Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Yellen says government will help SVB depositors but rules out bailout

ft.com

Post reply on HN
Print view View original

441–450 of 1001 posts

Re: Yellen says government will help SVB depositors but rules out bailout

#441

Post by mixologic »

tsimionescu wrote: post #416
idopmstuff wrote: post #339

Earlier quoted context omitted.

I'm pretty baffled to see so much of this on HN. Like a whole lot of people here, I've worked at startups for my whole career. People here are effectively suggesting that I shouldn't get my paycheck and that the company I work for should lose most of its money because our CEO used a well-reputed bank? Absolutely wipe out the equityholders of SVB. They deserve nothing, because that's what you should end up with if you…

First of all, even if the company you work for goes bankrupt, you're very likely to still receive your salary, as debts to workers are the highest priority in any bankruptcy case. So the risk to workers' livelihoods is being way overblown. Of course, if a substantial amount of your compensation was company stock, you may lose a lot on that, but that is par for the course with stock. Second of all, the purpose of havi…

You get your last paycheck, sure, but you still lose your job which is definitely a threat to workers lively hoods.

It's even more of a threat if the whole sector you're employed in suffers simultaneously, as it becomes difficult to continue to be employed in that sector.

Re: Yellen says government will help SVB depositors but rules out bailout

#442

Post by mym1990 »

tsimionescu wrote: post #416
idopmstuff wrote: post #339

Earlier quoted context omitted.

I'm pretty baffled to see so much of this on HN. Like a whole lot of people here, I've worked at startups for my whole career. People here are effectively suggesting that I shouldn't get my paycheck and that the company I work for should lose most of its money because our CEO used a well-reputed bank? Absolutely wipe out the equityholders of SVB. They deserve nothing, because that's what you should end up with if you…

First of all, even if the company you work for goes bankrupt, you're very likely to still receive your salary, as debts to workers are the highest priority in any bankruptcy case. So the risk to workers' livelihoods is being way overblown. Of course, if a substantial amount of your compensation was company stock, you may lose a lot on that, but that is par for the course with stock. Second of all, the purpose of havi…

Where do you propose a company with millions in cash keep that money if not a bank?

Re: Yellen says government will help SVB depositors but rules out bailout

#443

Post by massysett »

peter422 wrote: post #396
belter wrote: post #382

Earlier quoted context omitted.

It's coming from the same system that probably led you to work at Startups your whole career. High risk for high reward on a lightly regulated capitalist system. If your CEO or CFO put all the money in one risky bank, it was bad financial management.

What bank do you use? When was the last time you went over their deposit base and asset allocation?

I use an FDIC-insured bank. My deposits are under the limit for insurance. I don’t care about its deposit base or asset allocation because that’s the point of deposit insurance: to make retail depositors feel secure.

On the other hand, a CFO with millions in cash is a professional whose job is to manage corporate risk. A competent CFO needs to account for things like bank failures, which do happen.

Re: Yellen says government will help SVB depositors but rules out bailout

#444

Post by prepend »

gerad wrote: post #199
manuelabeledo wrote: post #132

I see a lot of unexpected saltiness and clear misconceptions in any thread about SVB. “Depositors shouldn’t get anything beyond the insured $250,000”. Then what do we do with the billions in remaining assets? Appropriate them, and leave small and mid businesses hanged to dry? “This is a bailout”. It would be if shareholders were to get their money back, which doesn’t seem likely. The government will use the bank asse…

I just don’t understand why folks on the internet are so passionate about the depositors being hit by this. In terms of avoiding moral hazard they are about as far down the list as possible, and bankruptcy law supports that. First stock holders get wiped out (common then preferred), then debt holders (folks who have lent money to SVB won’t get their money back), only then would it hit depositors - and in the case of…

> just don’t understand why folks on the internet are so passionate about the depositors being hit by this.

I think most of America can’t even imagine having over $250k in an account. So people with this much wealth asking for a bailout is literally rich people asking for coverage because they did something dumb (banked with a bad bank, didn’t account for risk, didn’t insure, didn’t manage funds).

It’s not hate so much as it’s apathy and surprise as the ask for money. It’s like those millionaires who wept because they lost money with Madoff and they wanted the payout for all their earnings they had “made” over the years.

Re: Yellen says government will help SVB depositors but rules out bailout

#445

Post by paxys »

corette wrote: post #350

I have a really dumb question. If my spouse and I have a checking account and a savings account at the same US Bank, does the 250K limit apply to the total of both accounts or each account separately? Say we have 200K in checking and 200K in savings. Would we get 400K from FIDC or just 250K total? Thanks

The limit applies to all your accounts at the bank combined.

