers in this world are Not… They’re not borrowing for… Again, some are, but not in the traditional sense. So I’m saying that to say the SVB just doesn’t have a way to funnel this money out into loans. So what do they do? They take $80 billion and they decide to invest it. They want to invest it in something very, very safe. So this is where… This is kind of the start. They didn’t know this that they should have, they didn’t know the time. They bought, $80 billion worth of mortgage-backed securities at 1.5% on a 10-year term. So they bought, basically, think of them like CDs. Right? Think of them like a CD at the bank.

Ryan Isaac:
Yeah.

Matt Mulcock:
They bought a 10-year, think of it like a CD that’s paying 1.5% per year for that 10-year period. At the end of the 10 years you get all your money back. Very, very safe investment. Right? At the time, interest rates were basically zero. So SVB was like, again, not a bad gig. You got $80 billion getting 1.5%. Rates are basically zero.

Matt Mulcock:
Not a big deal. At that point they were okay. They had deposits funneling in the door. They were in good shape. The problem started at the beginning of last year. When the Fed starts raising rates. So think of it like this. You’ve got a… Let’s say you’ve got a CD at the bank. Individual has a CD at the bank, I bought a CD on a 10-year term paying me 1.5%. But as rates start to rise, now that same bank is issuing new CDs at 2.5% or 3% or 4%. Well, you go to sell your CD to your neighbor.

Ryan Isaac:
Yeah. Who wants them?

Matt Mulcock:
Your neighbor’s gonna say, “Why would I want your CD at 1.5?” I can go to the bank right now and get one for 5%.

Ryan Isaac:
Yeah.

Matt Mulcock:
That’s what happened. And so that’s why when you hear people say there’s an inverse relationship to interest rates moving up and the bond prices coming down. That’s what it is. So the balance, all these holdings that SVB had, the $80 billion worth started to drop in value on the balance sheet, right? Those securities were much lower in value, which is still is not a huge problem. ’cause as long as they hold it to maturity, to the end of that 10 years, not a big deal.

Ryan Isaac:
Yeah. The bonds will pay you. Yep.

Matt Mulcock:
Yeah. And as long as deposits don’t dry up and as long as… Or people don’t want their money very quickly, they’re fine. So, they’re still in okay-shape. But in 2022 rates start to move up. That starts to kind of… And then the VC startup tech world starts to slow down. It goes from this like craziness of a couple years explosion to slowing down because rates are moving up, slowing down the entire ecosystem of the startup world.

Matt Mulcock:
So you’ve got the balance sheet of these assets moving down in value. Deposits are drying up because these startups are getting less funding. ’cause 2022, which again, rates just slowed everything down. And now these companies that have their money with SVB, they still need to make payroll. They still need to pay all of the expenses that they have. So not only deposits start drying up as far as new money coming in, peoples actually start wanting their money out.

Matt Mulcock:
So it’s this double whammy. Now SVB is sitting here saying, “We got this loss on the balance sheet. Pretty significant ’cause rate’s moving up. Deposits are drying up and people are asking for their money.” So they have to… They wanna make a move. They wanna do something. This is really where it started. So they put out a press release and… This was last week and it was pretty bad. It was basically, it was a convoluted, confusing Press release that spooked people. And basically, what they said is, for all intent to paraphrase, they basically said they sold at a loss. They sold some of their securities that were on the balance sheet at a pretty significant loss, a couple billion dollars. And then they were releasing stock to raise some capital.

Matt Mulcock:
Well, this people were like, “Wait a second, why are you selling your securities at a loss? Why are you raising capital? You must not be doing… ” Like your balance sheet must be out of whack. You need some liquidity. What’s happening? With already what was happening with the angst and the issues just prevailing in the market. People are already spooked. People start getting really nervous. Well, and the VC world is very small, very well connected. You have people like Peter Thiel who basically starts telling everyone, get your money out of SVB. That started it, and it literally went from… So then everyone’s rushing, and again, it went on Twitter and you’re watching it live on Twitter. This is what you were saying earlier like it was the first bank run ever to basically be started and viewed live on Twitter.

