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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

#591

Post by matheusmoreira »

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…

It's likely startups only exist to begin with due to low federal interest rates. It is obvious that if those rates are low investors will look elsewhere. Startups are one of those elsewheres. Now that rates are on the way up, there's no need for investors to risk their money on startups anymore. So startups no longer have one of the pre-conditions for their existence. Namely, free investor money literally pouring in and paying for all their expenses.

Such is life in the free market. Looks like the US government disrupted you. Doesn't mean the US taxpayer has to bail you out.

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

#592

Post by TMWNN »

martinald wrote: post #484
tempsy wrote: post #170

Earlier quoted context omitted.

can’t people buy private insurance for their deposits above the $250k threshold? if you buy an expensive house or car you generally pay a lot more to insure that asset. not sure why people don’t think of buying insurance on their bank deposits in the same way if you find yourself in a situation where you need to hold much more than $250k in one account for whatever reason. But even if you’re an individual holding mil…

Yes, you can buy it. It's very common at wholesale banking levels (credit default swaps are extremely commonly used to cover counterparty risk). Also credit insurance is available to anyone. However, the simple option here is to put money into short term govt bonds, there are ETFs like SGOV that make this extremely easy. Even more ridiculous is that you are getting 4-5% yield on them. This is what is so crazy about t…

>It is frightening to me people don't seem to understand this. It's absolutely basic money management.

It isn't frightening to me, because the trust people put into banks' reliability is a testament to the fundamental strength of the American financial system. I'd rather have that than the opposite, where everyone is hyper-sensitive about everything and even refuse to use banks at all.

That said, there is no excuse for Roku, for example, to have more than $400 million in uninsured funds at SVB. That is fundamental malpractice on the part of its corporate treasury, CFO, and management.

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

#593

Post by urbanhole »

idopmstuff wrote: post #565
jjulius wrote: post #551

Earlier quoted context omitted.

It's this. I would also like to point out that it's perfectly okay to simultaneously take pleasure in an industry being culled of precisely what you described, while also feeling bad for some of those who may lose their jobs as a result. Ain't nuance neat?

> I would also like to point out that it's perfectly okay to simultaneously take pleasure in an industry being culled of precisely what you described, while also feeling bad for some of those who may lose their jobs as a result. Ain't nuance neat? Absolutely. What's surprising to me is the absolute lack of that nuance on HN. It's all just BURN IT ALL TO THE GROUND over the last few days.

Internet people are garbage, and HN is not special in this regard. This is because people are garbage.

People love tearing others down. This is the rule.

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

#594

Post by peter422 »

massysett wrote: post #443
peter422 wrote: post #396

Earlier quoted context omitted.

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.

Great now every startup and every business needs to hire a CFO because a bank can't be trusted to store any number higher than $250k?

So if my nascent 5-person startup raises 1.2M your suggestion is I need to hire a CFO? That's going to help innovation?

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

#595

Post by masterjack »

FartyMcFarter wrote: post #573
idopmstuff wrote: post #558

Earlier quoted context omitted.

I'll probably get my next paycheck or two, but I'll lose my job. You're pretty clearly saying here that I should lose my job, along with many other people, because of the bank at which my company's cash is stored. > Perhaps they shouldn't keep money in the bank in the first place, but find other uses for them. I work at a small startup that's raised five million dollars. Not a huge amount of money, but obviously losi…

I'm not sure your founders are as "extremely" prudent as you claim them to be. For example, couldn't they have spread their funds throughout more banks instead of putting their eggs in one basket?

Are you really suggesting they open up 20 different bank accounts? And not only pay the monthly account fees but also pay a bookkeeper to upload statements for all 20 banks into the accounting system? And have appropriate controls on all money movements? And float money between the accounts each time payroll or some large expense is run? And follow the financial results of all of those banks in order to find signs of weakness?

Id rather be in a world where businesses don’t have to spend so much time playing games with their bank accounts and just trust that their money is safe, which is why the fdic needs to guarantee the deposits.

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

#596

Post by ordinaryradical »

JackFr wrote: post #482
mixologic wrote: post #441

Earlier quoted context omitted.

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.

I say as a person who’s been laid off twice and worked for a company that went bankrupt — why is that my problem? Why should you get my money? (In the case of the company I worked for which went bankrupt — we were a fintech startup with a truly innovative and fantastic product. Our management made three bad decisions which led to our demise. Two were technical and would have been recoverable, the last was a strategic…

Because you don’t make depositors responsible for banks’ mismanagement unless you intend to create a depression.

Are you truly proposing that every time a bank fails we make everyone who kept money there take the hit?

A return to the 1920s, eh?

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

#597

Post by norwalkbear »

idopmstuff wrote: post #560
duxup wrote: post #534

Earlier quoted context omitted.

> 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.

I agree with you on this, but I'm thinking more as a matter of perspective. HN is just not a place where I expect to see vicious, anti-tech backlash given the demographics.

It's because tech has become synonymous with woke

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

#598

Post by baq »

runeks wrote: post #409
nightpool wrote: post #288

Earlier quoted context omitted.

Yes, but "worth" is a complicated concept here. What's probably going to happen is that a big bank like JPMorgan is going to buy the remaining assets at 100% book value, and the depositors are going to be made whole out of that. That's not their current market value if sold at fire-sale prices, but banks have the time horizons to hold those assets to maturity and not worry so much about their market value. The stabil…

I highly doubt that JP Morgan will buy SVB's assets at above-market prices.

They might if they’re buying more than the assets (i.e. credibility of the whole sector), but the hole is probably too big for even JPM to take it alone. Maybe the top 4 split it between themselves?

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

#599

Post by idopmstuff »

FartyMcFarter wrote: post #573
idopmstuff wrote: post #558

Earlier quoted context omitted.

I'll probably get my next paycheck or two, but I'll lose my job. You're pretty clearly saying here that I should lose my job, along with many other people, because of the bank at which my company's cash is stored. > Perhaps they shouldn't keep money in the bank in the first place, but find other uses for them. I work at a small startup that's raised five million dollars. Not a huge amount of money, but obviously losi…

I'm not sure your founders are as "extremely" prudent as you claim them to be. For example, couldn't they have spread their funds throughout more banks instead of putting their eggs in one basket?

So anybody who raises money should put a max of 250k into any given bank? My CEO should spend his time managing 20 different bank accounts?

I just think that if we look at it from the big picture - what's best for the country/society/etc. - that we're collectively much better off if a business that puts its money into a decades-old, reputable financial institution can count on it being there the next week.

(Also I do feel like I should clarify that I'm using my company as a kind of general example... I have no idea where our money is stored and I'm on paternity leave at the moment so just going to hang out with my new kid and hope this all works out).

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