Urgent: Sign the petition now • Hacker News Board

Re: Urgent: Sign the petition now

#811

Post by wpietri » Sun, Mar 12, 2023, 4:35 PM UTC

concinds wrote: post #542

baq wrote: post #356

Earlier quoted context omitted.

Sir you should talk rather firmly to your VC friends who told their portfolio companies to withdraw to maybe not spread FUD next time because things happen. It sucks this time around. Get those founders bridge loans instead of replying to a rando on the internet (though I appreciate the opportunity to interact).

If you want to understand why SVB failed, feel free to read writeups in proper financial publications, like FT or Bloomberg, and please avoid "mainstream" sites by clueless journos with zero finance knowledge. This one is good: https://www.ft.com/content/0387e331-61b4-4848-9e50-04775b4c3... SVB didn't fail because of "FUD", but because of a dumb decision to invest at the top. SVB is squarely at fault here.

There can be more than one link in a causal chain. The broad problem was bank executive choices. But the urgent problem was a bank run caused in part by VCs telling everybody to take their money out.

Re: Urgent: Sign the petition now

#812

Post by wpietri » Sun, Mar 12, 2023, 4:39 PM UTC

seizethecheese wrote: post #564

nicenewtemp84 wrote: post #496

Earlier quoted context omitted.

Did you have more than $250k sitting in SVB? We're you unaware of the $250k FDIC insured limit? Or were you, and didn't act on mitigating this potential problem? Any particular reason?

Yes, I was aware. I don’t think there’s a moral imperative to help us, necessarily. I would only ask that tech depositors not be treated differently due to the schadenfreude I see in this thread. Consider companies small enough to have no one whose job it is to do finance. As a founder you’re already working long hours and bank failure is not a risk that is top of mind compared to lack of product market fit.

As far as I can tell, everybody is asking that tech depositors get treated like any other uninsured depositor. That being fairly, under the long-established rules.

As a founder, I am sorry that VCs apparently don't help with treasury management. That strikes me as something that should be a clear part of their value prop.

Re: Urgent: Sign the petition now

#813

Post by smcl » Sun, Mar 12, 2023, 4:40 PM UTC

effingwewt wrote: post #796

smcl wrote: post #748

Earlier quoted context omitted.

Interesting, I thought it was the opposite - people attempting some kind of damage control since having a “Y Combinator is asking for a bailout” story on the front page is not a good look. But I guess the title was changed to be a little less incendiary

Not for me, personally. This wasn't an article or blog post talking about the out-of-touch CEO-bros having the lack of self-awareness to even attempt to have us bail them out. This was a direct link to their 'petition'. We've gone beyond moral hazard, we are now at the point where it's expected for tax-payers and poor people to bail out the rich when their greed finally catches up with them.

Right but when I commented the headline was literally “Y Combinator is asking for a bailout”

I definitely understand why you flagged it though, it just didn’t occur to me when I commented

Re: Urgent: Sign the petition now

#814

Post by wpietri » Sun, Mar 12, 2023, 4:41 PM UTC

nomdep wrote: post #789

jimrandomh wrote: post #37

Statement by the FDIC: https://www.fdic.gov/news/press-releases/2023/pr23016.html Key paragraph: > "All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDI…

For this payroll cicle, but what about the next one in two weeks?

The FDIC promises to make a large portion of uninsured deposits available within a week.

If a company still can't make payroll, they were pretty close to the edge. If the company is either profitable or very promising, they can look to their investors or providers of things like bridge loans.

If not, well, most startups fail, so it's all part of the game. But it's a good lesson for people in why profitability is more than just a nice-to-have.

Re: Urgent: Sign the petition now

#815

Post by wpietri » Sun, Mar 12, 2023, 4:43 PM UTC

cmurf wrote: post #579

analognoise wrote: post #557

Earlier quoted context omitted.

What's weird is that you can insure an account for more than that, it's just not free. So if you had "substantially more" than that, you should be financially savvy enough to insure your accounts and pay for the insurance on them as a cost of doing business. That's why we insure anything - in case something happens.

I found no information on how to do this with a cursory Google search. What comes up are other stratgies, like multiple bank accounts, each at different banks. Or instruments like certificates of deposit, which aren't suitable for payroll. So if banks offer more insurance for a fee, I can't easily tell how to do this. My business banking account has nothing about such a feature, either online search or looking at the…

This is an example: https://www.difxs.com/DIF/Home.aspx

But I think it's not common because there are other treasury management strategies besides "keep all your eggs in one pure-cash basket".

