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A Bank of One's Own

nayafia.substack.com

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Re: A Bank of One's Own

#31

Post by chris_armstrong »

erik_seaberg wrote: post #22
hn_throwaway_99 wrote: post #5

I thought this was a great post. I've commented elsewhere that I'd be pissed at the moral hazard of unsecured depositors getting a federal bailout (though not if the feds just assist in finding a buyer or do as much as possible to ensure depositors can access their funds quickly), but at the same time I'm saddened by so much of the gleeful tribalism I see online (but not too saddened - many of the "dancing on your gr…

The moral hazard of trusting a licensed bank? Do we want depositors to be hesitant to do that? The Fed won’t even allow “narrow banks” (that keep a 100% reserve ratio and cannot fail) because they think it’s crucial for our deposits to be available for loans and bonds.

It is crucial because new loans generate growth and economic activity. The economy would seize up and enter a deep recession if regular savers stashed their money in 100% reserve ratio bank. (Many would if there was no government-backed deposit insurance for regular-sized amounts.)

I think the reason such institutions don't exist is that they are very unprofitable compared to regular banks and would be expensive to keep deposits in them.

Re: A Bank of One's Own

#32

Post by nightmarish »

dools wrote: post #27

The obvious fact is that we don’t need private banks to run our payment system or provide deposit accounts. It can be done perfectly well by allowing individuals to have accounts at the central bank through a postal savings system. There is probably some value in having banks to do loan underwriting and allowing private credit creation but this whole thing if allowing private banks to run everything and then providin…

How do you handle fraud in this setup? Lol.

Re: A Bank of One's Own

#33

Post by paulddraper »

photochemsyn wrote: post #25

As an aside, this is a curious situation that points to capitalism (in its current form) being something of a continuation of aristocracy but by other means: > "Some employees can't afford to buy their equity at all, so that when their startup is acquired or goes public, they earn nothing from the outcome, looking on in silence while their colleagues become millionaires. The people who find themselves in this situati…

I'm confused.

RSUs cost nothing. ISOs are heavily discounted especially because they are offered years before IPO.

Yes there is a case where employees give up equity entirely, but I would guess this is < 15%. And when the 16th percentile is the aristocracy...

Re: A Bank of One's Own

#34

Post by idk1 »

This it a little tangental but a lot of the times when I see a title that says "An X of One's Own" and then see the content I wonder if it relates at all to Virginia Woolf's A Room of One's Own.

For example I once read an Ikea blog post titled "A Storage Space of One's Own", and the content of the post was nothing at all to do with how women can achieve the same things as men if they are allowed the space to do so, the blog post was about Ikea's top five storage units.

This was one was suspect until the end, and then I think it wraps up quite nicely. All people should be allowed to flourish. And we should take that positive note away from it.

Re: A Bank of One's Own

#35

Post by lazyeye »

erik_seaberg wrote: post #10

It worries me that people assume SVB must have taken crazy risks on startups or crypto, when the actual mistakes were locking up so much money in long-term mortgage and Treasury bonds, and having clients who talk to each other.

Other people are arguing that SVB spent too much time focusing on fashionable, non-core issues rather than the business of actually running a bank.

Clearly they were not giving sufficient attention to the core business for one reason or another.

Re: A Bank of One's Own

#36

Post by djbusby »

nightmarish wrote: post #32
dools wrote: post #27

The obvious fact is that we don’t need private banks to run our payment system or provide deposit accounts. It can be done perfectly well by allowing individuals to have accounts at the central bank through a postal savings system. There is probably some value in having banks to do loan underwriting and allowing private credit creation but this whole thing if allowing private banks to run everything and then providin…

How do you handle fraud in this setup? Lol.

Same way as now? Eventual Consistency that the current financial industry uses.

Re: A Bank of One's Own

#37

Post by ghayes »

nightmarish wrote: post #32
dools wrote: post #27

The obvious fact is that we don’t need private banks to run our payment system or provide deposit accounts. It can be done perfectly well by allowing individuals to have accounts at the central bank through a postal savings system. There is probably some value in having banks to do loan underwriting and allowing private credit creation but this whole thing if allowing private banks to run everything and then providin…

How do you handle fraud in this setup? Lol.

The bank doesn’t need to perform those functions like debit and credit cards in this set-up. Transfer funds to a private bank for that. The public bank is just to secure deposits.

Re: A Bank of One's Own

#38

Post by [deleted] »

dools wrote: post #27

The obvious fact is that we don’t need private banks to run our payment system or provide deposit accounts. It can be done perfectly well by allowing individuals to have accounts at the central bank through a postal savings system. There is probably some value in having banks to do loan underwriting and allowing private credit creation but this whole thing if allowing private banks to run everything and then providin…

[deleted]

Re: A Bank of One's Own

#39

Post by gruez »

dools wrote: post #27

The obvious fact is that we don’t need private banks to run our payment system or provide deposit accounts. It can be done perfectly well by allowing individuals to have accounts at the central bank through a postal savings system. There is probably some value in having banks to do loan underwriting and allowing private credit creation but this whole thing if allowing private banks to run everything and then providin…

>There is probably some value in having banks to do loan underwriting and allowing private credit creation

but why would you ever put your money in a commercial bank when you can deposit at the federal reserve with 0 risk?

Re: A Bank of One's Own

#40

Post by morelisp »

> Several years into my time in San Francisco, someone explained to me how, as a partner at a venture capital firm, they were expected to commit personal capital to the fund, which is often several percentage points' worth of the total fund size.

So I have been out of this mess for a long time, but at least at some point, this was literally the definition of being "a partner" in a firm (investment or otherwise). It's not a title you get by working hard. You buy in if you want the gains, and that means you're also taking on the risk.

This whole essay feels like someone reckoning with the capitalist class, or difference between being rich and being wealthy, for the first time. "What do you mean risky investments don't always shake out fairly? That's not what I learned in my MBA!"

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