Matt Mulcock:
It’s happening in real time. In a matter of 30 hours. So from that point, it started when Peter Thiel basically said that, and they put out that press release. From that point to… That was like Thursday morning. By Friday the stock had dropped like 90%, everything had halted. People were losing their minds. They had shut down the website, people couldn’t get their money out. And then over the… Basically the market closed and then over the weekend people were freaking out. On Sunday the government came out, the FDIC took over the bank and then the government came out and basically guaranteed everyone’s money. Said depositors, not investors, depositors with money there are guaranteed. They’ve now gone to like, sell the bank.

Matt Mulcock:
Someone’s gonna take it over. The depositors are gonna be fine. The government has already guaranteed their money. But I mean, that’s essentially what happened. Again, there’s some specifics that I can get into as far as like what’s specific about SVB as to why it happened to them faster than a normal bank…

Ryan Isaac:
I was just gonna ask you if you knew the differences between them and a differently… The difference is regulation and the rules of regulation they fall under. I was gonna ask you if you wanna get into that at all.

Matt Mulcock:
Yeah. So we’re gonna jump into the FDIC, and how all that works. But what makes them unique I think is two things. So, well, maybe three. The number one thing is that they’re so niche in this space that’s pretty close, and very connected, right?

Ryan Isaac:
Yeah.

Matt Mulcock:
So meaning once that word starts in that community…

Ryan Isaac:
It’s all over.

Matt Mulcock:
The VC community, it’s over. And very powerful people that started… When Peter Thiel says something like that in the VC world, he’s kind of like the godfather. Right? In that… In that world, he says something, it’s over. So that was number one. But structurally there’s two things. So… 93% of the deposits in SVB were uninsured meaning the FDIC, they went over the FDIC limit.

Ryan Isaac:
It Was over the limit.

Matt Mulcock:
Yes, and it makes sense, right? Because it’s big money. These are small businesses, but they’re getting funded with big money. They’re paying big money with SVB.

Ryan Isaac:
Yeah. I was just gonna say, these loan getters are people…

[laughter]

Matt Mulcock:
I’m never gonna hear the end of that.

Ryan Isaac:
I have a joke about that actually, it just is hilarious to me, ’cause it’s not wrong. They’re people who are getting loans.

Matt Mulcock:
They are loan getters. Yes.

Ryan Isaac:
But a lot of these depositors though, too are, like you’re saying, these aren’t like just… These are people who are blowing through hundreds of thousands of dollars per month in payroll costs for their small software companies. ’cause it’s… That’s just how much it costs. And the amount of money they need to survive for 30 days is astronomical. The dentist think that they spend a lot of money per month to just keep a business running.

Matt Mulcock:
Totally, they’re also companies that come into a lot of cash very quickly. So they’ll get funded with a series A, let’s say it’s 5, 10, 15, 50 million dollars, whatever. Dude, the stuff that was happening during, you know, in particular, 2021 was, like out of control what was happening specifically to like these SaaS companies, like these softwares, the service companies, the valuations they were getting. So all of this big money was coming in. So again, why does it matter that 93% was uninsured? Well, again, that belief, right? The belief that my money is safe is going to dwindle a lot faster if I know my money’s uninsured. Everyone knows pretty much at least has heard FDIC insurance and like kind of what it is. It protects me to a certain degree.

Matt Mulcock:
For the average person.

Ryan Isaac:
The average person’s gonna kind of generally know, “Oh, there’s something with protection.” Right? Well, these guys for sure knew, right? Like, I’ve got $10 million in that bank. It is not insured. So that matters because when they get spooked, everyone knows that it’s at that bank. My money’s not insured, so it’s gonna happen a lot faster. The average bank is about 50, 55 percent, meaning the deposits at the average bank, these big banks over half of it it’s insured. So people aren’t gonna panic as much or as quickly, the last thing, structurally, what impacted them was 56% of their assets, again, like the money they brought in or the assets on their balance sheet were invested in longer term fixed income securities, which that matters because as rates were moving up, their balance sheet value was dropping, which made them have to make a move. The average bank, or like these bigger banks is about half that 20, 25 percent. So interest rates don’t move or don’t mess with their balance sheet as much. So it was kind of like the perfect storm with SVB that again, once someone started talking, once they got spooked, Peter Thiel said something on Twitter, “It’s over.” And it happened so quickly. It was kind of unbelievable to watch.

Ryan Isaac:
Yeah. And a lot of people previous to the weekend were thinking the government wasn’t going to do anything at all. Right? Wasn’t that what was being said, Actually. It was like, “Yeah, sorry, we’re not gonna do anything.”

