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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

#611

Post by avianlyric »

adharmad wrote: post #228
avianlyric wrote: post #188

Earlier quoted context omitted.

> The reason SVB is in receivership is because they don't actually have the ability to make all their depositors whole. No, SVB is in receivership because they can make their depositors whole right now . They have most of the assets, it’s just that liquidating them immediately would result in losses far greater than SVB can afford, but that’s what a bank run demands. The feds can take over, make depositors whole now…

Or they can find a buyer for SVB's assets - preferably a bank - which do all this and in addition provide business banking services as well.

Ideally they would, which is what happens to some banks in 2008. Unfortunately the banks that stepped in and bought failing banks got very badly punished, because they also inherited a whole bunch of liabilities far beyond the failing bank’s deposits, liabilities the purchasing bank didn’t expect and ultimately cost them substantial amounts of money.

If FDIC wanted another bank to buy SVB and make depositors whole, they would almost certainly also need to guarantee some sort of firewall against any liabilities beyond the deposits. Presumably the purchasing bank would want some ability to pick and choose exactly what bits of SVB it buys, and which liabilities. Leaving the remainder with either the feds, or some shelled out SVB entity. But who’s knows if that’s a path FDIC want to go down.

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

#612

Post by [deleted] »

rqtwteye wrote: post #540
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 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…

[deleted]

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

#613

Post by dkga »

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?

Multiple banks. There's one thing called counterparty risk and any firm with millions (or more) of US dollars in cash should have a function just to take care of this. But it seems a lot of tech firms' CFOs were sleeping at the wheel if it indeed transpires that all these firms were keeping their money all in one bank.

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

#614

Post by tome »

jliptzin wrote: post #285
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…

It is completely insane to allow innocent depositors to lose their money especially when the government clearly would have no problem coming up with the funds to backstop depositors since this is an isolated incident. This bank being located in a tech hotspot is incidental and I am sure some non-techies are swept up in this as well. Imagine a 70 year old woman who just lost her husband and sold her house to downsize…

> Imagine a 70 year old woman ...

I think the idea is that millionaire grannies should be advised to split their cash across four accounts, or buy bonds, or some other sensible thing, rather than just keeping bank deposits.

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

#615

Post by [deleted] »

nasseri wrote: post #392
rayiner wrote: post #231

Earlier quoted context omitted.

Why shouldn’t depositors learn a lesson that they should get additional insurance beyond the $250,000?

If the lesson you want corporate depositors to learn is that in the United States, any dollar beyond 250K in an account can evaporate overnight, than be prepared for a lot more bank runs in the immediate future.

[deleted]

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

#616

Post by ordinaryradical »

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]

I’m getting paid below market rate, I’m the sole provider, and I have two children in preschool. So while you chortle over “tech bros,” I’m looking at the end of my family’s healthcare and financial stability.

When everyone around you looks like an asshole, you might be the asshole.

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

#617

Post by idopmstuff »

reb wrote: post #580
rqtwteye wrote: post #540

Earlier quoted context omitted.

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…

Plenty of startups fit that bill and will nonetheless be impacted by SVB’s failure, while the most pointless businesses surf by on their founders’ access to inherited wealth and political power. Any revenge on them will be short-lived and will have serious, lasting consequences for middle class workers throughout the industry. For anyone reading this who doesn’t already know: startups aren’t all snotty trust fund kid…

Nailed it. If people get whatever short term vengeance they're looking for, the contagion will cause a whole lot of collateral damage to people who aren't in tech.

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

#618

Post by matheusmoreira »

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]

In other words: consequences are good.

We enjoy watching people face the consequences of their actions. We absolutely hate it when they manage to avoid the consequences.

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

#619

Post by travisjungroth »

skwirl wrote: post #65
NotACop182 wrote: post #13

Earlier quoted context omitted.

Did they help depositors that lost money in the last 500+ bank collapses? Why do they get special treatment? The government has laws and rules the depositors are insured up to 250k. Either they liquidate and everyone takes a hair cut. Or they wait till the bonds mature and can pay them out. But the government should not relieve anyone past what is legally available.

> Did they help depositors that lost money in the last 500+ bank collapses? Yes. Anything else?

[sounds of goalposts shifting]

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

#620

Post by brador »

reb wrote: post #580
rqtwteye wrote: post #540

Earlier quoted context omitted.

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…

Plenty of startups fit that bill and will nonetheless be impacted by SVB’s failure, while the most pointless businesses surf by on their founders’ access to inherited wealth and political power. Any revenge on them will be short-lived and will have serious, lasting consequences for middle class workers throughout the industry. For anyone reading this who doesn’t already know: startups aren’t all snotty trust fund kid…

There's always the option to release founder equity in exchange for more investment. If the startups were viable before, they're most likely still viable now.

Already picked up some great deals and next week is booked dense.

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