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Urgent: Sign the petition now

ycombinator.com

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Re: Urgent: Sign the petition now

#511

Post by theGnuMe »

drcode wrote: post #444
theGnuMe wrote: post #312

Earlier quoted context omitted.

Your funds are insured up to $250k. That's the expectation and reality. Every account has the disclaimer that amounts in excess of $250k are not insured.

You are right of course, but we've established a moral hazard There will be a cost to suddenly altering expectations, I guess there's a chance we might see what that cost is now (but probably they will just get a boring bailout)

No we have not established a moral hazard. It's always been $250k. You are trying to make one up implying that we are "suddenly altering expectations". The narrative has always been, FDIC insured accounts are insured up to $250k.

I've known this since I opened my first bank account.

Re: Urgent: Sign the petition now

#512

Post by klyrs »

garry wrote: post #167
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.

Many startups chose SVB because they were the ones willing to open a bank account for them at all. I remember going to a branch of Bank of America to open a bank account for Posterous and not being able to.

So let's get this straight. You want a bank who will take risks willy-nilly on start-ups. But you also want that bank to be subject to regulations to prevent banks from taking risks. But those regulations exist, and SVB begged for exemptions to them, so they could take risks. But your experience with more-regulated banks shows that they're too risk averse. What exactly are you asking for here?

You want your flock made whole. I get that. But are you also asking for regulators to kill the startup economy by shutting it out of banking?

Re: Urgent: Sign the petition now

#514

Post by scarface74 »

professoretc wrote: post #450
scarface74 wrote: post #409

Earlier quoted context omitted.

While I saw first hand what happened in 2008 and afterwards I said “fuck it” and let my three underwater properties that were combined worth a quarter million less than I owed go and did “strategic defaults”, I can’t imagine running a business and having my funds spread across enough banks to meet the $250K protected amount and still try to run payroll and meet all of my other obligations.

You don't necessary have to have all your funds spread out enough that every account is under 250k; you just have to determine how much you are willing to risk. E.g., if you split your funds between two banks, if one of them goes under, you lose 50%. Your risk threshold determines how many splits you need; only if it's 0 do you need to keep every account under 250k.

My risk threshold for cash is $0. So yeah, it would be split across however many banks.

Of course I don’t have all my positions in cash and I take into account the necessary risk/reward equation into account.

But then again, I would never work for a non public company where part of my compensation comes from “equity” and I sell/diversify all my after tax RSUs within 6 months after that vest. So I’m very risk averse about holding positions in any company I work for

Re: Urgent: Sign the petition now

#515

Post by peteforde »

hinata08 wrote: post #269

St00pid question : I don't understand what kind of accounts these start-ups have. Are they like the mandatory checking accounts for the day-to-day management ? That should indeed be bailed out immediately, to unfreeze their processes. Or is that investment? I don't care if investors loose money for once. And how can a bank 'loose' money from checking accounts, without anyone profiteering or getting the money for frie…

Not a stupid question. Good to ask what you don't know.

Yes, we're talking about startups with their operating capital frozen and struggling.

Many of the commenters here appear to be confusing bank depositors with bank investors. If you started a startup, it's very likely that your funds would be frozen.

> And how can a bank 'loose' money from checking accounts

As usual, it's complicated. Banks have always used the money in checking accounts to make investments. All of the service fees are just a tiny fraction of how a bank makes money.

The real question is how - and to what degree - a bank should be able to invest that money without creating untenable risk. Essentially, they are allowed to loan a significant multiple of their actual cash holdings.

Let's say that they can loan $5 for every $1 in trust. This works great so long as they don't have 21% of their customers show up and demand their holdings at the same time... which is a drastically simplified version of what happened late last week.

Unfortunately, they don't teach this stuff in high school. They 100% should.

Re: Urgent: Sign the petition now

#516

Post by j_crick »

gustaf wrote: post #257

I work as a group partner at Y Combinator. Over the last 48 hours I've talked to numerous founders of YC companies who told me they can't make payroll to their employees next week. In many cases they had raised millions of dollars which is currently locked into their SvB accounts. Even if they get access to the insured $250k on Monday that won't last long and in many cases not even cover the payroll they are planning…

Question from a foreigner: if this bank is so important for your ecosystem, why don’t y’all interested parties chip into some fund or something and buy it out yourself?

Re: Urgent: Sign the petition now

#517

Post by axlee »

syntheticcdo wrote: post #279
garry wrote: post #144

Earlier quoted context omitted.

The equity holders and management of SVB are likely to be wiped. In the petition we specifically call this out: we are not asking for their risks to be "socialized." Depositors have a reasonable expectation that when they choose a bank (especially a publicly traded bank that is regulated) that their deposits are safe. If this is not true, then most people will only bank with the largest banks. That's not a good situa…

Perhaps I would be more sympathetic had SVB themselves not recently successfully lobbied to have the exact regulations you are asking for to not apply to their bank. [1] https://www.theguardian.com/business/2023/mar/11/silicon-val...

This is damning.

Re: Urgent: Sign the petition now

#518

Post by gnicholas »

Why on earth would this be flagged? The SVB fiasco has been all over the front page for days, with an unprecedented number of stories allowed simultaneously. This particular link is especially relevant, since it's from YC itself.

The strangest part is there's no 'vouch' button, which is typically/always available on flagged submissions.

Re: Urgent: Sign the petition now

#519

Post by JumpinJack_Cash »

somewhereoutth wrote: post #300
JumpinJack_Cash wrote: post #82

Can I ask why everybody banked with SVB? Are Wells Fargo or Bank of America not hip enough? A bank should be like a gas station, you go to the nearest one given that the pruduct being sold is essentially all the same. I think that what happened is that founders weren't the one opening the accounts, the VC industry took it upon themselves to streamline the process in order to free the founders of the 'burden' of havin…

Apparently being a startup, with large chunks of money being deposited and unclear/non-existent operating revenue on a dubious business proposition raises lots of red flags for mainstream banks.

I don't buy it, while it's true that startups are hundreds of thousands in the US, it's also true that VC funds are about 2000, the ones that invest on a recurrent basis must be less than 1000.

Every big bank surely has the receipts by now and they can check the sender as well as the cause for the wire (which should always be added) .

A 2.5M wire with sender being 'Founder Fund' and cause being 'Equity investment' will get the green flag even if the account is 3 months old or less.

Re: Urgent: Sign the petition now

#520

Post by itg »

smcl wrote: post #483

Flagged!? Come on this is extremely topical, I cannot think of a more on-topic thing for HN. It brings together: - Silicon Valley - Startups - Y Combinator - Current Events Any one of those is an appropriate submission for Hacker News but altogether, it’s just … there is nothing more appropriate for HN. This belongs at the top of the front page where I encountered it.

I imagine some people flagged it so it doesn't get more views. How pathetic of YCombinator itself begging for a bailout.
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