Matt Mulcock:
There were a lot of people speculating and a lot of powerful people in the, again, in that world, they were going on Twitter that were like directly tweeting at the, you know, at the president and Fed Chairman Yellen. And they… She was… Not Fed chairman Yellen, she’s the secretary of the… Treasury secretary. So they were directly tweeting at them like, “You have to do something.” And these were like, not like people like me with 50 followers. They were like, big-time people.

Ryan Isaac:
You’re up to 50, dude sick.

Matt Mulcock:
Yeah. And I might have like 60 now. I’m basically an influencer.

Ryan Isaac:
You’re bigger than that, you’re bigger than that.

Matt Mulcock:
Yeah. I’m basically an influencer.

Ryan Isaac:
Yeah. These are big time people directly communicating to decision and policy makers. Oh yeah.

Matt Mulcock:
Yes, they were basically saying, and they were right. Like forget how things and everything in America becomes political, the fact of the matter is if nothing was done to protect depositors in this case by Monday, the following Monday, which was this last week. By the time you listen to this, it was two weeks ago, it would’ve been 2008 level. Because everyone would’ve lost their belief, at least in the regional banking system not like, and everyone would’ve been funneling their money to the bigger banks, the too-big-to-fail type banks. It would’ve been a catastrophe. So they kind of had to do something.

Ryan Isaac:
Yeah, they had to and they did.

Matt Mulcock:
They had to step in. Technically there was three banks that failed. SVB was the biggest one. There’s Silver Gate. And there was one more.

Ryan Isaac:
Republic…

Matt Mulcock:
No. First Republic also got hit pretty hard. They did not fail…

Ryan Isaac:
They entered receivership. Yeah.

Matt Mulcock:
Yeah. Not that I know of. That may have happened since you listened to this, but they had bounced back a little bit and yeah, I mean their, I’m looking at it now. Their stock has plummeted, people are kind of freaking out about First Republic as well and some of these regional banks.

Ryan Isaac:
These regional, yeah. It’s some of these regional banks.

Matt Mulcock:
But as far as I know as of this recording, three have failed and they all kind of failed simultaneously. In fact, I believe it was Silver Gate, I believe it failed before they… That happened before SVB technically, or pretty much right in parallel. It’s just that everyone was talking more about SVB. I think because of its…

Ryan Isaac:
Magnitude.

Matt Mulcock:
Magnitude and the clout with the type of people that were invested in that bank and all that kind of stuff. So.

Ryan Isaac:
Yeah, totally. So, you know, our audience are, they’re not tech investors, although some of our clients do dabble if you can say that.

Matt Mulcock:
They dip their toe.

Ryan Isaac:
There’s some toe-dipping, some dabbling, some lighting of the moon. Moon already. Yeah. So dumb.

Matt Mulcock:
There’s some loan getters out there.

Ryan Isaac:
There’s loan getters, I’m just gonna say it really fast. I have four daughters and early in my daughter’s lives, they did not know the existence of a boy. Like that was a boy was like a thing, that like a brother or anything ’cause they just literally thought their whole world was sisters. So they used to, they thought that the term for the word brother was boy sister [laughter]

Ryan Isaac:
And they used to say, boy sisters.

Matt Mulcock:
And that’s what you thought of when I said loan getters.

Ryan Isaac:
Yeah, that’s what I thought. Because they… It’s not wrong. They would call everyone a boy sister if it was someone’s brother. Or they used to call a cowboy, a boy cowgirl, which I just thought was so cool. Like…

Matt Mulcock:
That’s awesome.

Ryan Isaac:
Anyway, okay, so I don’t know, is there anything else you wanna say? The question that started coming in from clients on this, oh, this is what I was saying, dentists aren’t in the VC and private equity funding. They’re not hoarding, you know, millions of dollars in cash from a capital raise to pay out hundreds of thousands of dollars in like payroll every month to try to build their software companies, their patients. The dentist businesses aren’t affected by this as directly, but how I think people were perceived to be affected was dentists do still hold a lot of cash. For various reasons. And, which is actually a whole different subject, but the questions I started getting was like, “Oh, what is FDIC? How do I make… Are my deposits insured? Should I move money around to different banks and put them in different spots? Because just to keep them safe.” Before we get to that question, is there anything else you wanna say? Like, to tie all this in about just what happened factually and just what the situation was?

