My Playbook- Lessons Learned from the Silicon Valley Bank Collapse 2023

Written By Sabrina Burke

Fluffy Hammer Bookkeeping guide to building a no‑drama backup plan for banking emergencies.

On March 10, 2023, Silicon Valley Bank (SVB) was closed by California regulators and handed to the FDIC. It was fast, public, and messy — and it blindsided thousands of otherwise solid companies that suddenly weren’t sure Friday payroll would clear. FDIC

Here’s the headline that matters for business owners and bookkeepers: SVB’s collapse wasn’t about vibes. It was about vanilla risk management done badly. The bank piled long‑dated bonds on one side of the balance sheet, kept hot, short‑term deposits on the other, shed key interest‑rate hedges, and left itself exposed. When rates jumped, the hole got obvious. That’s not macro doom — that’s a maturity mismatch you could spot in Banking 101. Kenan Institute

Add two accelerants: (1) a depositor base that was overwhelmingly uninsured (over 94% of deposits) and (2) a hyper‑networked customer community armed with social media and same‑day wires. Result: roughly $42B walked in hours, with another $100B queued for the next morning. That’s a bank run at internet speed. oig.federalreserve.gov
Even the Fed’s post‑mortem called out how social media + instant transfers have changed the speed of bank runs. Your contingency plan needs to assume “hours,” not “weeks.” Federal Reserve

So what does this mean for you — the owner who signs paychecks and the bookkeeper who keeps the wheels on? It’s time to wield the fluffy hammer: comfort and strength in your financials. Here’s your no‑nonsense playbook.

1) Know your coverage (for real, not vibes)

  • FDIC insurance is $250,000 per depositor, per insured bank, per ownership category. If you’re holding more than that in one operating account, the excess is uninsured. Use the FDIC’s guidance (and their EDIE tool) to map your coverage by entity and account type. FDIC

  • Remember: during SVB/Signature, regulators used a systemic risk exception to make all depositors whole — an extraordinary move, not a standing policy you should plan around. FDIC

2) One bank is not a strategy

  • Two (or more) primary banking relationships. Open, KYC‑approved, tested. Keep both ACH and wires enabled, with signers ready and limits set.

  • Mirror critical services. If Bank A runs payroll or merchant services, set up Bank B with the same rails ahead of time (even if usage is minimal day‑to‑day).

3) Use insured sweep networks (the boring superpower)

  • ICS® / CDARS® (via IntraFi): Work with one participating bank while your large deposits are split into sub‑$250k chunks across many network banks, keeping coverage intact. ICS uses demand/MMDA; CDARS uses CDs. Translation: multi‑million‑dollar FDIC insurance without juggling 20 logins. (Eligibility and pass‑through conditions apply — your banker should document them.) IntraFiIntraFi

4) Segment cash by job, not by guess

Give every dollar a job and a parking spot:

  • Operating Cash (30–60 days): Lives in Bank A. Purpose: bills, payroll, taxes.

  • Contingency Operating Cash (30–60 days): Lives in Bank B, standing by. Keep it ACH‑enabled and vendor‑ready.

  • Reserves: Park via ICS/CDARS or across multiple banks to maintain FDIC coverage.

  • Strategic Cash: For any yield‑seeking bucket, remember: Treasury bills and money market funds are not FDIC‑insured (they can be appropriate, but they’re different instruments with different protections). Confirm fit with your CFO/advisor. FDIC

5) Pre‑wire your lifelines

  • Backup payroll: Set up a duplicate payroll funding account at Bank B and load your company + employee profiles now. Run a $0 test file or a tiny live payroll cycle to prove it works.

  • Vendor triage: Tag “must‑pay” vendors (rent, health insurance, critical SaaS, freight). Store their alt‑payment instructions (wire/ACH/card).

  • Receivables reroute: Keep a secondary lockbox/ACH destination ready. If Bank A is offline, invoices flip to the Bank B remit‑to immediately.

6) Lock in contingent liquidity before you need it

  • Committed line of credit sized to one payroll + one rent + a bit of cushion.

  • Pledgeable collateral documented so you can tap a secured line fast if cash is stuck in limbo.