However you and your spouse each get $250K worth of insurance, so in this case it'll be $500K.

Re: Yellen says government will help SVB depositors but rules out bailout

#446

Post by tome »

mym1990 wrote: post #442
tsimionescu wrote: post #416

Earlier quoted context omitted.

First of all, even if the company you work for goes bankrupt, you're very likely to still receive your salary, as debts to workers are the highest priority in any bankruptcy case. So the risk to workers' livelihoods is being way overblown. Of course, if a substantial amount of your compensation was company stock, you may lose a lot on that, but that is par for the course with stock. Second of all, the purpose of havi…

Where do you propose a company with millions in cash keep that money if not a bank?

My first suggestion would be as T-Bills. I've asked a lot of questions on HN in the past few days about this, and I'm still not sure why it was not standard practice. Why people in position of authority trust bank deposits after 2008 I do not understand.

Re: Yellen says government will help SVB depositors but rules out bailout

#447

Post by spaceman_2020 »

manuelabeledo wrote: post #132

I see a lot of unexpected saltiness and clear misconceptions in any thread about SVB. “Depositors shouldn’t get anything beyond the insured $250,000”. Then what do we do with the billions in remaining assets? Appropriate them, and leave small and mid businesses hanged to dry? “This is a bailout”. It would be if shareholders were to get their money back, which doesn’t seem likely. The government will use the bank asse…

Isn’t the entire point of having hundreds of banks the idea that competition will give customers choice, and that they can choose to bank with anyone based on their own risk tolerance?

Re: Yellen says government will help SVB depositors but rules out bailout

#448

Post by JumpCrisscross »

Denvercoder9 wrote: post #306
drgath wrote: post #233

Earlier quoted context omitted.

Have we yet deviated from FDIC rules? I don’t think so, even with what Yellen says. My limited understanding of the situation is that the assets to cover everything is there, they’re just tied up in long-term treasuries. From the FDIC’s site: > As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. For simplicities sake, let’s just ass…

> So, what’s next? FDIC finds a buyer for the assets, perhaps a private bank or a a pseudo-government body who has the ability to wait till maturity, and in the meantime, everyone gets all their deposits. Yes, that's happens in the ideal case. However, due to the rise in interest rates, the market value of SVB's assets is likely lower than $175B at the moment; so it might prove challenging for FDIC to find a buyer fo…

> the market value of SVB's assets is likely lower than $175B at the moment

Deposits are less, too. We won’t have a good picture of their balance sheet until later.

Re: Yellen says government will help SVB depositors but rules out bailout

#449

Post by i_love_cookies »

tsimionescu wrote: post #416
idopmstuff wrote: post #339

Earlier quoted context omitted.

I'm pretty baffled to see so much of this on HN. Like a whole lot of people here, I've worked at startups for my whole career. People here are effectively suggesting that I shouldn't get my paycheck and that the company I work for should lose most of its money because our CEO used a well-reputed bank? Absolutely wipe out the equityholders of SVB. They deserve nothing, because that's what you should end up with if you…

First of all, even if the company you work for goes bankrupt, you're very likely to still receive your salary, as debts to workers are the highest priority in any bankruptcy case. So the risk to workers' livelihoods is being way overblown. Of course, if a substantial amount of your compensation was company stock, you may lose a lot on that, but that is par for the course with stock. Second of all, the purpose of havi…

Well I'm not getting paid the entire team was essentily furloughed (~25 ppl)

No idea what's going to happen with insurance since some people were expecting

I'm generally treating it as being laid off with no severance and looking elsewhere

Re: Yellen says government will help SVB depositors but rules out bailout

#450

Post by auntienomen »

senttoschool wrote: post #208
koolba wrote: post #153

Earlier quoted context omitted.

> Then what do we do with the billions in remaining assets? Appropriate them, and leave small and mid businesses hanged to dry? Easy, pay out $250K per account, then distribute the rest pro rata based upon closing balance from when the fed's took over. If they have to wait because assets need to be liquidated then sucks to be them. I'm sure they can get their money faster if they agree to a haircut. > “This is a bail…

I think the depositors should get a bit of a haircut if selling the assets don’t cover all deposits. For example, 5%. If it’s more than 5%, then the government steps in and pay for the rest. 5% seems like the right balance between the two extremes. Companies and people should pay a small penalty. At the same time, we shouldn’t rock the financial system further. We need to have confidence in the system. After this, th…

5% is still going to cause bank runs elsewhere. No one is going to stay at any bank where they might take a 5% hit.

Make the depositors whole and let things calm down. Then, at leisure, on a case by case basis, claw back a few percent to cover the moral hazard of people getting better loan terms or whatever.

Post reply on HN