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Urgent: Sign the petition now

ycombinator.com

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Re: Urgent: Sign the petition now

#761

Post by andrepd »

rockemsockem wrote: post #311
andrepd wrote: post #141

Earlier quoted context omitted.

Couldn't agree more. Average Joe is swindled by con-men into bad deals and/or is subject to events outside his control: should have known better/worked more Huge company in the business of risk management fucks up: bad luck, the taxpayer will cover you, no civil or criminal responsibility will come to anyone regardless of the magnitude of the fallout

I don't think startups can be honestly called huge businesses. If you're referring to SVB, then yeah no bailout for them, but the petition isn't calling for that. Isn't it possible to think that both small businesses/startups and average joes deserve to be bailed out when shit goes sideways?

> Isn't it possible to think that both small businesses/startups and average joes deserve to be bailed out when shit goes sideways?

Sure! Either both of them or none of them, that's the point! But we see bailouts for "systemically critical" banks, but not for the average joe.

Re: Urgent: Sign the petition now

#762

Post by prepend »

greatpostman wrote: post #497
garry wrote: post #358

Earlier quoted context omitted.

These are deposits at a bank. We're advocating for protection of 37,000 small business accounts, a small number of which are YC. We discovered about 30% of YC companies would not be able to make payroll even after the $250,000 insured amount if they were to wait months for their payments. That is detailed on the FDIC website currently as the process for remediation. This petition represents the lived experience of th…

This is a pathetic reply

I don’t think that’s fair. I like how he’s at least engaging. And prefer how they are at least being honest about what they are doing and seem to be avoiding weasel speak more than other companies (ie, “we want to unleash the value of empathetic communities to resiliently respond to government billion bailouts”).

Re: Urgent: Sign the petition now

#763

Post by andrepd »

vorpalhex wrote: post #327
andrepd wrote: post #177

Earlier quoted context omitted.

> Would the taxpayer receive 10% equity in YC? Make that 30–50 and we'd have a deal. Fucked up and want the state to rescue you? Fine, but your business is now mine, future profits and dividends (evabled by the bailout) will be distributed to all Americans, not just the handful of owners of "your" business. It's how the 2008 bailouts should have been handled, instead we got the biggest transfer of wealth from poor to…

The US government made $15B from the 2008 bailouts. That's 0.6% return on investment which is kinda poor but overall the bailout was profitable for US taxpayers.

Lol... If you bought a Ferrari 250 GTO for 175k$ back in the 60s (inflation-adjusted) and sold it today for 176k$, you would have technically made a "profit" of about 0.6%. Only you have made a very stupid deal because you could have sold it for 70 million.

The same applies here: these companies would go under without state intervention, the very least you could do is gain a large stake in the equity of those companies, in exchange for bailing them out. That and criminal liability for the people in charge.

Re: Urgent: Sign the petition now

#764

Post by andrepd »

Laaas wrote: post #396
vorpalhex wrote: post #327

Earlier quoted context omitted.

The US government made $15B from the 2008 bailouts. That's 0.6% return on investment which is kinda poor but overall the bailout was profitable for US taxpayers.

> 9. Did all the companies bailed out by taxpayers pay the money back? > Pretty much. The Treasury Department injected $412 billion into banks, carmakers and other struggling companies through the Troubled Asset Relief Program, or TARP. As of the end of last year, it had collected everything it had paid out in bailout funds and then some, leaving the government with a profit of $12 billion. https://www.washingtonpost…

12/700 over 10 years is absolutely shit profit.

If I go unemployed for a few months and can't pay my house [1], unfortunately there's nobody to bail me out. I'll lose the house and go homeless, notwithstanding the fact that I'd be willing to pay that 1.5% interest over 10 years for a liquidity bailout for myself during those times. Unfortunately I'm not too-big-to-fail.

[1] Ironically, in the downturn caused by those very same companies we're talking about.

Re: Urgent: Sign the petition now

#765

Post by [deleted] »

benmccann wrote: post #662
rahimnathwani wrote: post #185

Earlier quoted context omitted.

The possibility of changing the rules of the game once it's started can create moral hazard. For example, if people believe that the govt will use taxpayers' money to reimburse funds that were not FDIC protected, then they won't be careful about picking their bank. And it's a lot of money (e.g. 30% loss on $200bn is about $600 per US resident household). But I'm conflicted, because: - the federal administration doesn…

> And it's a lot of money (e.g. 30% loss on $200bn is about $600 per US resident household). I'm not sure where you got this number, but it's different than what I've seen. Yes, SVB had $200B in deposits, but it had $15B in unrealized losses. The FDIC is probably contributing $12B as roughly 6% of deposits were insured. That means the gap is probably $3B if the government is to step in, which is very different than t…

[deleted]

Re: Urgent: Sign the petition now

#766

Post by lapcat »

AlchemistCamp wrote: post #744
throwmeaway1212 wrote: post #359

Earlier quoted context omitted.

I'm sorry, maybe I misunderstand, but they are asking for this 'Small business depositors at Silicon Valley Bank should be made whole', any good business should be aware of the max insured amount, so it sounds like they are asking for more than is specified by law (that they should have known about), and therefore asking the government to give them money that they knew was at risk. Currently given the regulations the…

In the case of the depositors, they put their own money into an account and want to be able to spend that money to pay their employees. It might easily cost the government even more in lost tax revenue if the thousands of companies cannot make payroll due to a banking failure, thus forcing them out of business and their employees out of their jobs. In the case of students, they borrowed money that was not theirs, spe…

> In the case of the depositors, they put their own money into an account and want to be able to spend that money to pay their employees.