  • Board/owner resolutions drafted to move cash or open emergency accounts without delays.

7) Build your Banking Emergency Playbook (print this; keep it with your minute book)

Front Page (1 sheet):

  • Institutions, account numbers, relationship managers, and after‑hours hotlines

  • Daily transfer limits + who can raise them

  • Payroll cutoff times for both banks

  • Top 10 “must‑pay” vendors (amounts, frequency, backup method)

  • Decision tree: “Bank A unavailable at 9:00 a.m. on payroll day —> do X, Y, Z”

Attachments:

  • Pre‑approved wire templates at Bank B (payroll, rent, tax)

  • A/R switch kit (alternate ACH/lockbox instructions + templated customer email)

  • Board/owner resolutions (account opening, signer authority, intercompany transfers)

  • Master list of fintech dependencies (payroll, payment processors, bill pay, gateways) mapped to their sponsor bank(s) — so you’re not surprised by indirect exposure

8) Bookkeepers: your monthly “calm‑under‑pressure” checklist

  • Coverage audit: Confirm balances vs. FDIC coverage by ownership category; verify ICS/CDARS allocations match policy. Document. FDICIntraFi

  • Access & controls: Test Bank B logins, tokens, signer matrix, dual‑approval workflows, and daily limits.

  • Rails rehearsal: Send a $1 test ACH/wire from Bank B to each must‑pay vendor (and to payroll provider).

  • Dependency map refresh: If your payroll/bill‑pay provider changes sponsor banks, update your risk notes.

  • Crisis drill (15 minutes): Simulate “Primary bank unavailable today.” Can you fund payroll and pay taxes from Bank B without touching a new form?

9) Communicate like a pro when things wobble

  • Internal script (one paragraph): “Here’s what happened. Here’s our cash position. Here’s the plan for payroll and payables. Next update at __.”

  • Customer note (if receivables reroute): Clear remit‑to switch with effective date and reason (“banking service interruption”).

  • Board/investor update: Share coverage map, liquidity runway, and playbook status. Keep it short and numerical.

10) Lessons we should actually carry forward

  • The cause matters. SVB was a balance‑sheet and supervision failure, amplified by uninsured concentration and faster information flow — not evidence that every bank is secretly on fire. Plan accordingly. Kenan InstituteFederal Reserve

  • Speed is the risk. Social+tech compress the timeline; your plan must compress response. Federal Reserve

  • Insurance is a backstop, not a strategy. Don’t bank on extraordinary measures; build ordinary resilience. FDIC

A tiny glossary (because jargon shouldn’t slow payroll)

  • FDIC coverage: Insurance on deposits up to $250,000 per depositor, per insured bank, per ownership category. Use EDIE to verify your mix. FDIC

  • ICS/CDARS: Services (via IntraFi) that split large deposits across many banks so each piece stays under the FDIC cap — administered through one relationship. IntraFi

  • Operating vs. reserves: Money you spend this month vs. money that protects you if a bank or rail hiccups.

Bank failures make headlines. Preparedness keeps the lights on. Put your backup accounts in place, sweep what’s sweepable, drill your rails, and keep that playbook printed and ready. If you want Fluffy Hammer Bookkeeping to sanity‑check your setup, we’re here to bring comfort and strength to your financials — and keep payroll boring.

Sources for key facts and lessons:

  • FDIC notice on the SVB closure (date and receivership). FDIC

  • Kenan Institute’s analysis on interest‑rate risk, hedging, and uninsured concentration. Kenan Institute

  • Federal Reserve OIG review: uninsured share, deposit outflow amounts, sequence of events. oig.federalreserve.gov

  • Fed’s supervisory review: speed of runs in the era of social media/instant transfers. Federal Reserve

  • FDIC overview of deposit insurance limits and ownership categories. FDIC

  • FDIC speech: systemic‑risk determination extended protection to all SVB/Signature depositors (extraordinary step). FDIC

  • IntraFi: how ICS/CDARS provide multi‑bank FDIC coverage via one relationship (conditions apply). IntraFiIntraFi

Not legal, tax, or investment advice. This guide is educational; work with your banker and advisor to tailor a plan to your entity structure, industry, and risk tolerance.

Sabrina Burke