791–800 of 1001 posts
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Indeed. The bank was trying to raise money and recapitalize itself several days before this and instead of investing, VCs panicked, told their portcos to withdraw immediately, and started a bank run.
Right, they told their clients to run for the exits, caused a collapse on their uninsured deposits - and now expect a handout (and will get it).
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Except this is the opposite of what happened in 2008 with bailing out the banks. Then, the banks got public money to remain solvent. Here, the bank is taking the hit and the government is ensuring the depositors get their funds back. In 08 people were kicked out of their homes and banks were propped up with public funds. Here, the depositors are being made whole and the bank is going out of business. The salt is your…
Tangent: In decades of socializing in NYC and the Bay Area, I've only ever seen the term 'flyover country' used by people complaining that the coastal elites look down on them. Never once heard the term from an actual coastal elite.
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> It was VC money, that's money intentionally being gambled in high risk endeavors. The high risk endeavor does not have anything to do with the bank where you deposit the money raised. Here, it does not matter if the source of money is a VC or another.
It does. SVB is preferred by startups because they do things that other banks won't, riskier things. It's not the same as any old bank.
1) why are the feds claiming they are going to 'help' depositors? isn't it more, like, no, you're just going to do what you're required to do by law?
2) shouldn't the FDIC deposit insurance limit be pegged to inflation? yeah, obvious, but. last raised in 2008 to $250k. seems like it'd be about $350k today.
Bailing out the depositors is still a bailout.
SIVB is 100% at risk of bankruptcy/collapse. Saving SIVB would be a bailout for sure.
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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.
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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.
The irony as a fly-over-American is great. We are constantly and sanctimoniously told we have to move from our cities and towns to the Coastal regions. When toxic chemicals are spilled we're ignored, or worse - mocked. We're told we're financial burdens on the country. But what we see is both coasts gambling with low interest rate money, getting rich off of fee leaching, and, when the gravy train slows down, causing…
I'm sympathetic to the tech mirage view generally. One piece I don't quite understand though, is why did tech so disproportionately gain from low interest rates when compared to other industries? Is it just because the friction of starting a non-physical business is so much lower? I'm not quite satisfied with that as an explanation, because that provides a competitive advantage to tech vs other industries regardless…
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Yes, in the case of large retail banks, the government did help. In 2008, the federal government purchased stock in several banks in order to recapitalize them. One could argue this was a starker example of moral hazard than letting the bank fail, but making depositors whole.
Which is why you should always bank at a "too big to fail" institution. Why America has 4000 banks is beyond me. In my country they all consolidated in the 60s and 70s into a half a dozen giants.
Local community banks make it far easier for farmers and coffee shops to get loans. Local community banks keep money locally and grow locally. The consolidation of banks is a problem to avoid, not desire.
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> 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…
If you start bailing out banks which take risks, then the incidents become less isolated
Once you're handling millions of dollars you absolutely should be looking into counterparty risk when you deposit funds. Baffling that people are arguing business owners should do no due diligence on a bank or take no insurance.