Matt Mulcock:
Yeah. One thing I do want to make clear and this is not a prediction of what’s going to happen, we have no clue. But one thing that’s come out of this we mentioned earlier, is like biggest bank collapse since 2008, which is true. That is true. It can also be true that structurally what happened here, what caused this bank collapse is not even close to what happened in 2008. Completely different. As far as like the reasons for what happened. So, I just wanna make that clear that you hear these really scary headlines or see things on Twitter on the news. It’s like, ‘Biggest bank collapse since 2008’. They’re implying that like, or they want you to think, or maybe I shouldn’t question their motives, but I’m going to, I believe that they’re saying like, they’re using that headline to say like, “This is like ’08, ’09 again you should be really scared.” Not saying, could this turn into that? Sure. I think it could. And I think if the government wouldn’t have stepped in, yes. I think there was very likely that could have happened something to that level. But what caused this is not even this close to the same thing.

Matt Mulcock:
As far as what happened on ’08, ’09.

Ryan Isaac:
I just pulled up a list of how many banks failed, since 2009. And the 2009 through, even into, I mean, into 2014, there was still 18 banks that failed that year in 2014. Since then, just going from 2015 on, it’s 8, 5, 8, 0, 4, 4, 0, 0, 2 this year.

Matt Mulcock:
Do you want to compare this to before FDIC insurance, which was 1931. So the 1920s, I have a little list here just for some fun. Do you want to know These numbers?

Ryan Isaac:
Yeah. Number of banks failed before FDIC in 1920s. Okay.

Matt Mulcock:
So yeah, the FDIC, I believe was created in, I think it was like 1931, something around that range. Okay. So 1920s was like the decade of bank runs and bank failures. Which I believe… Is that ‘Wonderful life’. What was the… Was that around… Was that supposed to be 1920s?

Ryan Isaac:
That was it. That was the setting The Great Depression.

Matt Mulcock:
Yeah. So that was like the decade of bank runs. So, it started in the, kind of the down set of 19… Beginning of the decade. 505 banks failed in 1921 alone.

Ryan Isaac:
505. Okay.

Matt Mulcock:
505. They continued to rise, during the ’20s averaging 680 per year from 1923 to 1929. The peak was 1926, where there was 950…

Ryan Isaac:
Oh my gosh.

Matt Mulcock:
Bank runs or bank failures in 1926 alone.

Ryan Isaac:
Wow.

Matt Mulcock:
Then they created FDIC insurance. The Fed, was already created, but really started to figure out how to handle these kind of things. And so they, we haven’t seen it like that since. But 680 a year for that decade. Pretty much.

Ryan Isaac:
Yeah. Thousands in the ’20s and early ’30s.

Matt Mulcock:
Thousands of banks during the ’20s.

Ryan Isaac:
So then do we move into the FDIC then? Is this the segue?

Matt Mulcock:
Yeah. Yeah.

Ryan Isaac:
So then in 1933, the FDIC was created. And by the way, the FDIC’S website is actually surprisingly helpful for a government website.

Matt Mulcock:
Yeah. It really is.

Ryan Isaac:
There’s a lot of really good information. They even have a calculator on there, which we’ll talk about in a minute, but they have a calculator where you can punch in all the different types of accounts you have and the amounts, and it’ll tell you if any, are at risk of being uninsured, meaning they wouldn’t be covered. But FDIC’s created…

Matt Mulcock:
Fdic.gov.

Ryan Isaac:
Yep. It’s created in 1933. It’s funded. It’s not… Has no congressional appropriations. It’s funded by bank premiums. I mean, so banks pay fees to the FDIC to fund the FDIC fund. And it says here, it ensures trillions of deposits in the US banks. That’s… It’s huge. It’s gigantic.

Matt Mulcock:
Is that right?

Ryan Isaac:
Yeah. The FDIC insureds trillions of dollars of deposit in US banks and thrifts.

Matt Mulcock:
Wow.

Ryan Isaac:
Deposits in virtually every bank in savings association in the country. Trillions of dollars. The standard, and this is what we’re gonna talk about in a minute, ’cause this is the question people have the… This is the line that confuses people. So we’ll break it down a little bit. The standard insurance amount is 250,000 per depositor per insured bank for each account ownership category. So we’ll get into that.

