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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

#821

Post by locallost »

koolba wrote: post #286
locallost wrote: post #254

Earlier quoted context omitted.

I don't get this comment at all. The post you're replying to literally says the bank has more assets than 250k per client. I read somewhere the insured amount is around $8B whereas the bank's assets are at least 20x that. Where should that money go if every client gets capped at 250k?

They have more than $250K per client but not the full value. Each account should be allocated MIN(balance, 250K). Then the remaining should be allocated pro rata. So if one is still owed $1000 (ie the balance was $251K before the collapse), then that account’s share of the remainder is: $1000 / (sum of all remaining balances owed) The haircut per account is only on amounts beyond $250K.

But that's exactly what the post you replied to said? Anyway, I am against a bailout here, but haven't seen one announced.

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

#822

Post by dkjaudyeqooe »

thecus wrote: post #708
kentonv wrote: post #473

Earlier quoted context omitted.

The purpose of the $250k per-person-per-bank limit is to encourage large depositors to spread their money among many banks, which reduces risk for both them and the system. However, it's not clear that this limit is really the ideal design. In the financial crisis 15 years ago, the FDIC in practice guaranteed 100% of deposits. They had to in order to keep people from running all the banks. Since then, we've all been…

So, when you're running a $3mm payroll, how do you do that while keeping money in an FDIC insured state. FDIC needs to be reformed. I feel like it's been 250k for my entire life lol, at the very least the amount needs to be revisited.

You don't need the FDIC, lodge your money directly with the US government.

Let's say you earn your income 28 days before you have to pay out wages (for illustration purposes). You buy a 28 day Treasury bill which matures in time for you to make payroll. Even if they're paid into a bank account you're taking a lot less risk having money sit for a day than continuously. You also earn a little interest.

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

#823

Post by dehrmann »

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…

It's just that rather than them failing because their product was bad or they're working on a bullshit idea, they might fail because their bank failed? And not some fancy crypto bank, a regular, government-regulated bank? Even if you want to see the startup space fall, that's a rather unsatisfying way for it to happen. It's not a SBF moment.

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

#824

Post by omginternets »

Mistletoe wrote: post #163
SirensOfTitan wrote: post #28

Earlier quoted context omitted.

I’m inclined to agree, this kind of special treatment is fairly ridiculous, depositors in other bank failures with funds over FDIC limits have to wait for fire sales to recover, which can take years in some cases. I’m not sure exactly what Yellen is proposing (I only subscribe to print FT so no access), but it seems like special treatment for the well connected on Sandhill Road.

The response to this crisis has been very telling. No one I meet wants Big Tech to be saved or has any good response when asked about Silicon Valley. The response is one we would expect for a group of people that have enslaved us rather than liberated us. Made us miserable rather than delighted. I see two waves in Silicon Valley. Wave one was actual innovation, computers etc. Wave two was rent-seeking conmen fueled b…

This has nothing to do with Big Tech. This is about SMBs.

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

#825

Post by omginternets »

version_five wrote: post #200

As others have said, if depositors are bailed out, it's a bailout. Pretending that changing the definition makes a difference is childish. Whatever the government decides to do, this makes the VC and startup industry look really weak and entitled, and knocks them down from risk takers building the future to the same status as a bunch of bankers looking for a handout. There was an opportunity here for VCs with lots of…

Respectfully, I think you are the one playing with definitions. “Bailout” refers to shareholders. It refers to bailing out the institution, not it’s depositors.

We can talk about a depositor bailout if you want, but let’s not pretend it’s the same thing, not pretend it’s what the term “bailout” commonly refers to.

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

#827

Post by elevenoh »

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…

[dead]

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

#828

Post by ntonozzi »

m3kw9 wrote: post #377
daniel-thompson wrote: post #355

Earlier quoted context omitted.

> what's the purpose of saying "FDIC Insured up to $250k" The FDIC guarantees up to $250k, but if additional assets are available beyond that, then those will be paid out to depositors as well. It's a floor, not a ceiling

Upto sounds like a ceiling to me

If you only deposited $1000 they are not going to give you $250k back.

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

#829

Post by bart_spoon »

wpietri wrote: post #707
nullc wrote: post #695

Earlier quoted context omitted.

> 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.

I am not in fact arguing for collective punishment. I am arguing for people experiencing the consequences of their choices. The paragraph you quote is about their ardent insistence on being allowed to make those choices without interference.

What choices were made by the thousands of employees who work for the startups who can no longer pay them?

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

#830

Post by derivagral »

AmericanOP wrote: post #468
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…

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…

SVB did not put their deposits only in tbonds.

https://news.bloomberglaw.com/bankruptcy-law/svb-mbs-sales-m...

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