Square Co-Founder Jim McKelvey on Why the Fed’s Swift Response to SVB Was ‘Great’
As Silicon Valley Bank failed late last week, billionaire entrepreneur Jim McKelvey commended the U.S. government’s prompt involvement over the weekend. The co-founder of Block, the publicly traded financial technology business formerly known as Square, emphasized the necessity of the steps taken by the FDIC and Federal Reserve to safeguard depositors and maintain the midsize banking sector.
“When there is a government bailout, everyone is furious, and many politicians capitalize by shouting, “Whoa! The millionaires shouldn’t be bailed out, “added McKelvey, who made this statement during a conversation with Inc. editor-in-chief Scott Omelianuk at the Inc. Founders House on Monday afternoon during the South by Southwest Conference. We had a very solid case for saving a medium-sized bank.
McKelvey
The serial entrepreneur, who is currently the founder and CEO of Invisibly, claimed that if the federal government did not take action, trust in small and local banks would decline, which would cause the financial sector to become even more consolidated. McKelvey warned the founders in the room that the result would not be good for them as business owners.
“Do you wish to have access to just four banks? Or would you prefer to have a large number of small or local banks? They would have been eliminated, “He informed the group. “We completed the payroll while preserving mid-tier banking. That was made possible by wonderful individuals at the FDIC, the Treasury, and the Federal Reserve, where I work.”
Because he is the chair of the board of directors for the St. Louis Federal Reserve, which is in charge of the regional Fed bank, McKelvey has a special perspective on the situation. He even wore a hoodie with the letters FRED, the abbreviation for Federal Reserve Economic Data, which is the name of the website that the St. Louis Fed founded and maintains.
“I’m not an FOMC member. I don’t serve on the board of directors. The guys in the room are not me. I am the head of one of the 12 districts of the St. Louis Federal Reserve. My primary responsibility is to report on events in the Midwest “He clarified. “But I’m ecstatic. I’m proud of what they accomplished.”
In this desperate time when many founders were worried about being able to pay their employees, McKelvey claimed that the government’s decision to guarantee all accounts at SVB, including those above the $250,000 FDIC-insured threshold, helped keep other financial institutions from preying on founders.
“There were numerous sharks with huge bank accounts circling and offering their assistance in making payroll. Right now, we’ll merely take 10% of your business. It was harsh, he claimed. It might have been much worse.
