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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

#841

Post by hchehxhsb »

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…

> Pretending that changing the definition makes a difference is childish.

Right or wrong sometimes your own maturity gets called into question by the words you use and how you treat others who disagree.

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

#842

Post by dragonwriter »

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?

> But this is their house catching on fire and all of their money just vanishing through no fault of their own.

Inquiry into bank finances, diversification across banks, etc., are all available options. Maintaining large uninsured balances at a single bank without doing those things (or doing the first, but not taking appropriate actions thereafter) is a choice.

I am not opposed to reasonable government action to mitigate ripple-effect harms given the externalities, but the idea that the startups involved have no responsibility here is misguided.

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

#845

Post by dehrmann »

Analemma_ wrote: post #660
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…

> 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 b…

There's something the airline industry does where they don't compete on safety. They're all safe. You don't want banks to start competing on safety; they should all be safe.

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

#846

Post by simonh »

PragmaticPulp wrote: post #680
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…

> 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? Cynicism reigns supreme on social media right now, and HN comments are a type of social media. There is also a deeply engrained “us versus them” mentality baked int…

There's also the modern 'anti-capitalist' crowd that nebulously always blame everything on 'capitalism' while also unironicaly enjoying, you know, owning private property, choosing their own jobs and investing in stocks, while at the same time distrusting government. Because we don't actually need to implement Marxism or state ownership or any other alternative economic system, we just need to not capitalism. Or something. I'm sure they're loving all of this.

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

#847

Post by yibg »

prepend wrote: post #444
gerad wrote: post #199

Earlier quoted context omitted.

I just don’t understand why folks on the internet are so passionate about the depositors being hit by this. In terms of avoiding moral hazard they are about as far down the list as possible, and bankruptcy law supports that. First stock holders get wiped out (common then preferred), then debt holders (folks who have lent money to SVB won’t get their money back), only then would it hit depositors - and in the case of…

> just don’t understand why folks on the internet are so passionate about the depositors being hit by this. I think most of America can’t even imagine having over $250k in an account. So people with this much wealth asking for a bailout is literally rich people asking for coverage because they did something dumb (banked with a bad bank, didn’t account for risk, didn’t insure, didn’t manage funds). It’s not hate so mu…

People don’t think businesses have more than 250k in accounts? How do restaurants buy inventory, pay workers etc?

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

#848

Post by [deleted] »

stephen_g wrote: post #250
komali2 wrote: post #180

Earlier quoted context omitted.

This seems to be a core argument for those in opposition to shareholders getting liquidated bank assets vs depositors, but I don't really understand it because it seems to be kind of arbitrary. So there's fdic insurance, that's nice, but why does that mean anything regarding whether depositors or investors should be made whole first? The more important and real question is which option has what outcomes in terms of f…

Shareholders are paid last by law. So if depositors are not made completely whole, shareholders don’t get anything . 1. https://www.fdic.gov/consumers/banking/facts/priority.html

[deleted]

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

#849

Post by mark_l_watson »

tqi wrote: post #437
mark_l_watson wrote: post #368

Earlier quoted context omitted.

Smaller local banks and Credit Unions are great! Just don’t keep more than $250K in any one of them. The governance of Credit Unions tends to be very transparent, at least for the two that my family uses. Seriously, you are promoting giving business to the major Wall Street banks? I would argue this is against your personal long term interests.

Agree that for individuals they are great! But for companies with more than 250k in cash, I would think that the incentives to keep your treasury "safe" would drive you toward banks that you believe are too big to fail?

true enough!

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

#850

Post by foobiekr »

ak_111 wrote: post #370

The only comic thing in this entire tragedy is watching the fanatics who have been relentlessly preaching to others such dictums as “move quick and break things” and “only the paranoid survive”, extolling the virtues of “creative destruction” and repeating ad infinitum the Reagan quote "The top 9 most terrifying words in the English Language are: I'm from the government, and I'm here to help" cry out for government i…

That, the documented comments by short sellers for months about it being a trainwreck, the last minute bonuses and the dumping of stock on retail investors by insiders.

It's like all of the tech misbehavior packaged neatly up into one story.

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