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Urgent: Sign the petition now

ycombinator.com

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Re: Urgent: Sign the petition now

#621

Post by drcode »

theGnuMe wrote: post #511
drcode wrote: post #444

Earlier quoted context omitted.

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.

It's a moral hazard if people over 250K got bailed out in the past. Look up the Temporary Liquidity Guarantee Program.

Re: Urgent: Sign the petition now

#622

Post by friend_and_foe »

garry wrote: post #144
axlee wrote: post #97

Earlier quoted context omitted.

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.

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…

You do have a reasonable expectation, up to $250,000. You did at the time too. Nobody made any depositor incur excess risk beyond the insured amount. It was all clear and open, available to everybody. Everyone in the US knows that if they put over that amount in a bank, only up to that amount is guaranteed safe. Those that don't know pay other people to know, or they have so little they don't have to worry about the amount.

Re: Urgent: Sign the petition now

#623

Post by dehrmann »

somsak2 wrote: post #601
dehrmann wrote: post #540

Earlier quoted context omitted.

I have no idea why this idea is suddenly so unpopular. People see putting money in banks as a de-facto safe decision. $250k might be a reasonable cutoff for individuals, but it's clearly way too low for businesses. If that threshold had been more like $10M, SVB might have even survived since depositors would have had faith they could access enough of their funds within a day of a bank failure. Instead, there was a ba…

Is it suddenly so unpopular? Can you link me to think pieces / opinions that have been published in the last few years that are arguing for increased deposit insurance for businesses? I don't recall hearing about this ever before. If you wanted such a high cap, you'd need to increase the deposit insurance premiums much further to cover for it. The banks were already unhappy about the most recent 2 basis point increas…

> I don't recall hearing about this ever before.

That's like saying you don't remember hearing about CDOs as a potential problem in 2006. This is the second-largest bank failure in the US, and it disproportionately hits one industry. This just isn't a problem we're used to thinking about.

Re: Urgent: Sign the petition now

#624

Post by grugagag »

muzz wrote: post #597
dehrmann wrote: post #507

Earlier quoted context omitted.

> Everyone knows that amounts over $250K were not insured. This is technically true, but I think there's a feeling that traditional banks are de-facto safe places to keep money. Depositors losing money in bank runs feels like a 19 20's problem.

Because 2008 was so long ago? What were the CFOs of these companies doing.

They were counting the days till the next bonus

Re: Urgent: Sign the petition now

#625

Post by choppaface »

garry wrote: post #295
nightmarish wrote: post #105

Earlier quoted context omitted.

[flagged]

I grew up food insecure.

Please don’t trample productive discussion on HN. The OP clearly was posting about financial investment issues and not poverty.

But it’s not unprecedented for the VC community to confuse capital issues and human rights issues: https://www.npr.org/sections/alltechconsidered/2014/01/26/26...

Re: Urgent: Sign the petition now

#626

Post by oarabbus_ »

jlmorton wrote: post #160
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.

Sorry, I'm not sure if you're confused, but these are simple bank accounts. There was no high interest yield. The average interest yield was a fraction of a percent. No one was chasing any yield. No one was taking any risks. It's a bank account. Are you suggesting tens of thousands of small business customers need to do due dilligence on the investment practices of their banks? And what about all the other regional b…

>No one was chasing any yield. No one was taking any risks. It's a bank account.

It is by definition a risk for a corporation (or individual) to keep over $250k at a single institution ($750k if including SIPC-protected accounts). Reports are stating 97% of SVB's customers kept more than FDIC guaranteed limits. How can you claim this is not risky?

There is also additional insurance clients can purchase or the financial institution can themselves provide a statement they've purchased excess insurance for their clients.

>Are you suggesting tens of thousands of small business customers need to do due dilligence on the investment practices of their banks?

If they're keeping more than $250k in a single account, absolutely, yes, I cannot be sure this is even a serious question.

Re: Urgent: Sign the petition now

#627

Post by JohnFen »

garry wrote: post #469
bentlegen wrote: post #214

Earlier quoted context omitted.

Garry I have a question (and this is not intended to be snarky). Why should a company, perhaps a slower and more risk-averse company who intentionally chose a different, safer banking institution to do business with, do they not get to benefit from their discretion in choosing that banking partner? One could argue that choice put them at a disadvantage against their fast-moving competitors, who chose fast-moving “cor…

Choice of bank historically has been one of the lower priority things people have to worry about. I think this changes now. If your personal bank went out of business through no fault or gain of your own, most individuals would feel that it would be fair for you as the depositor should be made whole. That's the same with a business, and as important since this represents the payrolls of thousands of people.

> If your personal bank went out of business through no fault or gain of your own, most individuals would feel that it would be fair for you as the depositor should be made whole.

But at the same time, you are also aware of the limits of your protection. If you leave all but $250k uncovered, you're willingly and knowingly taking a risk.

How is it fair to ask a bunch of people who had nothing to do with any of this to make the depositors whole from a risk those depositors willingly took? I really don't understand the ethical stance here.

Re: Urgent: Sign the petition now

#628

Post by IncRnd »

nightmarish wrote: post #93
dctoedt wrote: post #49

Earlier quoted context omitted.

Yes, actually — choices have consequences, or so we keep being told by "the market will provide everything!" capitalists.

[flagged]

If they are asking for government assistance to bail them out of their own problem that were created when they lobbied the government to lower oversight regulations of SVB, then no, they aren't capitalists.

Re: Urgent: Sign the petition now

#629

Post by muzz »

Supermancho wrote: post #316
drcode wrote: post #231

Earlier quoted context omitted.

Yeah this is a fact lots of people don't want to accept To be fair though, in the US we've long established an expectation that if you have funds in a bank account at a registered bank, the government would back those funds It's stupid to have set that expectation, but it seems very destructive to suddenly remove that expectation

> in the US we've long established an expectation that if you have funds in a bank account at a registered bank, the government would back those funds Not since around 2010. The ~2007 crash was not without consequence.

Indeed. Deposits at IndyMac Bank were only paid 50 cents on the dollar in 2008.

Re: Urgent: Sign the petition now

#630

Post by doodlesdev »

itg wrote: post #520
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.

I attempted to create a Tell HN thread talking about this but it almost instantly disappeared from new. I believe this is the moderation team, possibly they have been asked by someone higher up to not allow the discussion.

Keep in mind the above is only speculation, but since the moderators haven't taken a public stance on this or clarified anything it's what I'll believe for now.

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