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

641–650 of 1001 posts

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

#641

Post by marvin »

bradleyjg wrote: post #74
marvin wrote: post #20

This is exactly the statement that's required, given the confusion and irresponsible politicization of deposit insurance. Shareholders lose 100%, depositors get 100% of their deposits back. It's a simple situation, and the former point (as opposed to the solution during the GFC) counteracts moral hazard.

What politicization of deposit insurance? The amount of deposits that are insured have been capped since the program was put in place 90 years ago. Making all depositors completely whole is not insurance. That was not a risk that premiums were paid for. It’s a government bailout.

The politicisation should be obvious from the "eat the rich" rhetoric currently floating everywhere on Twitter. The government is mostly concerned with the stability of the economy and preventing cascading bank runs, which this climate is less conductive to. That much should be obvious to a slightly keen observer.

While it's well and good in theory that deposits are capped at $250k, adhering strictly to that rule right now will cause cascading consequences much more serious than the price of this guarantee.

Sensible realpolitik right now is to guarantee the deposits to prevent cascading wealth destruction that will very much hit Joe Average, then adapt the system to prevent moral hazard and ensure that this insurance premium is collected in the future. There will probably be a way to recoup the cost of the guarantee from debt holders to SVB, but right now the real concern is putting out the burning crisis of confidence.

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

#642

Post by theRealMe »

matheusmoreira wrote: post #591
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…

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…

This is the exact lack of nuance that OP is talking about. Do you understand what is actually happening here? A bank is going under and potentially taking a ton of startups with it, not because of any poor decisions or lack of legit business model by the startups. It’s purely due to an internal implementation detail of the (until now) we’ll respected bank that holds their money.

I swear if it was called “generic bank” instead of “Silicon Valley Bank”, we wouldn’t be seeing all of these knee-jerk “good because they’re bad” responses.

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

#643

Post by deepGem »

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…

People in general who are not good at something or didn't find success in that field, in order to feel their salt's worth have 2 options - either build something that's far greater than what they are not good at, or disparage what they you are not good at. The latter is a lot easier.

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

#644

Post by tsunamifury »

NotACop182 wrote: post #549
AmericanOP wrote: post #468

Earlier quoted context omitted.

Before people get too excited about letting it all burn, I recommend everyone watch this talk by an economist on the 2008 recovery: https://www.youtube.com/watch?v=RrFSO62p0jk Spoiler alert (18:30): It was entrepreneurship that turned the economy around. Not fed policy. SVB put their deposits in US Treasury Bonds. Commonly regarded as the safest investment vehicle there is. Then the fed raised interest rates, complet…

By design the feds wanted to increase unemployment and salaries. Problem solved? I'm not trying to be mean or condesending. But who would / should the unemployed / wages come from? What sector?

It turns out that you can make everyone unemployed and it won’t fix the supply/labor shortage created by a lack of immigration and supply chain disruptions. The fed is using a hammer to fix a chipped vase because it’s all they know what to do.

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

#645

Post by startupsfail »

epistasis wrote: post #609
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…

I think this mostly comes from the PayPal mafia sort of attitude: libertarian when it helps me, bail me out when it helps me, start a bank run when it helps me. There was a time when tech did seem like a better business movement. Certainly better than the financial sectors, or heavy industry, or pharma. But then we let Thiel and Musk become the face, with Sachs and Calacsnais (or however you spell his name) become th…

Yes, it seems that the antisocial defectors are going to win in the short term and may have more power in the long term. Any suggestions onto how to inject some discipline and long-term thinking into this?

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

#646

Post by manuelabeledo »

CPLX wrote: post #481
manuelabeledo wrote: post #389

Earlier quoted context omitted.

I find it ironic that you mentioned taxi drivers, since many were initially collateral damage, and then moved onto drive for Uber or Lyft. I would say that medallion holders, those with enough capital to pay the almost million dollars a license was running for around 2010, were the ones getting screwed. And if you ask me, I would compare them to whomever invested in SVB. Those will not get their money back.

Just click the link, that's exactly who the article is about. In those specific cases they aren't moving on to Uber and Lyft because they're dead. They didn't have enough capital for the medallions in hand of course, these were mostly immigrant strivers who worked and toiled and deeply tapped their entire network of friends and family for down payments and were heavily leveraged for the rest. Then Silicon Valley VC's…

I think you got it wrong.

Regardless of what these articles may say, the vast majority of medallions are owned by private companies, not independent contractors. Drivers need to be licensed, but medallions are associated to cars, not necessarily people. And this is not a new phenomenon at all [0]

Effectively, Uber and Lyft did more damage to companies than individuals.

Companies that also speculated with the medallion prices by the way, as most were bought and sold privately, not by governments. How do you think they got to cost a million bucks in NYC back in 2013?

[0] https://slate.com/business/2012/06/taxi-medallions-how-new-y...

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

#647

Post by matheusmoreira »

grey-area wrote: post #321
bentlegen wrote: post #278

Earlier quoted context omitted.

The C-suite paid themselves millions of dollars via bonuses and stock sales right before insolvency. Executives got paid. What’s to stop future bankers from running the same playbook? (We can debate that this the stock sale was premeditated/signaled months in advance, but the stock had already declined 80% from its 2021 peak and they surely knew about the tough liquidity position months ago — external observers drew…

So to punish them, we need to punish depositors?!?

Actually, yes. Absolutely. Maybe with enough punishment these depositors will stop stuffing the accounts of these fat cats full of cash for them to "invest" and lose everything with.

How many global economic meltdowns do we have to go through before people learn that banks are literally the root cause of so many of society's problems? Depositors aren't being punished enough if they're still buying into this system. They keep feeding the beast and complaining when it eats them.

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

#648

Post by n0us »

fwlr wrote: post #148

Eh, the depositors aren’t totally blameless here. On Thursday they conspired to perform a huge bank run on SVB, on Friday they succeeded, and on Saturday they were demanding the government and taxpayers make them whole by Monday. They deserve to get their money back and they eventually will once SVB’s assets are liquidated. But that’s not good enough, they want it now , and they won’t hesitate to make you pay for the…

This has to be the stupidest take in the entire comment chain.

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

#649

Post by tome »

CPLX wrote: post #485
thinkmassive wrote: post #244

Earlier quoted context omitted.

> My feeds are full of sociopathic libertarians calling for government to make sure they never suffer any consequences for their failure to adequately manage risk? Not sure to whom you’re referring, but they’re not libertarians.

I mean literally nobody is a libertarian by the dictionary definition, there aren't any on the planet. It's just a word people use to describe a value system where governments only help people like them and everyone else gets fucked. They sure talked a good game though.

No true libertarian.

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

#650

Post by tsunamifury »

roflyear wrote: post #570
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 I lean towards you, but what people are actually suggesting is that these startups shouldn't be bailed out when they went with a bank with super-high promised rates, while they of course knew their deposits over $250k were uninsured.

They haven’t lost the money yet. Read and understand before you comment. The banks assets lost 10-20% value not 100%
Post reply on HN