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Urgent: Sign the petition now

ycombinator.com

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Re: Urgent: Sign the petition now

#711

Post by gnicholas »

ashwagary wrote: post #703
jlmorton wrote: post #160

Earlier quoted context omitted.

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…

> "Are you suggesting tens of thousands of small business customers need to do due dilligence on the investment practices of their banks?" Yes, this exactly why millions of people, not just businesses, avoid banks like Bank of America and Wells Fargo. They review how they have historically operated and what risks they passed on to their customers.

Interesting take — I imagine these banks will be getting net inflows as a result of this fiasco because people will assume (perhaps correctly) that they are too big to fail.

Re: Urgent: Sign the petition now

#712

Post by muzz »

standapart wrote: post #661
standapart wrote: post #566

Earlier quoted context omitted.

Requirements aren't the only way to steer someone to a product. Google pays Apple billions to be the default search engine on iOS. Nor does the lack of a requirement indemnify someone from responsibility.

When the smoke has cleared, it would be interesting to quantify whether this event affected a (statically significant) higher percentage of YC offspring than other incubator offspring. Could be a selling point for alternative incubators in the future. Perhaps being a part of YC puts you at greater risk from these events. Draw your own conclusion about the reason why.

The comments from head of YC alone might be that selling point

If bank regulators move swiftly and ensure orderly withdrawals, his comments will go down in history as crying wolf, and that's putting it lightly

Re: Urgent: Sign the petition now

#713

Post by simonw »

JohnFen wrote: post #674
simonw wrote: post #261

Earlier quoted context omitted.

Groupthink on this kind of decision is usually a feature, not a bug. When you're a startup founder, you have to focus your efforts on the unique problem you are trying to solve. For generic problems like "which bank should I use" taking a shortcut like "the one my peers are using already" is generally a great idea - saves you from having to waste your time investigating options that usually don't make a material diff…

> When you're a startup founder, you have to focus your efforts on the unique problem you are trying to solve. When you're a founder, the unique problem that needs to be foremost in your mind is the business. You don't make business decisions based on "this is what everyone around me is doing". If you don't have the time, talent, or energy to get into the minutia of running the business, you do at least hire good peo…

> Is that really a common approach in SV startup culture?

Yes, absolutely.

As a founder, especially at the start of your company, you're responsible for _everything_. You need to figure out how to do product roadmap planning, and sales, and marketing, and hiring, and HR, and run payroll, and work with investors, and manage an office... anything that can help shortcut a decision that isn't fundamental to the unique opportunity your business is going after is very welcome.

Where an established company might have a whole role (or even a whole team) who are responsible for selecting a bank account, you need to get one setup RIGHT NOW because you just landed your first investment check and you need somewhere to put it!

Have you seen the TV show Silicon Valley? There's a scene in the first series where they've just landed their first cheque, but they don't have a bank account yet so they have nowhere to pay it in!

This happened to us when we founded a YC company back in January 2011. We went to the Mountain View branch of Silicon Valley Bank because someone told us that they would know what to do with us. They sorted us out.

We did not pause for one second to check who their Chief Risk Officer was.

Re: Urgent: Sign the petition now

#714

Post by muzz »

AlchemistCamp wrote: post #478
IncRnd wrote: post #468

Earlier quoted context omitted.

In the same way, surely you don't expect taxpayers to agree with what SVB's account holders want, just because they are on this site!

FWIW, I am a taxpayer and am not a SVB bank account holder. I don’t want to see this spin out of control on Monday when all those companies can’t make payroll and even more carnage ensues. This could blow up into a much much bigger panic contagion.

1. It won't spin out of control. 2. Stock in SVB (market capitalization) is $6B. Deposits are almost $200B. Depositors who had put more than 250k did so willingly knowing the risks.

Re: Urgent: Sign the petition now

#715

Post by blep_ »

nuclearnice3 wrote: post #268
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…

FDIC should treat these guys the way hn funded firms coinbase[1] and airbnb[2] do. [1] https://news.ycombinator.com/item?id=27468549 [2] https://news.ycombinator.com/item?id=27654940

You swapped your two links, btw.

Re: Urgent: Sign the petition now

#716

Post by dlubarov »

oarabbus_ wrote: post #652
popol12 wrote: post #537

Earlier quoted context omitted.

What if you have 3 billions to deposit, like Circle ? Open 1200 accounts in 1200 different banks ?

Let's not act like Circle's options were either to put 3 billion in one bank, or open 1200 accounts at 1200 banks. -Purchase high-limit cash insurance from a Reinsurer like Lloyds of London or Berkshire Hathaway up to their underwriting limit, perhaps $100M. Do this across 4-5 different banks with 4-5 different reinsurers. -Put the remaining $2-2.5B into mixed US Treasuries of varying maturities

They did already have 77% of the collateral in short-term T-bills, and the 23% in cash was spread out across multiple banks. They held $3.3bn at SVB, but that's out of $42bn total.

Re: Urgent: Sign the petition now

#717

Post by muzz »

xupybd wrote: post #551
garry wrote: post #443

Earlier quoted context omitted.

This isn't some sort of complex bid call option strategy. This is a checking account, and one choice out of many that founders make regularly. To my knowledge SVB was never required, and startups always had choice.

Yes but they got screwed by incompetence at their bank. Why should the tax payer get screwed instead?

Because "they did nothing wrong" is his way of saying they are entitled to a taxpayer bailout

Re: Urgent: Sign the petition now

#718

Post by dlubarov »

aaomidi wrote: post #610
popol12 wrote: post #537

Earlier quoted context omitted.

What if you have 3 billions to deposit, like Circle ? Open 1200 accounts in 1200 different banks ?

Open 4 banks and you’ll lose at most 25%? Use treasures bills if you’re that concerned.

They did use mostly T-bills, and spread out the cash over 6 banks - that's why it's "only" $3.3bn out of $42bn.

Re: Urgent: Sign the petition now

#719

Post by dlubarov »

isignal wrote: post #608
popol12 wrote: post #537

Earlier quoted context omitted.

What if you have 3 billions to deposit, like Circle ? Open 1200 accounts in 1200 different banks ?

Just buy us treasuries. There is no rule that you have to have cash at a bank.

They did have ~77% of collateral in T-bills. I do wonder why that wasn't even higher though.

Re: Urgent: Sign the petition now

#720

Post by runnerup »

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…

Why not use YC’s bully pulpit to push for the creation of a federal deposit bank for businesses and consumers? Both the profit and risk could be socialized. It would likely offer lower interest rates on deposits than private competitors, in exchange for FDIC guarantee on unlimited deposits.
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