Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

A Bank of One's Own

nayafia.substack.com

Post reply on HN
Print view View original

41–50 of 130 posts

Re: A Bank of One's Own

#41

Post by eastbound »

Osmose wrote: post #15

> I'm perplexed, then, to see so many people gleefully celebrate the collapse of an institution that helped level the playing field for people from all backgrounds. "Making loans to startups that otherwise wouldn't get a loan because they are too risky for traditional banks" does certainly grant more people access to the high-cost high-risk world of tech startups, but I dunno that it's a terribly compelling method to…

For the last two years on Youtube in France, we’ve had ads saying “DON’T HAVE MONEY? YOU CAN STILL BUY A HOME!”

It’s the 3.6 Roentgen of banking. Everyone with no money was able to buy. Startups are too many being created. Flooding the economy with Covid money made that everyone had way too much money. Everything is in flames, we’re just merely discovering it.

It’s gonna be a tough year.

Re: A Bank of One's Own

#42

Post by WalterSear »

grey-area wrote: post #29
WalterSear wrote: post #24

Earlier quoted context omitted.

That's to my point though: there's not going to be a fire sale.

Well let’s hope not, and let’s hope they arrange an orderly process by 9AM Monday. Friday was not great and appeared to take them by surprise.

Well, not everyone, given that the CEO's been selling shares :)

Re: A Bank of One's Own

#43

Post by xboxnolifes »

gruez wrote: post #39
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?

Interest

Re: A Bank of One's Own

#44

Post by swatcoder »

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.

From the bank’s perspective, uninsured depositors are essentially margin lenders who can call in their loan at any time.

If your lenders are all from one especially volatile and incestuous industry, you put yourself at especially high risk of experiencing a run and defaulting. You need to manage risk and investments accordingly.

They took a high-risk position with eyes wide open and have collapsed as a result.

Re: A Bank of One's Own

#45

Post by dools »

xboxnolifes wrote: post #43
gruez wrote: post #39

Earlier quoted context omitted.

>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?

Interest

I’m not an expert in the mechanics but I think there is also a way for private credit creation to run as a separate operation, similar to how loans were originated in the sub prime mortgage crisis and then immediately sold on. I’m not recommending that happen, but a similar system would allow private credit creation without the loan issuers being the primary deposit taking institution.

But yes private banks could also operate term deposits and pay interest to attract deposits to satisfy net flows of funds with other institutions.

Re: A Bank of One's Own

#46

Post by mitthrowaway2 »

xboxnolifes wrote: post #43
gruez wrote: post #39

Earlier quoted context omitted.

>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?

Interest

That would be nice. Presently, most private banks pay less interest to depositors than the Fed funds overnight rate.

Re: A Bank of One's Own

#47

Post by phendrenad2 »

> They banked with SVB because it's one of only a handful of banks that was willing to align its financial products with the holistic levels of risk that are required to work in startups.

I don't really understand what this means. What specifically did SVB offer that, say, Chase or BoA didn't?

Re: A Bank of One's Own

#48

Post by phendrenad2 »

paulddraper wrote: post #33
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...

Probably very few startup employees can't afford to exercise SOME options, but how many can exercise ALL of their options? Most probably fall somewhere in-between, hence the existence of the high-interest loans mentioned in the article.

Re: A Bank of One's Own

#49

Post by cscurmudgeon »

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.

This episode has taught me the random person on the street (on the left and the right) is horribly ignorant, has dirt-poor reading comprehension, and is seething with envy towards Silicon Valley.

Re: A Bank of One's Own

#50

Post by nemo44x »

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.

It’s such a strange thing. Gov stims everything and the fed drops rates to nothing and it works. Cash flows are coming in. But there’s just so much cash and not enough borrowers so they buy one of the safest assets. The very same entities that created all the cash and low interest rates start rapidly changing the interest rates and then this happens.

Like I don’t want to defend the execs too much as they are the responsible people. But the gov and Fed did this. Erratic economic policy did this. It’s sad so many people think it’s a greedy bank. Being named Silicon Valley Bank doesn’t help.

Post reply on HN