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Yellen says government will help SVB depositors but rules out bailout

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

#501

Post by tsimionescu »

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?

If the company is large enough to need to hold millions in cash, multiple banks would be the simplest response.

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

#503

Post by JackFr »

jtr1 wrote: post #463
JackFr wrote: post #452

Earlier quoted context omitted.

> But kill a bunch of startups because of their choice of financial institution? I just don't get where that comes from. Because you want to take my money, and your justification for wanting my money is simply “My company made a mistake.”

How are they taking your money?

FDIC receivership is not my money, it’s all self funded. Any bailout beyond that is taxpayer money. As a voter (and a guy who pays taxes) it is my money. I have a lot of opinions about how that money should be spent.

A bailout beyond FDIC receivership is simply a payout to VCs. SVB’s resolution will be a solid measure of much political clout they have.

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

#504

Post by JumpCrisscross »

tock wrote: post #434
JumpCrisscross wrote: post #428

Earlier quoted context omitted.

> because our CEO used a well-reputed bank That didn’t have an investment grade rating, where $250k comes out of taxpayer coffers Monday morning, and where everyone has unemployment insurance? Yes. The assets of the bank should go to your company first. But the public purse should not be opened.

> $250k comes out of taxpayer coffers Monday morning This isn't coming out of taxpayer coffers. FDIC insurance premiums are paid by the banks.

> isn't coming out of taxpayer coffers. FDIC insurance premiums are paid by the banks

Fair enough. The FDIC is funded by premiums but backstopped by the Treasury. There is no private insurance function that pays out at this scale the next business day.

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

#505

Post by tsimionescu »

mixologic wrote: post #441
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…

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.

If things get dire enough, the government can intervene to protect workers in various ways (unemployment benefits, emergency housing, government employment - there are many options).

No need to prop up the middlemen with free insurance.

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

#506

Post by onlyrealcuzzo »

martythemaniak wrote: post #218
version_five wrote: post #200

As others have said, if depositors are bailed out, it's a bailout. Pretending that changing the definition makes a difference is childish. Whatever the government decides to do, this makes the VC and startup industry look really weak and entitled, and knocks them down from risk takers building the future to the same status as a bunch of bankers looking for a handout. There was an opportunity here for VCs with lots of…

Indeed. The bank was trying to raise money and recapitalize itself several days before this and instead of investing, VCs panicked, told their portcos to withdraw immediately, and started a bank run.

Right, they told their clients to run for the exits, caused a collapse on their uninsured deposits - and now expect a handout (and will get it).

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

#507

Post by tome »

ohgodplsno wrote: post #420
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…

[flagged]

This comment sounds very harsh on first reading but I'm having trouble finding anything actually incorrect about it ... I just pray this doesn't hit the wider economy.

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

#508

Post by lolinder »

nerdponx wrote: post #289
lotsofpulp wrote: post #146

Earlier quoted context omitted.

> “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? I think the common sentiment is depositors should not get any more than whatever the remaining assets are worth. And I think the prominent people asking the government to bailout depositors are worried about only getting 75% of…

But why? What purpose does that serve? It's hardly even inflationary, the value was basically destroyed, so the Fed conjuring replacement money doesn't seem like such a bad thing. Shareholders will still be taking a major loss, and they are the ones who ought to be held responsible, so it makes sense. You can't fault depositors for not doing thorough diligence on a 40-year-old bank with a good reputation and it doesn…

> You can't fault depositors for not doing thorough diligence on a 40-year-old bank with a good reputation

The 40-year-old bank with a good reputation was offering deals that were too good to be true, like 4.5% APR on a savings account (other high yield savings accounts are at 3.5% right now, and those are online banks that achieve those rates by having minimal overhead). Naive startup founders aside, the VCs should have known better than to think interest rates like that were coming from a bank that was playing it safe, and for them to now be asking for the taxpayer to make up the difference between the bank's assets and their startups' deposits is weird.

They knew they were advising their startups to put all of their money into a high reward system, but we're supposed to believe that they didn't realize that was also high risk?

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

#509

Post by fwlr »

lambo4bkfast wrote: post #425
fwlr wrote: post #366

Earlier quoted context omitted.

With the “conspiring”, I am referring to reports of VCs mass-emailing their investees to move everything out of SVB right now.

The VC's obligation is to their startups... Its a completely rational decision to get your money out of SVB once you know others are thinking the exact same.

I’m not trying to sentence them to the guillotine or anything. I appreciate the strong incentives driving their actions. Even the desire for the government to retroactively insure their deposits is understandable, although I disagree. In the OP I said they’re not completely blameless; I should emphasize I also think they’re not completely to blame. (Except for the shrill, nigh-hysterical tone of their demand, and the extraordinary timeline they demanded. That one’s all on them.)

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

#510

Post by lotsofpulp »

kamaal wrote: post #474
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…

>>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 I got no dog in this fight(as I'm an Indian, and stay in India). But I guess what they are saying is they don't want to be paying for it. They just want whoever is responsible to make somebody else pay for these problems. So bailout is ok, they just don't want to pay for it, and may…

Colloquially, a bailout implies taxpayer funded. Otherwise, it is known as charity/donation/investment.
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