Re: Urgent: Sign the petition now

#816

Post by dlubarov » Sun, Mar 12, 2023, 4:44 PM UTC

oarabbus_ wrote: post #728

dlubarov wrote: post #716

Earlier quoted context omitted.

They did already have 77% of the collateral in short-term T-bills, and the 23% in cash was spread out across multiple banks. They held $3.3bn at SVB, but that's out of $42bn total.

So then it sounds like they probably had 10-15 banks (entirely reasonable for them to be expected to open this many accounts at unique banks, given their business model) which is a far cry from the 1200 OP complained about. If your entire business model revolves around moving multiple billions of dollars via an asset-backed stablecoin model, it's reasonable to expect you to have dozens of bank accounts, in at least 3…

I'm not sure any private insurance exists that can cover a $42m deposit?

Re: Urgent: Sign the petition now

#817

Post by wankle » Sun, Mar 12, 2023, 4:44 PM UTC

shawn-butler wrote: post #754

wankle wrote: post #209

Earlier quoted context omitted.

Wells Fargo is the least corrupt large bank I can think of. They were nice and helped bail out one of the 2008 losers then those influx employees started doing mischievous things and gave WF a bad name for a while. I think they've got all that sorted now.

Doesn’t track: https://violationtracker.goodjobsfirst.org/?parent=wells-far... And particularly egregious: https://violationtracker.goodjobsfirst.org/violation-tracker...

We've been with WF since the early 2000's so for us, what I reported is based on our experience with them.

Re: Urgent: Sign the petition now

#818

Post by jarym » Sun, Mar 12, 2023, 4:55 PM UTC

slondr wrote: post #47

jarym wrote: post #32

Earlier quoted context omitted.

Are you saying if I deposit more than $250k (which is NOT a lot for a business) into a reputable and regulated US bank at negligible rates of interest I should just accept the impact of the bank shutting down due to events unrelated to my actions and choices? And that my deposit should vanish into thin air?

> Are you saying if I deposit more than $250k (which is NOT a lot for a business) into a reputable and regulated US bank at negligible rates of interest I should just accept the impact of the bank shutting down due to events unrelated to my actions and choices? Yes, because that is how risk works. > And that my deposit should vanish into thin air? No, you should insulate yourself from that risk, either by spreading o…

I think you're wrong. 'risk' is where I invest my money somewhere I can expect to lose some/all of my investment. Placing my money into the likes of a JPM or SVB, etc. should be RISK FREE because a) I am not investing my money and b) To recognise the fact it should be close to risk-free, I receive negligible interest on my deposit.

Re: Urgent: Sign the petition now

#819

Post by JJMcJ » Sun, Mar 12, 2023, 5:12 PM UTC

lolinder wrote: post #376

JJMcJ wrote: post #208

Earlier quoted context omitted.

SVB has some ordinary people as depositors, with a regular commercial bank as their Boston Private subsidiary. It would be very disruptive and cruel if they lost all or much of their deposits. SVB's stockholders, on the other hand . . .

The ordinary-people depositors almost certainly don't have more than $250k in the bank, so they will already be made whole by the FDIC on Monday.

That is absolutely the plan. The assets are now with a new bank that will be open for business on Monday.

FDIC promises for the ordinary-people, everything will be uninterrupted. Checks from the older SVB accounts will clear, debit cards will work, money will be available.

Re: Urgent: Sign the petition now

#820

Post by trogdor » Sun, Mar 12, 2023, 5:28 PM UTC

garry wrote: post #144

axlee wrote: post #97

Earlier quoted context omitted.

110% agree. At some point, risk HAS to be treated as what it is, risk, rather than just "another way to do things". We have so many banks treating risk as what it is, and pricing for it, well these people decided to go to another bank to get funding, well deal with it. It's not like the average citizen has this luxury.

The equity holders and management of SVB are likely to be wiped. In the petition we specifically call this out: we are not asking for their risks to be "socialized." Depositors have a reasonable expectation that when they choose a bank (especially a publicly traded bank that is regulated) that their deposits are safe. If this is not true, then most people will only bank with the largest banks. That's not a good situa…

>Depositors have a reasonable expectation that when they choose a bank (especially a publicly traded bank that is regulated) that their deposits are safe.

Respectfully, no sophisticated entity should ever expect their deposits to be safe beyond their insured limits. That is why businesses purchase insurance on their excess deposits, and/or use other financial products to ensure they have no excess deposits.

Frankly, YC failed to advise its companies in rudimentary financial risk management. Holding millions of dollars in a single bank account and taking no measures to mitigate the obvious, enormous, (and yes, unlikely) risk of bank failure is mind-boggling.