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Urgent: Sign the petition now

ycombinator.com

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Re: Urgent: Sign the petition now

#781

Post by vorpalhex »

andrepd wrote: post #763
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.

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 compani…

The government is not a private investor.

That money would not have made huge returns anymore than medicare does.

We _do_ gain from bailing them out - we tax them. We do not put business owners in jail for losing the risk game.

There are plenty of corrupt governments that do the sort of things you are suggesting, such as Russia. They are not considered effective economies and their corruption ruins their ability to be functional.

Re: Urgent: Sign the petition now

#782

Post by lapcat »

AlchemistCamp wrote: post #778
lapcat wrote: post #766

Earlier quoted context omitted.

> 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 lo…

> 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. No. They literally sold pieces of their businesses for that money. The equivalent for students would be if instead of borrowing the money, they signed over a percentage of all future earnings for the rest of their lives.

As soon as a loan is disbursed, it literally becomes the money of the borrower.

There's no effective difference. Only the terms are different. Although if your student loan debt is large enough, you may in fact be signing over a percentage of all future earnings for the rest of your life. One of the biggest growing groups of student loan debtors is senior citizens.

Both a loan and VC funding are legal relationships between someone who lacks money and someone who has money. It's a trade of current money for future money. Of course it's always a risk, because the future money may never show up: the debtor defaults, or the startup goes out of business. Plenty of startups die for reasons that have nothing to do with bank failure.

(Note also that a loan holder cannot simply repossess the money if the loan is in default. The disbursed money is no longer theirs. At worst, the loan holder can sue to have the debtor's wages garnished by a certain %, maximum 15% for federal student loans.)

Re: Urgent: Sign the petition now

#783

Post by ZachPruckowski »

muzz wrote: post #550
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 ?

Is your goal to eliminate risk, or to mitigate it? If they had deposited that 3B in, say two banks rather than one, they'd have 1.5B in that other bank

They actually had like $12B split across 5 or 6 banks. But yeah, they definitely could've split it better. "No more than $1B per bank" seems like an easy rule, and even maxing at $500M could be doable.

Re: Urgent: Sign the petition now

#784

Post by ZachPruckowski »

garry wrote: post #443
standapart wrote: post #293

Earlier quoted context omitted.

With all respect, Garry: YC is to blame for the consolidation of this risk in a single counterparty. Those who led all these entities from the same industry to bank at the same place must be held accountable too.

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.

> "This isn't some sort of complex bid call option strategy"

Exactly. And "don't put all your eggs in one uninsured basket" is the exact sort of 101-level business advice I'd expect the experienced hands at YC or any Angel investor to provide pretty routinely.

Re: Urgent: Sign the petition now

#785

Post by lolinder »

dlubarov wrote: post #727
lolinder wrote: post #411

Earlier quoted context omitted.

My parent wasn't talking about shuffling money around, they were talking about reading the bank's balance sheet. $1k gets you several hours of an accountant's time to go through the bank's balance sheet and tell you if their interest rates and other perks are, in fact, too good to be true. If you want to go the extra mile and try to move money around to keep under the limits, more power to you, but paying someone to…

How could my accountant have known the risks? I don't think there was any public information about SVB's poorly-timed MBS purchases, the main cause of this incident.

This guy short sold SVB based on their quarterly and annual reports:

https://archive.ph/XaKkt

Re: Urgent: Sign the petition now

#786

Post by berniedurfee »

nocoiner wrote: post #8

LOL, nope. Not interested in taking another spin on the “privatize gain, socialize loss” merry-go-round. The banks had to be saved in 2008 because they were, like, the financial system. I don’t see why private companies and funds that are much less integral to the functioning of the economy as a whole should be saved by the public fisc. Sorry about your disruption.

Agreed.

The government bailing out private industry seems counter to the maturation of private industry.

It sucks that the ones will who suffer the most have the least culpability in this situation.

Re: Urgent: Sign the petition now

#787

Post by ZachPruckowski »

Mystery-Machine wrote: post #384
lolinder wrote: post #331

Earlier quoted context omitted.

> everyone has to sit down and evaluate their banks balance sheet before trying to do business with them? No, if you're not keeping more than $250k in the account, you don't have to do the homework. If you're keeping more than $250k in the account, you can afford to pay someone $1k to do a bit of due diligence.

$250k is nothing for a company. It's 1 engineer salary. And, no, it's not $1k. It's more like $10k-$20k per month, plus all the overhead of having your money in multiple bank accounts and shuffling it all around just to never hit the $250k limit. Just my 2 cents on this strawman part of discussion.

I mean, completely reducing this risk to 0 is probably expensive and annoying, yes. But you could halve the risk by splitting your money into just two bank accounts, and reduce it further by keeping medium/long-term savings in short-duration no-coupon T-Bills or something.

Re: Urgent: Sign the petition now

#788

Post by berniedurfee »

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…

In hindsight, were there actions that depositors could have taken to reduce the risk?

Was there any level of due diligence that could have warned people off of SVB?

Re: Urgent: Sign the petition now

#789

Post by nomdep »

jimrandomh wrote: post #37

Statement by the FDIC: https://www.fdic.gov/news/press-releases/2023/pr23016.html Key paragraph: > "All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDI…

For this payroll cicle, but what about the next one in two weeks?

Re: Urgent: Sign the petition now

#790

Post by chernevik »

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…

Your reasonable expectation is not and should not be underwritten by the government. You are in fact asking that your risk be socialized.

It's bad enough to be asking for a bailout, at least be upfront that you're asking for a bailout.

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