Matt Mulcock:
That’s key.

Ryan Isaac:
That is key. We’ll get into that, what that means. Since the start of the FDIC, January 1st, 1934, no depositor has lost a penny of insured funds, means covered up to that amount, as a result of bank failure. One thing I learned from this, one of my takeaways from just hearing this again and, not having heard bank failure news really since ’08, which is not true because it has been in the news since ’08 is that, banks are, they’re businesses and they go under, like businesses do.

Matt Mulcock:
Yeah. Exactly.

Ryan Isaac:
But we’ve had this backstop since the early ’30s of ensuring that people’s deposits up to a certain amount are covered. So, anything you wanna say about the history and creation of, anything you wanna add to that or at all about the creation and history of that?

Matt Mulcock:
No.

Ryan Isaac:
I want to talk about this line here. I’ll go back to it. I’ll say it again. The standard insurance amount is 250,000 per depositor per insured bank for each account ownership category. So I want to talk about that, what that sentence means. Here’s what I think it means, change, add/or correct this at all, Matt. I’m gonna go back, I’m gonna read it here. So what I hear that sentence mean is that you get 250,000 insured of cash, per person…

Ryan Isaac:
But per, the word depositor actually can be defined a few different ways per insured bank. So me as one person, I could deposit $250,000 in multiple banks, as many as really as I want, and have each of that $250,000 chunk secured, insured in different banks for each account ownership category, which is what I’m gonna talk about. So this means that me, I’m an owner person, I’m a depositor so I could have all these in different banks, but also within one bank. Me as a depositor, I could have different account types that each have that amount insured.

Matt Mulcock:
At the same bank?

Ryan Isaac:
At the same bank.

Matt Mulcock:
So it’s funny, there’s just what you said with the 250 you were using the example of you, you’d go to all these different banks. A story came out during this whole process…

Ryan Isaac:
Oh, cool.

Matt Mulcock:
So at end of last week of Giannis Antetokounmpo. He’s like one of the biggest NBA stars in the world.

Ryan Isaac:
Yes. Okay. Yeah. Cool.

Matt Mulcock:
Yeah, he plays for the Bucks, so a story came out about him where he has over 50 banks that he banks at.

Matt Mulcock:
He has a cash spread ’cause he doesn’t have one account that’s under the limit. So he literally has like, it’s like over 50 banks.

Ryan Isaac:
Yeah. The story, wait, hold on. What was the, I texted you this as a funny episode we should do on people who hold too much cash ’cause it’s actually a thing. Giannis put his money to 50 different banks until Bucks owner taught him investing. He had, 250,000 in 50 different banks ’cause he didn’t know how to invest money.

Matt Mulcock:
He just thought, he just put his money in the bank and that was it.

Ryan Isaac:
Yeah. Luckily the Bucks owner is also a billionaire who’s like a hedge fund person and he could always learn a few things.

Matt Mulcock:
Yeah. And also Giannis is doing okay. I mean he makes like $50 million a year, so he’s all right.

Ryan Isaac:
Okay, so each person can have that at each bank, but inside of one bank, one person could also have different types of accounts. Again, fdic.gov, this is on their resources page. Pretty easy to find. Here’s what they defined as an ownership category. And there are one, two, three, four, five, six, seven, eight, three, four, five, six, seven, eight categories of ownership. Types of accounts you could have at one bank per person. And each of these actually has subcategories too. So there could be even more, but we have a single account, so I open a checking account, there’s an example. I could have a checking account, $250,000 checking, savings, money market. That’s me, one depositor with a single account. It’s pretty standard.

Matt Mulcock:
Man, you better break up your… You gotta move some money around, bro.

Ryan Isaac:
I got ’em, I got ’em, I have so much money to move around. Certain retirement accounts. This is where it gets a little bit different interesting. But the FDIC deposit insurance covers retirement accounts in which plan participants have the right to direct how the money is invested. So IRAs, self-directed like 401K plans, profit sharing, some of these other ones don’t. Section 457 plans, some people out there have those they don’t cover. So this is where it gets interesting, when you hold an account like that, they don’t cover losses of stock market changes and they don’t…

Matt Mulcock:
What?

