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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

#691

Post by jmull »

roflyear wrote: post #533
jmull wrote: post #260

Earlier quoted context omitted.

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

I agree that some things are worth spending tax dollars on.

I do not agree that anything is worth spending tax dollars on.

IMO, a taxpayer bailout of Silicon Valley startups -- highly speculative businesses by their nature -- is a really poor use of federal funds.

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

#692

Post by shadowgovt »

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…

No, but the median salary for a software engineer is still 120k, a little under double the median salary across all industries.

It's hard to dredge up deep, deep wells of sympathy for folks who were already playing the salary game at double the value of half the players. One can't escape the sense that if they've done the kind of budgeting that a regular American does, they will be fine.

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

#693

Post by sangnoir »

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…

> 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?

I am suggesting that your CEO not adequately insuring the companies bank deposit is negligent. If your CEO does not insure your HQ against fire, and it burns down, should it be bailed out by the government just so that you're not out of a job? Or is it not their fault that the CEO didn't use a "well-reputed landlord with adequate fire suppression?"

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

#694

Post by shawabawa3 »

StopHammoTime wrote: post #608

This is a simple liquidity problem. SVB had the treasury bills and loan book to cover all the deposits. They just couldn’t access any of that money. The FDIC should take on the bills and loans, and pay out the cash now. They will collect the entire balance eventually and they have the benefit of time and I imagine they’re authorised to hold assets like this long-term (or do a cash swap with the fed, they have plenty…

You need to look up time value of money https://en.m.wikipedia.org/wiki/Time_value_of_money

Having $1M in 10 years is the same as having $680k today, as you could buy 10Y treasuries that will pay out $1M

So saying "The FDIC should take on the bills and loans, and pay out the cash now. They will collect the entire balance eventually" is the same as saying "They have lost 30% of depositors money but FDIC should pay that 30% out of their own pocket"

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

#695

Post by nullc »

wpietri wrote: post #679
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…

As a long-time tech person and someone who has started multiple companies, including one venture-backed one, I'm happy to explain why I think uninsured depositholders should not have their losses subsidized by taxpayers. One, anybody with a bank account has heard about the FDIC and the FDIC insurance limits. Presumably anybody smart enough to raise millions of dollars know that if part of something is insured, the re…

> Two, the tech industry, especially the VC-funded end, is forever crowing ... there has been endless puffery and chest-thumping among VCs and tech startups

When you find yourself cheering for collective punishment you should know that you are absolutely the bad guy.

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

#696

Post by wpietri »

flappyeagle wrote: post #630
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?

This isn’t nuanced. It’s confused. If startups were going under because it turns out that they were pointless and there was no market, and they ran out of runway… then sure. But this is their house catching on fire and all of their money just vanishing through no fault of their own. It doesn’t distinguish between good startups and dumb ones, real businesses and nonsense — how could you root for this beyond pettiness?

> no fault of their own

Making bad treasury management decisions is not "no fault of their own". If people want to make the case for a taxpayer bailout, they should start with something like, "Look, we know we fucked up by [not paying attention to something important|taking a risk we thought we could get away with|getting high on our own supply], but we're humbly asking for help."

If somebody's house catches fire because they cheaped out on the furnace and the didn't get homeowner's insurance, I'm going to feel bad for them. They have some Kubler-Ross time ahead for sure. But unless they're family, I'm not taking them in.

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

#697

Post by youngtaff »

theRealMe wrote: post #642
matheusmoreira wrote: post #591

Earlier quoted context omitted.

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…

Putting the money in SVB rather than another bank can be seen as a poor business decision by the startups - yes, they may have be forced to by their VC backers, or they may be just following the crowd

But reality is SVB isn’t a normal bank and it had the highest percentage of deposited funds that weren’t covered by FDIC amongst US banks

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

#698

Post by oldgradstudent »

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…

> 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?

If you want to be paid by the government, you should be aware that salaries are significantly lower, and perks are non-existent.

The government regulates banks and provides deposit insurance to to 250K.

The whole point of deposit insurance is to prevent retail bank runs by the general public.

Beyond that, it is the job of your CFO to manage risks, including the risk bank failure.

The last large wave of bank failures happened barely over a decade ago. These things happen.

Also, it sounds like your company will lose at most a fraction of its deposits.

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

#699

Post by hcks »

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]

This is pure loser resentment lol

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

#700

Post by unity1001 »

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…

> make customers, not owners, whole

Framing bailout with a different word like 'make whole' does not make it not a bailout. The bank played with those people's deposits and screwed it up. Rescuing all the deposits would just exonerate the bank of all its wrongdoing and set a bad precedent. "There are no repercussions for bad business management".

Per capitalist philosophy, the bank should sink, along with whatever deposit was in there - "Buyer beware". If you dont agree with that principle, it means that you are not subscribing to capitalism, but to social democracy in which capitalist principles are overridden by socialist principles to protect the public. And the moment you go that way, you open the door for questioning a lot of the setup that rules the modern economy.

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