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Urgent: Sign the petition now

ycombinator.com

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Re: Urgent: Sign the petition now

#411

Post by lolinder »

Mystery-Machine wrote: post #384
lolinder wrote: post #331

Earlier quoted context omitted.

> everyone has to sit down and evaluate their banks balance sheet before trying to do business with them? No, if you're not keeping more than $250k in the account, you don't have to do the homework. If you're keeping more than $250k in the account, you can afford to pay someone $1k to do a bit of due diligence.

$250k is nothing for a company. It's 1 engineer salary. And, no, it's not $1k. It's more like $10k-$20k per month, plus all the overhead of having your money in multiple bank accounts and shuffling it all around just to never hit the $250k limit. Just my 2 cents on this strawman part of discussion.

My parent wasn't talking about shuffling money around, they were talking about reading the bank's balance sheet.

$1k gets you several hours of an accountant's time to go through the bank's balance sheet and tell you if their interest rates and other perks are, in fact, too good to be true.

If you want to go the extra mile and try to move money around to keep under the limits, more power to you, but paying someone to occasionally keep an eye on your bank's balance sheet and make sure it's not going to collapse under you is totally within the capabilities of pretty much any company.

Re: Urgent: Sign the petition now

#412

Post by seizethecheese »

nightmarish wrote: post #105
baq wrote: post #24

Pathetic to be honest. Yes it’s bad. Yes it’ll get worse if no buyer at 100 cents to the dollar is found by Monday morning. And yet, literally everyone involved signed up for it! It isn’t like there aren’t other banks? The thing had a circus for its risk management office. The big mighty all-knowing VC firms shouldn’t go around crying like babies and signing petitions but be organizing bridge loans until FDIC, the mo…

[flagged]

VC backed founder here whose company is impacted by this.

“Nepotistic trust fund baby” I am not. My family has no money, no connections. I went to Portland State University. I had no VC connections whatsoever.

Our company was originally bootstrapped off of personal savings accumulated by working and living way below our means. No friends or family invested or gave us loans. I’ve had no inheritance and expect none.

We did not see a deposit account as a risky investment in any way.

Re: Urgent: Sign the petition now

#413

Post by kelnos »

skwirl wrote: post #123
slondr wrote: post #47

Earlier quoted context omitted.

> Are you saying if I deposit more than $250k (which is NOT a lot for a business) into a reputable and regulated US bank at negligible rates of interest I should just accept the impact of the bank shutting down due to events unrelated to my actions and choices? Yes, because that is how risk works. > And that my deposit should vanish into thin air? No, you should insulate yourself from that risk, either by spreading o…

>No, you should insulate yourself from that risk, either by spreading out your cash between multiple institutions, or obtaining deposit insurance beyond the government's, or (most likely) both. Why would I do that when I can bank with a too-big-to-fail bank like JP Morgan Chase, Citibank, Wells Fargo, or Bank of America?

If you can, then do that. "Bank with too-big-to-fail bank" is a rational choice that you could make while doing a risk assessment.

Unfortunately, many small companies and first-time founders can't get a business account at one of the big banks. Hence: SVB. I don't think this means we should automatically bail them out, though.

Re: Urgent: Sign the petition now

#414

Post by simple-thoughts »

tiedieconderoga wrote: post #51

It's too bad there was nobody who was supposed to be mentoring these startups, maybe giving them advice about business concepts like the benefits of diversification.

Yeah what if we create a network of competent, business savvy investors who are familiar with technology startups? That would be a great way to prevent this type of thing from happening, because they would know about proper risk management.

Re: Urgent: Sign the petition now

#416

Post by Nifty3929 »

Actually this would a bailout for YCombinator and VCs!

Those are the ones with all the money at stake. It’s the VCs money that is going up in smoke, and it’s their portfolios that are going to take a huge hit when all their bets go poof at once.

Let it happen.

Re: Urgent: Sign the petition now

#417

Post by AlchemistCamp »

IncRnd wrote: post #382
AlchemistCamp wrote: post #229

Earlier quoted context omitted.

So SVB owners should take losses. Not those who had bank accounts there and literally did nothing wrong to cause this or even contribute to it.

It was just yesterday that there were pages of comments here on HN filled with people talking about how there should be no bank reserves. The arguments were that cash flow is king and reserves are bad for the economy.

Pretty much anyone on the internet can make an account here.

Surely you don’t expect everyone to agree with what everyone else has said just because it’s on the same site!

Re: Urgent: Sign the petition now

#418

Post by rudedogg »

WhatTheFlak wrote: post #303
axlee wrote: post #127

Earlier quoted context omitted.

There was nothing arbitrary about that choice. This bank promised better deals BECAUSE they were not careful enough about the risk it entailed. That was their competitive advantage, and they made bank for it. Well, tough luck, now it's not anymore: it has nothing to do with being a large bank or a small bank, it has to do with healthy business practices.

Wait so now everyone has to sit down and evaluate their banks balance sheet before trying to do business with them? Silicon Valley Bank had nothing wrong with it's business practices other than they were concentrated in one particular industry, and a slowdown in VCs pumping money resulted in them shrinking deposits suddenly. They asked their investors for money, some VCs basically yelled fire in a crowded theatre and…

> That 250,000 number hasnt changed in nearly a 100 years. Maybe it isn't what we should be going off of?

For what it's worth, it used to be $100K and was increased to $250K in 2008.

Here's a timeline:

https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corp...

Re: Urgent: Sign the petition now

#419

Post by breck »

garry wrote: post #358
prepend wrote: post #133

What would I gain as a taxpayer in return for this bailout? Would the taxpayer receive 10% equity in YC? It seems like YC could have insured these funds, but didn’t. They saved money and accepted the risk. This risk is now realized. Seems bizarre that YC would be made whole. Certainly it saves jobs, but it benefits YC more than anyone else.

These are deposits at a bank. We're advocating for protection of 37,000 small business accounts, a small number of which are YC. We discovered about 30% of YC companies would not be able to make payroll even after the $250,000 insured amount if they were to wait months for their payments. That is detailed on the FDIC website currently as the process for remediation. This petition represents the lived experience of th…

You are in the top 1% and you are asking for a government bailout.

Everyone knows that amounts over $250K were not insured. These are not "innocent depositors".

A lot of my portfolio companies are affected, but I will not lobby for a government bailout on their behalf.

It's not the right thing to do.

I 100% agree with you on lobbying for an expedient process, but if these companies have to take a haircut, they have to take a haircut. The strong will survive (and learn a lesson about risk management).

Re: Urgent: Sign the petition now

#420

Post by oldgradstudent »

cmurf wrote: post #284
tikkun wrote: post #157

Earlier quoted context omitted.

Disagree. People who invested in SVB should be wiped out, probably. People who deposited in SVB should not be wiped out. Depositors in banks aren't expected to do due diligence on the financial statements of the bank they're depositing in. Have you read the 10-K filings of your bank in detail?

Correct. The $250,000 FDIC cap is a favor to banks. They only pay fees to insure up to that amount. And it's bogus. The FDIC should require deposits to be insured, no matter the amount.

The insurance is there to prevent run on retail banks by the general public.

It is expected that you manage your risks if you have significantly more than the insured amount.

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