Ryan Isaac:
Yeah, I know. Isn’t that, that sucks, but that’s an account type so, that… You could have a checking account and an IRA and the cash in those would be considered to…

Matt Mulcock:
Make sure the failure of the entity in which you have… Money.

Ryan Isaac:
Yes. The failure of the entity not being able to get your cash out. Another really common was a joint account. So I could with my wife go have a joint account. We each in that joint account could have $250,000. So a total of 500 for our family, while I have another 250 in a single account in the same bank and my wife has a 250 in another single account in the same bank. And while we each have our own separate other types of accounts in the same bank as well.

Matt Mulcock:
So if you have a $1 million at the bank it’s all insured?

Ryan Isaac:
All insured. This includes, we’ll kind of breeze through some of these because these are gonna be a little less common and if they are common, they’re kind of set up in your trust documents. But around estate planning, revocable is one type, revocable trust is a type of account or irrevocable trust is a different type of account. Again, in the same bank. An employee benefit plan account, this isn’t as common for dentists, but that’s a different type. A corporation partnership or unincorporated association account, so deposits by corporations, partnerships and unincorporated associations including for-profit and non-profit organizations. That means that your… Now this is where I actually don’t know a little bit. If I have an S corp, this is what I think it’s telling me. I have an S corp that has deposits that are at a bank up to the limit that are insured.

Ryan Isaac:
Insured separately from my personal checking account, insured separately from my joint checking account that’s insured separately from my wife’s personal checking and savings account. These are all different. My S corp, the joint, the personal, the personal… You can do this at one bank. So really we’re talking about just in the really common ones. If a couple each has a personal of 250 and then a joint at 500 total, that’s a million. And then an S corp or your business corporation, I guess each of you could have a business corporation if it’s held separately and there’s no cross ownership or missing…

Matt Mulcock:
Sure. Or if you have a partner in that business and you each have… Yeah.

Ryan Isaac:
Partner. Then that’s another 250, 250 each, we’re talking north of a $1 million of…

Matt Mulcock:
It’s 1.5 million.

Ryan Isaac:
Yeah. North of a… Yeah $1.5 million of insured cash between common. And these aren’t the less common ones. These are common ownership structures at one single bank. And these are just common ways that people hold money. Government account is another category.

Matt Mulcock:
One other thing I want to hit on the trust accounts. If you have a trust, even if it’s the most common trust is a revocable trust. But you have a trust account at a bank, it’s $250,000 per owner, per unique beneficiary.

Ryan Isaac:
Yes. That’s where that changes.

Matt Mulcock:
So that’s key. So let’s say you’ve got, so it’s per owner, so it’s you and your wife and you’ve got five beneficiaries on that trust document, that is $250,000 for you, your wife and per beneficiary. So it’s not like that’s where it becomes really important to understand that if you have a trust account right now at a bank and you’re freaking out like, “Oh my gosh, we’re below 250.” It’s like, no, you’re actually most likely fine ’cause it’s 250 per owner and per beneficiary on that.

Ryan Isaac:
So I guess pausing just right there, most dentists, I mean we’re talking about $1.5 million in cash, not including these revocable trust account types with different beneficiaries for different kids and everything.

Ryan Isaac:
We’re now into a territory of money that is most dentists are not sitting on in cash. Unless they’ve got a pretty big… Two to three months of a pretty big operating expense which is good. Maybe a big bucket for upcoming taxes which they’re holding onto short time. And maybe they’re holding onto some building downpayment money, in which case I could see that exceeds seven figures. But that still could be spread out in a way that is protected at one institution. Now, we’re just talking about one institution. You could go play the same game at multiple as many as you really want to.

Ryan Isaac:
So, I don’t know if that’s enough of an answer but that’s the question people have been asking is like, “How do I protect all this cash?” And really you can do it in a lot of account types in just one account, especially if you’ve got a partner or spouse that you can do this with and move money with, and a business account and trust accounts. There’s a lot of ways to do it for a dentist. Now, to your point Matt, earlier in the story when tech company raises $10 million, and they got to throw it into the bank… That’s why there was so many uninsured assets because that wasn’t… Those weren’t normal people. Normal deposits.

Matt Mulcock:
Yeah, exactly. Yeah.

Ryan Isaac:
They weren’t normal. And our dentist would fall into that normal depositor category. I think that’s probably helpful on the category types at each bank. Anything you wanna add to that or say in addition to that at all?

