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Urgent: Sign the petition now

ycombinator.com

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Re: Urgent: Sign the petition now

#801

Post by [deleted] »

seizethecheese wrote: post #564
nicenewtemp84 wrote: post #496

Earlier quoted context omitted.

Did you have more than $250k sitting in SVB? We're you unaware of the $250k FDIC insured limit? Or were you, and didn't act on mitigating this potential problem? Any particular reason?

Yes, I was aware. I don’t think there’s a moral imperative to help us, necessarily. I would only ask that tech depositors not be treated differently due to the schadenfreude I see in this thread. Consider companies small enough to have no one whose job it is to do finance. As a founder you’re already working long hours and bank failure is not a risk that is top of mind compared to lack of product market fit.

[deleted]

Re: Urgent: Sign the petition now

#802

Post by DennisP »

rahimnathwani wrote: post #666
benmccann wrote: post #662

Earlier quoted context omitted.

> 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…

You're right, the gap is likely much smaller. I did a quick calculation based on: - $200bn deposits (on which we agree) - press reports that Jefferies and hedge funds are offering to buy claims at up to 70c on the dollar (suggesting 30% loss)

Apparently the offer from hedge funds gives them a substantial profit.

Re: Urgent: Sign the petition now

#803

Post by [deleted] »

mikeho1999 wrote: post #685
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…

> Depositors have a reasonable expectation that when they choose a bank (especially a publicly traded bank that is regulated) that their deposits are safe @garry, while it may be a reasonable expectation, it's always been very clear and _explicit_ that it's not a guarantee beyond $250k (or $500k). What's more troublesome is that VCs and Y! have portfolio companies that either didn't understand this and/or didn't take…

[deleted]

Re: Urgent: Sign the petition now

#804

Post by molsongolden »

scarface74 wrote: post #488
AlchemistCamp wrote: post #392

Earlier quoted context omitted.

Anyone who has really looked at the 2nd order effects. SV-style tech startups distribute more equity to employees than any other sector of business I know of and the average VC’s returns are worse than private equity, worse than the stock market and worse than real estate. You only hear about the biggest winners, but venture capitalists are taking on very long odds and the vast majority lose. More importantly, we all…

Equity that will statistically be worthless? You might as well say Hasbro distributes more money than most companies because of all of the Monopoly games they sell.

If startup equity is worthless then that will usually mean the VCs make no return on their investment.

If VCs make no return on their investment then they have just dumped millions of dollars into the pockets of startup employees and vendors.

Re: Urgent: Sign the petition now

#805

Post by b1c1jones »

molsongolden wrote: post #222
altdataseller wrote: post #129

Earlier quoted context omitted.

Why do startups only have 1 bank? I own a bootstrapped startup with literally just 1 employee and am easily able to get an account in Chase or Citi. Why do startups with much more revenue not able to get the same account in major banks?

SVB was a major bank and most businesses in the USA only have one bank. Once you have an established relationship it’s just easier to do all of your banking with that bank.

That doesn't answer the question. Why does the government need to underwrite the risk you assume for convenience? And "everybody does it" isn't an excuse, it just makes the prospect of the government doing so all the more expensive to the taxpayer.

Re: Urgent: Sign the petition now

#806

Post by beezle »

medvezhenok wrote: post #779
beezle wrote: post #692

Earlier quoted context omitted.

You can find similar rates from some other banks today. It is not so hard to do when 1mo treasury bills are yielding 4.80 and 3m over 5.0%

It's about 1% higher than most solid/large high-yield online banks right now (Capital One 360 at 3.4%, Discover Savings is at 3.5%, Ally Bank is at 3.6%). So I wouldn't say that you could get 4.5% from a reputable bank at the moment.

If your amount is under 250K, its insured. If not, take 1/4 (or 1/8th) of funds and place in 4 or 8 week t-bills every week for 4 (or 8) weeks with automatic roll over. On Wed those rates were 4.80% and 4.88%.

Re: Urgent: Sign the petition now

#807

Post by wpietri »

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…

You are absolutely asking for risks to be socialized. You're asking for corporate welfare.

Depositors do have a reasonable expectation that their deposits are safe. That's what the FDIC does: makes sure that 99% of people never have to worry about bank failures. For the 1%, well, it's time to put the big-boy pants on and accept sometimes in market economies there are disruptions. Something startup CEOs were perfectly happy to accept as long as it was other people experiencing the disruption.

No regulation can totally prevent this from happening to rich depositors in the future as long as the banks are capitalist institutions trying to turn a profit. There is no reward without risk. Arguing for zero risk is basically arguing for nationalizing the banks and creating a federal Boring Depository Bank whose job it is to just hold cash and that takes no risks with it.

Which honestly, it would be great to see the CEO of YC arguing for reducing the role of capitalism in key parts of the economy. But I'm guessing that the VC class's interest in tighter regulation is going to last exactly as long as it takes to get government subsidies, and then will go back to its previous extremely negative levels.

Re: Urgent: Sign the petition now

#809

Post by jimnotgym »

ZachPruckowski wrote: post #780
jimnotgym wrote: post #767

Earlier quoted context omitted.

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.

Well and it's not just that they had money over the insured amount in a bank. It's that they had ALL of their money in ONE bank. If they had $500K in three different banks instead of $1.5M in one bank, there would still be a risk, but it would be that they'd lose $250K if any of those three banks failed, not that they'd lose $1.25M if one particular bank failed. (And obviously actual losses are gonna be like 20% here…

So why on earth was everyone using SVB?

Re: Urgent: Sign the petition now

#810

Post by throwmeaway1212 »

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. 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.

But the money over $250K doesn't exist anymore if the bank is gone. It doesn't matter what they would use it for. This was a risk calculation, people put more that $250K into the bank assuming nothing would ever happen, it did, and now people want all their money back regardless of the risk they should have been aware of. But the contract/rules depositors signed up for the money is gone. Now those companies want money that doesn't exist anymore. They were playing roulette with very very low odds, but odds none-the-less.

The tax revenue aspect is nonsensical when compared to student loans as you could quite easily say getting rid of student loans would allow people to have more money to purchase more things for the government to get tax revenue on.

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