Their own money. Well... aren't these mainly venture capital based startups? It's not actually the money of the startups but rather the money of the VC funds. So the situation is more similar to student loans than you portray it.

In fact, the ideas behind VC startups and student loans seem very similar. In both cases, you have people who lack capital — the startup founders (some of whom are as young as students and may even be students) and the students — and people who do have a lot of money — VC funds and the government — give them money in the hope that it'll help these people make money in the future and pay back the investment.

> It might easily cost the government even more in lost tax revenue if the thousands of companies cannot make payroll due to a banking failure, thus forcing them out of business and their employees out of their jobs.

That's an argument to bail out every failing business. Why this one in particular? Why not every one?

Anyway, it's not the job of the government specifically to maximize tax revenue. If the government needs more tax revenue for some reason, they can raise the tax rates. But interfering directly in the free market is not the way to do it. Bad businesses are supposed to fail. It's morbidly funny how many people rail against socialism until they're the ones in need of assistance.

> In the case of students, they borrowed money that was not theirs, spent it and don’t want to have to repay it.

This is a very one-sided description, making it sound like the students stole the money. There are two sides to every loan, the borrower and the lender. The lender in question here was the US government itself. The government lent the money to people who could not afford the loans and who had no collateral for the loans. In other words, without regard for the ability to repay. If a bank did this, the bank would go out of business. But then by your own argument, there ought to be bailout. ;-)

> essentially punishing those who did repay their debts

How so?

> the many, many more who didn’t go to college

Forgiveness of student loans is not a punishment to these people. The punishment was the high college costs and society's requirement that job seeker have college degrees. Both debtors and non-debtors are punished by this situation; they just suffer the punishment in different ways.

> encourage lenders to be a bit more judicious

You're missing the part where the lender is the government. These are direct government loans, which is why the government has the power to forgive them. The government cannot forgive private loans.

Re: Urgent: Sign the petition now

#767

Post by jimnotgym »

xupybd wrote: post #547
axlee wrote: post #523

Earlier quoted context omitted.

I don't even understand why he would even make that comment in good faith in the first place. They are not asking for risks to be socialized, but they are asking for their "deposits" to be safe and the depositors to be "whole". Well, sounds like a lot like socializing the losses, unless there is a magical way to make the depositors whole without burdening the taxpayer.

There is a risk in using a bank. The risk should be low and it's normal to assume your money is safe in the bank. This incident proves it's not. The tax payer didn't take on this risk so why should they have to cover the losses?

Indeed I have read countless times on hn that it would be very risky to keep more than the insured amount in a bank.

Sounds like YC should invest more in mentoring their portfolio companies to manage their treasury correctly.

Re: Urgent: Sign the petition now

#768

Post by DennisP »

IncRnd wrote: post #705
DennisP wrote: post #700

Earlier quoted context omitted.

Yes, I'm aware that I can put money in multiple accounts, or get an account that spreads the money to multiple accounts for me. None of these are what I was responding to: the suggestion to "purchase 3rd party insurance." The closest in that article is DIF but even that isn't insurance you go and buy, it's another kind of special bank account available at DIF's member banks. As far as I can tell, you can't just go bu…

You can purchase DIF, when the account is at a participating bank. SVB chose not to participate in that non-FDIC program. However, SVB knew all about the program, even commenting on FDIC rule changes for it over a decade ago. [1] Ultimately, people will have to accept that SVB wasn't as trustworthy of a guardian as some other banks. It appears that people were pushed into using SVB, because it was part of the VC ecos…

I mentioned DIF above, and as I said there, it's not third-party insurance that you can go purchase. What you can do is get certain accounts that automatically include it for free: https://www.difxs.com/DIF/Home.aspx

Here is the complete list of DIF-covered banks: https://www.difxs.com/DIF/DIFmemberbanks.aspx

It's a short list, they're small banks, and they all have addresses in Massachusetts. Wells Fargo and Bank of America, for example, are not on the list.

Re: Urgent: Sign the petition now

#769

Post by andrepd »

prepend wrote: post #762
greatpostman wrote: post #497

Earlier quoted context omitted.

This is a pathetic reply

I don’t think that’s fair. I like how he’s at least engaging. And prefer how they are at least being honest about what they are doing and seem to be avoiding weasel speak more than other companies (ie, “we want to unleash the value of empathetic communities to resiliently respond to government billion bailouts”).

I dunno man, saying "these poor companies need money for payroll" to actually mean "we want a multi-billion dollar bailout to cover the risks that we profited from, funded by the people who would never and will never see a dime of those profits", sounds pretty weasely to me.

Re: Urgent: Sign the petition now

#770

Post by andrepd »

dehrmann wrote: post #736
muzz wrote: post #597

Earlier quoted context omitted.

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

I don't think depositors lost money in 2008. The lessons from 2008 were to look out for risks of an asset class failing and that packaging risky, correlated assets doesn't make them much safer. The lesson here is sudden interest rate increases can cause bank failures. This was a mostly unknown unknown.

LOL! Neither "packaging correlated assets doesn't make them magically AAA, so we'll also commit ratings fraud", neither "uninsured money at a bank can be lost in sudden market shifts (or simply mismanagement or fraud)" are/were unknowns. These people took risks KNOWINGLY, because they were rewarded handsomely by it. Now and then it rears its ugly face and we're supposed to pay the check? Give me a break.
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