Matt Mulcock:
No, just to reiterate that as long as you’re below these… Again, we’re getting questions like you said of, “What can I do?” It’s well, I think the key here is first understand are you even above limits? Most likely, in most cases you’re not unless again you’re sitting on a $1 million in a single account. Well, okay, well then it’s what you can do is very easily, set up some other banks and start moving that money around. A very easy thing as well, you just hit it just to reiterate, if you and your spouse have, let’s say, a good chunk of money in a joint account of over that $500,000 total limit, let’s say it’s 750,000. Well, an easy way to get around that, even at the same bank, is just set up an individual account in each of your names and then break up some of that money to those accounts. And then have each other as beneficiaries. So, that would be a pretty easier way to do it.

Ryan Isaac:
Easy way to do it, and that’s gonna cover most of the dentists worried about this situation right now. And that’s the good news too about most dentists running LLCs, incorporations, S corps because it’s passed through and flow through personally, it’s like they’re… You’re not gonna run into corporate bylaws. If you run a C Corp or some pretty big things, I think this might be a little bit different trying to pull money out of your C corp and moving it somewhere. Just talk to your CPA if you’re gonna start doing stuff with your corporation. But I think this paints the picture that it’s a pretty broad category and how to resolve this issue even in one bank. You need to just go to one more bank and do it all over again and double everything.

Ryan Isaac:
So, there’s a page on FDIC that I think is really important. The topic is what products are not insured? And this is where a different kind of insurance even comes in, but they do not insure stock investments, bond investments, mutual funds, crypto, life insurance policies, annuities, municipal securities, safe deposit boxes, or their contents, which was actually news to me. I got to go dig a hole for my safe deposit box contents. [chuckle] US treasury bills, bonds, or notes. These are things they do not cover and you might be wondering, “Well, what if I own stocks and a bank just disappears and my stocks disappear too?” This is where a different kind of insurance comes in, a different agency altogether.

Ryan Isaac:
The SIPC, the Securities Investor Protection Corporation, the SIPC protects customers. If you have a brokerage account with stocks or bonds in there, and the brokerage… Let’s say you have money at TD Ameritrade and you have stocks in an account up to, they have different limits too. Up to 500,000 are their limits including 250,000 of dollars of cash. If TD Ameritrade disappeared, they would replace the amount of stock shares in there up to those amounts. So, the SIPC protects your investments not from market declines. There’s no insurance for market declines.

Matt Mulcock:
What?

Ryan Isaac:
Well, I was just thinking some options trader is gonna be like, “That’s not true.”

Matt Mulcock:
Yeah. [laughter]

Ryan Isaac:
Options trader enters the chat.

[laughter]

Matt Mulcock:
Yeah. [laughter]

Ryan Isaac:
But there’s protection from a brokerage firm going under and having your shares insured up to a certain amount too, that’s SIPC. But most questions coming in right now are just dentists sitting on cash in various banks wondering, “How do I protect this?” And that’s FDIC and I think that’s a pretty good little list. Again, fdic.gov, they have a calculator that you can just punch in the accounts that you have, the amounts, how they’re owned. And they’ll tell you if there’s any blind spots and it’ll highlight it in red and say like, “All this is not insured. Here’s some options you can do.” It’s actually pretty… For a government website…

Matt Mulcock:
It’s pretty helpful.

Ryan Isaac:
Hats off the FDIC, whoever’s running the business over there, doing it good… Doing a bang up job.

Matt Mulcock:
Yeah. The last thing I’ll say on this, just on the SIPC and the differences…

Ryan Isaac:
Yeah. Oh, yeah.

Matt Mulcock:
Between brokerage versus a bank. Brokerage failures like the failure or the run on a brokerage firm is pretty rare. So, it’s a very, very different…

Ryan Isaac:
Different risk.

Matt Mulcock:
The risk there is much, much lower. Not saying it hasn’t happened or it couldn’t happen. But if this is right on the SIPC website as well, it says right there below… Like, like how… What is this… What is this? It says right there on the website, “Brokerage firm failures are rare.” It just… It’s such a different structure, and entity and how it functions than a bank. It very rarely happens.

Ryan Isaac:
And need and it’s different need.

Matt Mulcock:
And need. Yeah.

