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Ask HN: How is the SVB situation affecting your startup?

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Re: Ask HN: How is the SVB situation affecting your startup?

#81

Post by whitemary »

ak_111 wrote: post #65
Lightbody wrote: post #55

Disclaimer: I know next to nothing about the financial system or banking inside baseball. This is just one founder's reaction to the whole mess. We were reluctant to move our funds most of the day yesterday. Felt like a lot of dumb panic. We had emails from a few investors, most saying "stay calm" but one saying "move your money to this bank that I'm invested in!" ugh. We decided near the end of the day to move at le…

May I ask you why do you sound so calm and confident that your money will not evaporate permanently (above the FDIC guarantee)? Banks going bust is a totally normal thing in a capitalist system, and bigger more established banks than SVB have done so only a decade ago.

The banks a decade ago got bailed out. None of their customers lost money.

Re: Ask HN: How is the SVB situation affecting your startup?

#82

Post by toomuchtodo »

whitemary wrote: post #81
ak_111 wrote: post #65

Earlier quoted context omitted.

May I ask you why do you sound so calm and confident that your money will not evaporate permanently (above the FDIC guarantee)? Banks going bust is a totally normal thing in a capitalist system, and bigger more established banks than SVB have done so only a decade ago.

The banks a decade ago got bailed out. None of their customers lost money.

A bailout is not guaranteed. How long it takes to be made whole is unknown. How long can you go without cash while regulators work out the details. How long will payroll and creditors wait for you to get your cash back.

Hope for the best, plan for the worst.

Edit (epoch time 16784666958): https://www.cnbc.com/2023/03/10/silicon-valley-bank-is-shut-... (Silicon Valley Bank is shut down by regulators, FDIC to protect insured deposits)

Re: Ask HN: How is the SVB situation affecting your startup?

#83

Post by diebeforei485 »

Why hasn't SVB offered to split people's accounts into multiple accounts capped at $250K each? This would be a win for everyone, correct? The cash is guaranteed, companies don't need to waste their time migrating a new bank, and SVB doesn't have to worry about their fractional reserve.

Re: Ask HN: How is the SVB situation affecting your startup?

#84

Post by diebeforei485 »

ak_111 wrote: post #65
Lightbody wrote: post #55

Disclaimer: I know next to nothing about the financial system or banking inside baseball. This is just one founder's reaction to the whole mess. We were reluctant to move our funds most of the day yesterday. Felt like a lot of dumb panic. We had emails from a few investors, most saying "stay calm" but one saying "move your money to this bank that I'm invested in!" ugh. We decided near the end of the day to move at le…

May I ask you why do you sound so calm and confident that your money will not evaporate permanently (above the FDIC guarantee)? Banks going bust is a totally normal thing in a capitalist system, and bigger more established banks than SVB have done so only a decade ago.

There have been pretty much zero instances of people's money evaporating from U.S. bank accounts, even above the FDIC guarantee.

Re: Ask HN: How is the SVB situation affecting your startup?

#86

Post by synu »

diebeforei485 wrote: post #83

Why hasn't SVB offered to split people's accounts into multiple accounts capped at $250K each? This would be a win for everyone, correct? The cash is guaranteed, companies don't need to waste their time migrating a new bank, and SVB doesn't have to worry about their fractional reserve.

Insurance is per depositor, not per account number.

Re: Ask HN: How is the SVB situation affecting your startup?

#87

Post by mrelectric »

jtarud wrote: post #58

I think this thread will have tons of views from people in the startup world that are likely to be SVB customers. If we all agree to not do run in the bank, it will improve chances for SVB to make it through the next few days. I'll start with committing not to withdraw money my company [redacted] holds in the bank. We stand by SVB. I invite others to do the same.

I wouldn't share my company name in this context.

Re: Ask HN: How is the SVB situation affecting your startup?

#88

Post by Edmond »

asimpletune wrote: post #74
gizmo wrote: post #61

Earlier quoted context omitted.

When assets This isn't just a liquidity problem, this is a solvency problem. The bonds they have aren't temporarily worth less because nobody wants to buy them, the bonds are liquid and have a fair market value based on the current interest rate environment. Your cash isn't at the bank anymore. Your cash has been invested in bonds and those bonds are now worth less than the number you see in your bank account. That's…

It's not a solvency problem. The bonds are valued based on when they mature, not what they fetch on the open market. It is a liquidity issue, which means the money is there, but they can not access the money in the amount of time they need it by.

There is that economic adage attributed to Keynes: In the long run we're all dead.

If you need money but your current assets in whatever form can't furnish that fund for you, I am afraid you're broke.

Re: Ask HN: How is the SVB situation affecting your startup?

#89

Post by mbreese »

diebeforei485 wrote: post #83

Why hasn't SVB offered to split people's accounts into multiple accounts capped at $250K each? This would be a win for everyone, correct? The cash is guaranteed, companies don't need to waste their time migrating a new bank, and SVB doesn't have to worry about their fractional reserve.

IIRC, that's not how the FDIC capping works. It's a unique((account_owner, account_type)) operation, not just by total number of accounts. The "account_owner" can get a little creative, but by and large, just splitting accounts won't work.

Re: Ask HN: How is the SVB situation affecting your startup?

#90

Post by claytongulick »

diebeforei485 wrote: post #83

Why hasn't SVB offered to split people's accounts into multiple accounts capped at $250K each? This would be a win for everyone, correct? The cash is guaranteed, companies don't need to waste their time migrating a new bank, and SVB doesn't have to worry about their fractional reserve.

FDIC convers a single person per account type up to 250k, not per account.

If it were easy to get around the rule, why have a limit at all?

Folks who de-risk by staying within the FDIC limit do it by splitting their money between multiple financial institutions.

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