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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

#531

Post by WanderPanda »

idopmstuff wrote: post #339
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'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…

If your startup doesn't survive having only 50% in the bank account for one week and then 80-90% in the following weeks (appears to be the most likely outcome without any government money) it likely isn't viable to begin with (in a normal, non-zero interest environment). I think the believe that startups have to always be on the brink of bankruptcy is misleading because it worked in the last decade of endless money and in winner-take all industries. At this point I believe that "Blitzscaling" is a zero-sum game and that most value is created by non winner-takes all companies that grow steadily. It seems analogous to aerodynamic friction, the faster you try to go the less far you will be able to go with a certain amount of energy/money

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

#532

Post by roland35 »

deepsquirrelnet wrote: post #347
roland35 wrote: post #222

Whether or not depositors get their money back, or even have access to it in a timely manner, I think one lesson for me is how important it is to have a contingency plan for banking. It doesn't cost much to have a few month's (or even just a few weeks) worth of money at a second backup bank, but it could be a lifeline in the case of your primary bank going belly up.

Even as an individual with not a lot of money, I think this is prudent. When you give your money to a bank, they effectively give you back an IOU. And while most of the time they can make good on it, sometimes the investments they make with your money are risky, short sighted, or just unlucky. In any case, don’t put yourself into jeopardy by not having other options.

Exactly! My personal finances are nowhere near as sophisticated as even a small start-up, but I make sure I have multiple sources of cash and credit just in case I lose access to one for whatever reason temporary or permanent (bank failure, fraud, forget password, etc).

It isn't too difficult: open up a second savings account, apply for an extra credit card, open a HELOC if available. I have to believe there is some similar basic things a business can do to be more resilient. Even waiting for guarantees insured FDIC funds can be a problem depending how long it takes.

PS: not trying to victim blame for companies who trusted SVB. This is just a rough reminder to be prepared for contingencies.

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

#533

Post by roflyear »

jmull wrote: post #260
walnutclosefarm wrote: post #98

I think Yellen is signalling the right approach, frankly. First, the balance between the bank's assets (its loans and the investments it made with depositors money, plus the bank's capital) and its liabilities, is such that SVB has enough holdings to cover nearly all of its deposits. The banks capital (that is its equity, and subordinated debt) should all go toward making depositors whole. That's what bank capital is…

If you're volunteering to give or invest a few billion into the SVB receivership deal, then go right ahead. Please leave me and my tax dollars out of it. I'm not just hard-hearted, BTW. Unlimited depositor insurance is an awful idea.

There's a lot of things I don't like spending my tax money on but I am ok with it because largely I have benefited very much from living in the US

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

#534

Post by duxup »

idopmstuff wrote: post #339
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'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…

> I'm pretty baffled to see so much of this on HN.

HN comment quality, thoughtfulness, and etc seems to drop off with higher visibility…. and sadly generally too.

The more visible the more comments resemble Reddit or the god awful knee jerk hot takes you get in local newspaper comment sections :(

It’s a bummer as I’ve enjoyed the generally high comment quality on HN for a long time.

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

#535

Post by TrispusAttucks »

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.

That definitely sucks but why should Americans who had nothing to do with the bank or sector fork over public tax dollars to provide a soft landing?

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

#536

Post by KptMarchewa »

WkndTriathlete wrote: post #526
gerad wrote: post #199

Earlier quoted context omitted.

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…

> If depositors aren’t protected, then it’s going to have a lot of downstream impacts If depositors with deposits above the FDIC insurance limit _are_ protected then there will be nothing stopping this from happening repeatedly in the future. Depositors that exceed the FDIC insurance limit should be taking a haircut so they learn to do better risk analysis of their bank or purchase auxiliary deposit insurance on thei…

>If depositors with deposits above the FDIC insurance limit _are_ protected then there will be nothing stopping this from happening repeatedly in the future.

The fact that is stopping this - is the fact that only people who are earning money on risky strategies - shareholders - are being wiped the first.

Depositors are NOT investors and do not earn a premium on successful risky bank strategies.

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

#537

Post by belter »

cjbprime wrote: post #362
sebzim4500 wrote: post #138

Earlier quoted context omitted.

Your citation for why they aren't depositors refers to them as depositors. I'm confused.

Sounds like this commenter is not just arguing that language is being used incorrectly in this situation, but that the standard language and definitions are themselves propaganda terms. (Usually people are a little clearer about their intent to argue that.)

Yes that is what I am saying. And agree, could have expressed it in a more clear way.

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

#538

Post by duxup »

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…

It also heads off the big risk, additional bank runs.

If depositors see strong signs of support they won’t run. They may very well be saving other banks without even having to deal with them with this move. No bank can survive a bank run beyond a certain point.

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

#539

Post by plonk »

duxup wrote: post #534
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…

> I'm pretty baffled to see so much of this on HN. HN comment quality, thoughtfulness, and etc seems to drop off with higher visibility…. and sadly generally too. The more visible the more comments resemble Reddit or the god awful knee jerk hot takes you get in local newspaper comment sections :( It’s a bummer as I’ve enjoyed the generally high comment quality on HN for a long time.

Maybe @dang could accept monthly donations to pay for a couple moderators? Last I heard they were volunteers.

Anyway, the fact that the top-voted comment now complains about the low quality of answers shows that moderation + voting still help.

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

#540

Post by rqtwteye »

idopmstuff wrote: post #339
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'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…

I think the backlash against tech comes from many years of tech celebrating themselves and being celebrated as “disrupters” for a lot of bullshit startups. And the amounts of money made with companies hat have no real business is just astonishing. It would be nice if it went back to focusing on creating sustainable businesses that make useful products that benefit their users and aren’t just another vehicle for mass surveillance.
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