Ryan Isaac:
Your cash sitting there that’s either paying payroll expenses or your family’s next vacation, or medical bills is very different than stocks that are sitting in an account. That’s a very different need from the general public as a whole. So, cool man. Matt, thanks for doing so much research and just really understanding the big picture of what’s happened over the weekend. Really, like you said it happened so quickly, it was kind of tough to keep tabs on everything. And also keep tabs on what was real and what wasn’t real, because there was just so much talk about it all.

Ryan Isaac:
Do you… Is there anything else you wanna add to that? Anything else you wanna say? I think we answered the question on FDIC and how dentists can cover themselves, but anything else you wanna add or say that, on that?

Matt Mulcock:
No. I think we hit it. Hopefully, there’s better news as you’re listening to this and things have calmed down.

Ryan Isaac:
Yeah. Totally. We hope, but then something else will just be in the news maybe after that…

Matt Mulcock:
It will be something else.

Ryan Isaac:
Very shortly, we can’t promise and predict that. I said I had a quote for the end and I’m hoping to still fits, there’s just a line in here that I really love, and the point of this quote when I read this and I was just thinking about today, was just this idea was what we were talking about earlier, this idea that there’s always something going on, the world marches on, and yes, some of these things end up to being bigger set backs, and we realize and they do hurt real people in real ways…

Matt Mulcock:
And they are serious.

Ryan Isaac:
And they are serious, they are serious. But the world does march on, and there are… I guess the point is, there are some things you can do about it, quickly, there’s logistical strategic things sometimes, but very often, there’s not a lot of things you can do about big systemic things like this, and it’s gonna be the continuation of habits, successful habits that are gonna push you through ’cause you gotta keep going for decades and decades, so this is what… This is, again, this is like an exercise science person, I don’t know them, I’m gonna say their name just because they should get credit for this great little… It was a post, I guess this was like an Instagram post, but it’s like a tweet on Instagram. You know people do that.

Matt Mulcock:
Yeah, yeah. They take pictures and put it, yeah.

Ryan Isaac:
His name is Danny Matranga CSCS. I think that’s like a sport sign.

Matt Mulcock:
Oh Danny.

Ryan Isaac:
Do you know Danny? You guys [0:53:31.7] ____…

Matt Mulcock:
Yeah, good old Danny.

Ryan Isaac:
Coach Danny something is his handle anyway, it’s kind of a different subject, but there’s a line in here, I freaking love, he says the fastest way and fastest is in all caps and it’s in quotes, the “FASTEST” way to see results with your fitness is to acknowledge, there are absolutely no quick fixes, and instead of looking for them to… Instead of looking for them to re-direct your energy towards, this is the line I love, the relentless pursuit of consistency, showing up consistently is the only way, even if you wish it wasn’t. Now, this is a quote about health and fitness and shortcuts in health and fitness that humans have wanted since to dawn of time, but…

Matt Mulcock:
But it’s the same thing, yeah.

Ryan Isaac:
It is the same thing, and it doesn’t… This isn’t down-playing bad news or bad things that happen to people that are serious things, but the thing I loved about this is redirecting your energy towards the relentless pursuit of consistency, because showing up consistently is the only way, even if we wish it wasn’t the only way. And so what does that mean? It’s running a good business, it’s paying attention to your P&L and your overhead, and your profitability, it’s having a good savings rate, it’s not spending too much money, it’s investing for the future, it’s being responsible with your debt, it’s about being consistent with these things for years and years and decades, not for days and weeks at a time, and I think that’s a good lesson to take because this stuff, this kind of news, these kind of unexpected events, that throw us through a loop. They will never end. They will never stop. In a month there will be another one that we’re talking about on the show.

Matt Mulcock:
Yeah.

Ryan Isaac:
So Matt, thank you for helping the people.

Matt Mulcock::
Yeah. Thanks, Ryan.

Ryan Isaac:
Always pursue consistency. You’re good at that. And thanks for receiving the message.

Matt Mulcock:
Consistency is a super power.

Ryan Isaac:
Alright, shout out to all the loan getters and the boy sisters. And, thanks all of you for being here with us.

Matt Mulcock:
[laughter] I can’t wait for the emails and the text on that one.

Ryan Isaac:
I know, I don’t know what the controversy that I’ll cause, but I hope it does a little bit. Thanks for being here. We’ll catch you next time on another episode of The Dentist Money Show, take care now, bye-bye.