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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

#651

Post by curtisblaine »

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…

From the fact that, if money for bail out comes from taxpayers' pockets, they don't want to be the ones to ultimately pay for this.

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

#652

Post by ohgodplsno »

ordinaryradical wrote: post #616
ohgodplsno wrote: post #420

Earlier quoted context omitted.

[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.

And I wish you absolutely the best in finding a new job. Your salary will be paid even if the company goes bankrupt, and while times will be hard, I have no doubt you will find something.

I am, indeed, an absolute asshole. But then again, my post only said something about finding it funny, not that I'm not an asshole. Nor does it preclude people participating in the clown show from being clowns.

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

#653

Post by Clubber »

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…

>“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?

Did the depositors (we're talking companies here) not know that the FDIC limit was $250K? If they did, why didn't they hedge accordingly by opening accounts at other banks? Was this not an unreasonable expectation of a company to do?

If I did the same thing, would I expect the government to cover the difference between the asset sale value and the insured amount?

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

#654

Post by blululu »

norwalkbear wrote: post #597
idopmstuff wrote: post #560

Earlier quoted context omitted.

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

Except among left wing circles where tech has become synonymous with fascist. Most of the people I've seen calling for depositors to lose everything are leftwing of the woke variety. Of course both right and left seem to ignore that bailing out a bank and backing up depositors are really very different policies an different issues.

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

#655

Post by [deleted] »

mustache_kimono wrote: post #588
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…

> even if the company you work for goes bankrupt, you're very likely to still receive your salary Spoken like someone who has no experience with bankruptcy. The rule of thumb used to explain this to an unsecured creditors, before this happens, is -- dude, you might get 10 cents on the dollar. Employees are rarely made completely whole. > as debts to workers are the highest priority in any bankruptcy case Secured cred…

[deleted]

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

#656

Post by startupsfail »

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.

This is the community that claims that it will save the world. While it behaves with such shortsightedness that it can’t even save their piggy bank. Should it be trusted with more money and power (that the bailout gives)?

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

#657

Post by JJMcJ »

tome wrote: post #461
JJMcJ wrote: post #400

Earlier quoted context omitted.

It wasn't risky as long as prime rate stayed super low. But that rate has been creeping up for months now. SVB was too small to qualify for risk assessment under the revised banking rules. So they could get away with money in volatile securities that were very interest rate sensitive. That said, SVB seemed very solid until Thursday morning.

> It wasn't risky as long as prime rate stayed super low. That sounds a bit like "it's not risky to driver a motor vehicle as long as you don't get into an accident".

That's true. The real risk was in imagining that the interest rates would stay super-low forever.

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

#658

Post by baq »

pbourke wrote: post #624
matheusmoreira wrote: post #554

Earlier quoted context omitted.

So what you're saying is the bank made investments based on a whole lot of assumptions. These assumptions were quickly invalidated by US policy changes and then the bank lost everything. Yes, absolutely let it all burn. They risked it all on their "strategy" and lost. Why should they get bailed out in literally any way? I don't see the government showing up to bail me out when my "strategy" gets me liquidated, why th…

If your strategy is keeping money in an FDIC insured bank account the government will absolutely bail you out. You have a guaranteed bail out up to the deposit insurance limits and a high-probability bailout for close to 100% of your funds through FDIC resolution.

The money in FDIC is the banks’ money! Zero taxpayer investment.

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

#659

Post by mlyle »

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…

> Plenty of startups fit that bill and will nonetheless be impacted by SVB’s failure

Startups are going to get most of their deposits back-- perhaps all if there's an acquisition. If SVB is not acquired, I hope the FDIC is able to get a substantial dividend quickly so that they can keep operating and that everyone works to keep disruption low.

But I don't think the federal government needs to make depositors whole beyond the insurance limits. I think that sets its own bad precedent. Maybe some startups are going to lose 5-40% of their cash because of their treasury management choices. That is OK.

The times when I was a founder of a startup with a substantial cash balance--- we hedged the bank risk. There was a cost to it. I don't think those costs should be socialized.

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

#660

Post by Analemma_ »

tsimionescu wrote: post #416
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…

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…

> Perhaps they shouldn't keep money in the bank in the first place, but find other uses for them.

If this is the position you want to take, that's fine, but you need to own the consequences of that position. The point of the FDIC is that you don't have to worry about the credit-worthiness of your bank before deciding to do business with them. If that's not true anymore, then I'm pulling every dollar out of my local bank and giving it all to Goldman Sachs. Everyone else will do the same, and now you've destroyed small regional banks and make the biggest ones even bigger and more powerful. Was that worth it to "own the techbros"?

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