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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

#851

Post by pr337h4m »

They should just get out of the way:

>The FDIC, which took over SVB on Friday, has sought bids from interested parties during the weekend. The regulator is looking for a bank that has the financial wherewithal and management expertise to handle Silicon Valley Bank’s assets and customers, but not one that is so large as to be considered “too big to fail,” these people said.

>That means large lenders like JPMorgan Chase or Bank of America likely aren’t in the running, the people said. Even some large regional banks could find it difficult to absorb Silicon Valley Bank, which was the 16th-largest U.S. lender as of the end of last year. There are concerns that doing so could intensify regulatory scrutiny, even if a lender were to “rescue” SVB in an emergency sale, the people said.

https://www.theinformation.com/articles/regional-banks-are-m...

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

#852

Post by causality0 »

mlyle wrote: post #659
reb wrote: post #580

Earlier quoted context omitted.

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…

> Plenty of startups fit that bill and will nonetheless be impacted by SVB’s failure Startups are going to get most of their deposits back-- perhaps all if there's an acquisition. If SVB is not acquired, I hope the FDIC is able to get a substantial dividend quickly so that they can keep operating and that everyone works to keep disruption low. But I don't think the federal government needs to make depositors whole be…

I think people have forgotten that depositor bailouts are not just free money, but money taken from other people. There's a balance between minimizing the pain to depositors and minimizing the pain to the rest of society by not only taking money from them, but creating an environment where people don't have to care about where they put their money and thus have no reason to demand the people they trust with their money not act like reckless assholes. Corrupting the entire concept of risk vs reward would destroy us all.

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

#853

Post by addisonl »

computing wrote: post #789
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…

have you read the financials of the banks you bank with? have you read the source code of every app/other software that you use? Interesting new world folks are suggesting here, where depositors can't trust the highly regulated banks they bank with.

If you have over $250k in a single account then you probably should do some due diligence…

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

#854

Post by bart_spoon »

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…

Almost everyone in America works for a company with over $250k in their coffers. The point isn’t making depositors whole for the sake of uberwealthy individuals, it’s for the sake of ensuring that companies are able to pay their thousands of regular employees.

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

#855

Post by jzb »

fwlr wrote: post #148

Eh, the depositors aren’t totally blameless here. On Thursday they conspired to perform a huge bank run on SVB, on Friday they succeeded, and on Saturday they were demanding the government and taxpayers make them whole by Monday. They deserve to get their money back and they eventually will once SVB’s assets are liquidated. But that’s not good enough, they want it now , and they won’t hesitate to make you pay for the…

Some of the depositors, not all. My employer didn’t conspire about anything.

When and how much money is returned is going to make the difference between life and death for some of these companies. And the difference between having a job and healthcare or not for a lot of people.

Don’t forget that this is happening to depositors / companies after weathering a pandemic and in a really shitty economies where things are already very challenging. Having additional cash flow problems and/or additional debt to service all the sudden may be the proverbial straw that sends companies and people into bankruptcy.

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

#856

Post by jzb »

fwlr wrote: post #343
obventio56 wrote: post #194

Earlier quoted context omitted.

I don't think it's fair to blame the SVB depositors for the bank run. Perhaps you can blame public figures (VCs etc) who catalyzed it. Once a run starts, though, it's in your interest to run too. If you had >250k in SVB and you managed to get it out before it was shut down, you'd be pretty happy with yourself right now. If you run a business and have an obligation to share-holders, it would be negligent not to try th…

Yeah, I can’t blame them at all for joining an ongoing bank run. I can kinda blame them for starting one because they did it so aggressively, but only a bit, because that’s just how internet banking works these days. I can definitely blame them for demanding the taxpayers make them whole by 9am next business day.

Who’s demanding? Pleading might be more appropriate for many businesses.

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

#857

Post by fma »

mlyle wrote: post #769
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…

> But not long ago, a $2.5-millionaire opening 10 different bank accounts to stay under FDIC limits would have been called paranoid. Maybe I'm paranoid. But I have a few accounts. Not enough to make everything FDIC insured, but enough to get more insurance and mitigate risk. And my most recent startup used IntraFi's product to get diversification and more insurance.

I'm no startup CEO but I do trade stocks. I know many brokers, suck as Interactive Brokers will automatically move your money for you to different banks and your FDIC insurance is essentially $2.5 million while lookimg like 1 bank (https://www.interactivebrokers.com/en/accounts/sweep-program...)

In addition I use a service called Max My Interest where it will find me the max interest savings account, but also consider risk of bank failure so it's not all in one bank.

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

#858

Post by hn_throwaway_99 »

runeks wrote: post #409
nightpool wrote: post #288

Earlier quoted context omitted.

Yes, but "worth" is a complicated concept here. What's probably going to happen is that a big bank like JPMorgan is going to buy the remaining assets at 100% book value, and the depositors are going to be made whole out of that. That's not their current market value if sold at fire-sale prices, but banks have the time horizons to hold those assets to maturity and not worry so much about their market value. The stabil…

I highly doubt that JP Morgan will buy SVB's assets at above-market prices.

It's definitely possible. assets = liabilities + equity. Well, SVB equity has already been wiped out to zero, so that's money JP Morgan doesn't need to come up with to make the value of the assets (i.e their securities) equal their liabilities (their deposits). It could theoretically be worth it to JPM to buy SVB to (a) in one fell swoop take over the biggest startup-focused financial institution, and (b) calm systemic risk fears.

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

#859

Post by joe_the_user »

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…

The financial illiteracy is the most disturbing thing here.

Commentator can only rail against "the tech world" in this instance if they've failed to grasp that supporting large depositor here this isn't a tech world issue but a financial system issue. And that goes with a generally decline in how knowledgeable the average HN commentator is.

At this point, large bank deposits are implicitly guaranteed and if one pulls that away, the world's financial system would likely fall apart. You can argue this system is terrible and talk about how to change but no one who knows the impact of this stuff want "1929 on steroids" and neither is anyone with power going to implement it.

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

#860

Post by joe_the_user »

gerad wrote: post #199
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 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…

I just don’t understand why folks on the internet are so passionate about the depositors being hit by this.

I'm not at all passionate about the depositors. I dislike them but understand that screwing them would ripple across the entire world. I dislike banks and corporations but having many/most suddenly bankrupt would not serve me.

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