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Urgent: Sign the petition now

ycombinator.com

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Re: Urgent: Sign the petition now

#641

Post by JohnFen »

DennisP wrote: post #400
mindcrime wrote: post #213

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. That's the way this works. Or you can choose whatever risk mitigation strategy you're comfortable with: spread your deposits across multiple institutions,…

People keep talking about buying third-party insurance for this but a quick google didn't turn up any mention of insurance like that. Could you link some?

If you are serious about looking for solutions, you really need to consult a financial advisor who specializes in these sorts of things. They'll know where to find insurance. They'll also know of a variety of other mitigation strategies that might be better than insurance for your particular situation.

Re: Urgent: Sign the petition now

#642

Post by robjan »

eastbound wrote: post #173
sourcecodeplz wrote: post #31

Might seem like an ahole but can't you guys making 100k+ per year ride it out? We are talking about startup a here, have we forgotten the risks and implications that come with this model?

Should developers really be paid $300k a year? Why is it so high compared to a career manager in a bank who will cap out at $120k, after wrecking his health with cocaine to sustain the incredible pace for 25 years? This crisis may make deflation happen, if developer salaries deflate.

The ceiling for coked up bank managers is orders of magnitude higher than 120k.

Re: Urgent: Sign the petition now

#643

Post by skwirl »

somsak2 wrote: post #611
skwirl wrote: post #290

People are misdirecting their (rightful) ire over 2008 bank bailouts at depositors , which apparently is because they don't like some of those depositors for unrelated reasons. Nobody is defending the bank, which already has been shut down and its shareholders rightfully wiped out. The idea that backstopping depositors is moral hazard is preposterous and honestly embarrassing on a platform where people should know be…

You can both hold the opinion that we should actually bail the depositors out but also regard the fact that they exhibited a serious lack of due diligence at the same time. They are not mutually exclusive. I think you're assuming that simply because people are critical of the lack of risk controls at these companies, they also necessarily mean to say that they all deserve to be wiped out.

I don't think many people are qualified to assess the risk of a bank, and I don't think it's reasonable to expect founders to be able to do this. It's a bit like expecting people to inspect bridges before they drive over them (or companies to inspect the bridges that lead to their office buildings). We expect regulators to keep basic infrastructure working - be it financial or physical. As I said above, the State of California found this bank to be "in sound financial condition prior to March 9, 2023." The company was meeting its obligations with regulators. It then suffered a crisis of confidence which led to a bank run, which no bank can survive.

We also learned in 2008 that the private credit rating agencies cannot effectively assess the risk of what banks are doing either, despite that ostensibly being their entire area of expertise. So paying a company to assess the risk is out as a realistic option.

This was one of the 20 largest banks in the United States. If you can't trust the soundness of deposit accounts at top 20 banks that have been operating without issue for decades, your only rational choice is to move your deposits into the four "too big to fail" banks that you know the government will bail out in the event they collapse. Nothing else is safe.

Re: Urgent: Sign the petition now

#644

Post by oarabbus_ »

>Small business depositors at Silicon Valley Bank should be made whole. Regulators need to conduct a backstop of depositors. We are not asking for a bank bailout.

From where would the money come from, US taxpayers? How is this different from asking for a bank bailout?

> Longer term, Congress should work to restore stronger regulatory oversight and capital requirements for regional banks, and any malfeasance or mismanagement on the part of SVB executives leading to this failure should be investigated.

SVB execs successfully lobbied congress to lighten banking regulations affecting them [0].

Their C sold millions of stock the week prior to insolvency (yes, these sales were scheduled in January, but execs would have been well aware of the impending liquidity crisis at the time) [1]

They also paid bonuses to staff hours before the FDIC shut down the bank [2].

I cannot sign this petition in good faith knowing the above, at least without these questions being answered: what is the mechanism through which depositors can be backstopped without bailing out SVB? What would be the source of this money? How does the ask differ from a bank bailout?

[0] https://www.theguardian.com/business/2023/mar/11/silicon-val...

[1] https://twitter.com/unusual_whales/status/163455502148748083...

[2] https://www.cnbc.com/2023/03/11/silicon-valley-bank-employee...

Re: Urgent: Sign the petition now

#645

Post by JackFr »

To be clear to bail out the bank means to bail out the creditors. The creditors in this case are the depositors, which disproportionately are VC backed startups. This would be a bailout, not of employees and founders but of the wealthy investor class.

Re: Urgent: Sign the petition now

#646

Post by JohnFen »

AlchemistCamp wrote: post #473
WalterSear wrote: post #235

Earlier quoted context omitted.

YC's made $70 billion dollars from them. YC asking for assistance on their behalf is socializing the loses.

YC didn’t make SVB’s decisions or cause any of this and most SVB customers were not YC startups. Your suggestion is equivalent to saying that if I were to support hundreds of kickstarters for various board games and resell them for a profit to collectors over the years and then kickstarter imploded after taking on extreme financial risks, then I should bail out all the new customers of kickstarter who paid and didn’t…

> then kickstarter imploded after taking on extreme financial risks, then I should bail out all the new customers of kickstarter who paid and didn’t get their games

But what you're saying is the same thing: that taxpayers (random third parties who weren't even working in their ecosystem) should take the hit instead.

Re: Urgent: Sign the petition now

#647

Post by erik_seaberg »

JohnFen wrote: post #640
dehrmann wrote: post #390

Earlier quoted context omitted.

This workaround seems rather silly when it mostly applies to medium-sized businesses trying to get safe, stable bank accounts. FDIC coverage is too low for businesses.

There are a number of mechanisms besides the FDIC that are commonly used for depositors of this scale. You can even buy your own insurance, if nothing else.

From whom? A search for "bank failure private insurance" kept talking about FDIC and sometimes SIPC.

Re: Urgent: Sign the petition now

#648

Post by grugagag »

hyperhopper wrote: post #294

Why was the title changed from "YC needs a bailout" to something that gives almost no information about the content. "Urgent: Sign the petition now" is easily the most click-baity post-edit headline that I've ever seen on hacker news.

Damage control. Now the post has been flagged like anything that is critical in any way of YC.

Re: Urgent: Sign the petition now

#649

Post by JohnFen »

garry wrote: post #291
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…

These are businesses that had a reasonable expectation for their deposits to be there, and we are not advocating for a bailout of SVB's management or equity holders.

> These are businesses that had a reasonable expectation for their deposits to be there

These are businesses who willing took a chance that their deposits might not be there.

Re: Urgent: Sign the petition now

#650

Post by AlchemistCamp »

WalterSear wrote: post #528
AlchemistCamp wrote: post #473

Earlier quoted context omitted.

YC didn’t make SVB’s decisions or cause any of this and most SVB customers were not YC startups. Your suggestion is equivalent to saying that if I were to support hundreds of kickstarters for various board games and resell them for a profit to collectors over the years and then kickstarter imploded after taking on extreme financial risks, then I should bail out all the new customers of kickstarter who paid and didn’t…

The failure of the bank is certainly not YC's fault. But, much of the profits they made, and losses they are now incurring are both a consequence of the zero interest rate environment and it's current unwinding. If the goverment bails out YC's companies, when they are successful later, who is going to benefit the most from that?

As I said, most SVB customers were not YC startups.

There are thousands of businesses using SVB. If they only know they have 250k coming in the near future, and can’t be sure they’ll make payroll, what do you think happens to all of their employees? Or the other businesses relying on their products? Or anyone they owe?

This is the second largest bank failure in US history, and for now it’s confined to a single bank and the cost to stop the fallout is relatively low.

If decisive action is not taken by the end of this weekend, it’s going to get much, much worse.

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