371–380 of 864 posts
I'm 100% in support of a bailout... ...with the federal government taking equity in return, at the last valuation, diluting existing owners. That would let the businesses keep running, without the "privatize gain / socialize loss" merry-go-around.
What equity are you talking about? It’s already wiped out, anyone can buy SVB for $1
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Startups have been anything but “socialized losses”. They’ve literally been the growth engine of the country for the past twenty years. According to Brookings, “Annually, venture investment makes up only 0.2% of GDP, but delivers an astonishing 21% of U.S. GDP in the form of VC-backed business revenues.” https://www.brookings.edu/research/as-the-venture-capital-ga...
Who cares if it's 99% of GDP of that is going into the hands of venture capitalists?
Stop privatizing profit and socializing losses.
LOL, nope. Not interested in taking another spin on the “privatize gain, socialize loss” merry-go-round. The banks had to be saved in 2008 because they were, like, the financial system. I don’t see why private companies and funds that are much less integral to the functioning of the economy as a whole should be saved by the public fisc. Sorry about your disruption.
Earlier quoted context omitted.
If this is handled by the ordinary procedures used to handle bank bailouts and if the story is what we've been told (problems w/ bonds going bad because of an interest rate increase) there could be some haircut for depositors but it will not be apocalyptic. If the real problem is the quality of the loan book, however, it calls the startup and VC economy into question. We'll learn a lot more about this in the next few…
If a startup can't pay their employees at the end of the month, it's apocalyptic no matter whether or not they get access to their money again at some future date.
Often when a bank fails they change the sign at the branch to some other name otherwise you wouldn't know what happened. In the 1980s there was a lot of bank instability in New Hampshire, my mom kept all the statements going back to 1971, the name of the bank changed numerous times and she was not inconvenience except when the mortgage was about to come due the bank said the original payment was miscalculated and she'd owe more payments. I told her to go tell the bank regulator about it and the bank came back with their tail between their legs and forgave her the last 6 months of mortgage payments.
When I was a student I was banking with an S&L in New Mexico that went under as part of the S&L crisis, they just moved me to a different S&L, it was no skin off my back.
So there's a good chance that the FDIC will manage this with a minimum amount of disruption... Bank routines are handled routinely.
LOL, nope. Not interested in taking another spin on the “privatize gain, socialize loss” merry-go-round. The banks had to be saved in 2008 because they were, like, the financial system. I don’t see why private companies and funds that are much less integral to the functioning of the economy as a whole should be saved by the public fisc. Sorry about your disruption.
SVB has some ordinary people as depositors, with a regular commercial bank as their Boston Private subsidiary. It would be very disruptive and cruel if they lost all or much of their deposits. SVB's stockholders, on the other hand . . .
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These are depositors of a bank. Most startups only have one bank. Startups should live or die because they create good products and solve real problems in real markets, not because they made an arbitrary choice like which bank they started using. There's also a real risk of bank contagion if it is only safe to deposit in the largest banks.
> not because they made an arbitrary choice like which bank they started using Most companies live and die by what most people would call arbitrary choices in things they wouldn't think of. I use more than one bank account for my personal finances and I don't even have 250k cash. Begging for tax payer money after the 10 year tech bull run we've seen, shame.
How true. You can imagine that most people have only a vague idea of what is supposed to happen and why. There are entire professions devoted to many aspects of life (eg Healthcare, law, education, finance, politics, software). Even if you are such a professional, you probably have a mere specialty within the breadth of a vertical. The vast majority of choices people make are gambles based on intuition, localized/anecdotal deduction, and the type of education someone has been exposed to.
Taking stock of what everything anyone knows is true and why, will take longer to explore than a lifetime. A company, as an entity, is worse off.
LOL, nope. Not interested in taking another spin on the “privatize gain, socialize loss” merry-go-round. The banks had to be saved in 2008 because they were, like, the financial system. I don’t see why private companies and funds that are much less integral to the functioning of the economy as a whole should be saved by the public fisc. Sorry about your disruption.
110% agree. At some point, risk HAS to be treated as what it is, risk, rather than just "another way to do things". We have so many banks treating risk as what it is, and pricing for it, well these people decided to go to another bank to get funding, well deal with it. It's not like the average citizen has this luxury.
Many startups can survive taking the 30-40% haircut on their bank balances. Very few can survive their cash being locked up for many months (especially when there are many startups in the same boat.
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Also, people should pay attention when a bank is missing a Chief Risk Officer for 8 months during the most volatile period in fixed income history when Fed funds rate moved 400bps. Also, it is not a good look with SVB's CEO personally lobbied to be excluded from stress tests that more than likely would have prevented SVB from YOLO'ing on 10 yr duration MBS.
We need to get to a point where asset reporting is weekly, or ideally daily, so risks are out in the open.