691–700 of 864 posts
I would recommend people familiarize themselves with what happens historically when bank failures happen unchecked. It’s catastrophic. Good luck to you if any of these companies employs you or owes you money. A good book with a first person blow by blow is “The Great Depression: a diary”
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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…
They were definitely doing high interest yield: > ## Up to 4.50% annual percentage yield > Help make your money last longer with our Startup Money Market Account. Like with a savings account, you’ll earn up to 4.50% APY on deposits — so you gain a longer runway. Certain restrictions apply. https://www.svb.com/startup-banking
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.
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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…
And frankly, if you say, "We're not a VC firm, we're an accelerator", that is a distinction without a difference. You give money to companies that need it. So do that and do not use mine or my family's money. End of discussion.
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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…
> 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. That's not what anyone is expecting them to do. At all. What's reasonable to expect is that they know that any uninsured deposit comes with a chance that it will be lost, and that they take steps to limit their risk to acceptable levels -- just like every other risk busin…
Why is this suddenly flagged?
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You don't lose everything, only a percentage based on what the FDIC isn't able to recover after the sale of all assets. And - yes.
That process takes a long time. Most startups would be out of business by then.
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> 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. That's not what anyone is expecting them to do. At all. What's reasonable to expect is that they know that any uninsured deposit comes with a chance that it will be lost, and that they take steps to limit their risk to acceptable levels -- just like every other risk busin…
FDIC insurance limits are set to protect individuals. $250k is nothing for a business. Roku would have needed 8000 bank accounts to hold their cash at 250k per account. You are basically telling businesses to not use the banking system outside of the too big to fail banks that we know the government will backstop. If this is the message, we should all run on any bank other than the top 4. By the way, the FDIC tries t…
No. Roku would have had to use one of the many other methods to mitigate the risk. They could buy their own insurance, for instance. There are options.
It isn't a new phenomenon that companies have to handle more than $250k at a time, and companies have been managing this risk though a number of different mechanisms from long, long before silicon was anything other than sand.
If you had a company and were keeping large amounts of money deposited without any risk mitigation, that was a choice. Or that was you winging it without competent financial advice. Either way, it was a risk you were choosing to take.
> You are basically telling businesses to not use the banking system outside of the too big to fail banks
I'm actually not, because the same risk exists with those banks, too. It's less likely, perhaps, but it's not zero. Just like it wasn't likely that SVB couldn't pay out to all the depositors, but it wasn't zero.
No matter how small the risk is, if you roll the dice enough, sooner or later you will get bit. That's the nature of risk.
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what are the implications of a bank that cannot fail no matter how reckless it is with everyones money?
The bank is already shut down, dead, gone, past tense. It's shareholders are wiped out, as they should be. Nobody is calling to save a bank that doesn't exist anymore. We're talking about the depositors. I think this has been confusing to a lot of people.
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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?
That's very odd, the entire first page was full of hits for me. What were you searching? Take a look at https://www.forbes.com/advisor/banking/ways-to-insure-excess... . It explains several methods, including extra deposit insurance from CDARS, MaxSafe, Depositors Insurance Fund, etc. It also explains cash management accounts, credit union overflow, using multiple banks, and so forth. I can't help but think a good CF…
(And as someone who's worked as the first employee of a startup, I can tell you it was while before we were able to get a CFO.)