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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

#861

Post by truthwhisperer »

idopmstuff wrote: post #339
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'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…

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

#862

Post by [deleted] »

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…

[deleted]

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

#863

Post by Zetice »

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…

That’s an insane argument to make while using the tech that came from SV to make it.

“Sustainable” businesses are not how American economy differentiates itself in the world, what you’re asking for is to crush the way of life yourself used to in America, to make your own life substantially worse.

It’s nonsensical, bitter, and petty. If that’s the argument you want to make, grow up.

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

#864

Post by violenceislaw »

newaccount2023 wrote: post #403
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…

> I just don’t understand why folks on the internet are so passionate about the depositors being hit by this The rest of America hates Silicon Valley like they hate Wall Street

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

#865

Post by iancmceachern »

dehrmann wrote: post #840
iancmceachern wrote: post #689

Earlier quoted context omitted.

The issue is it wasn't pension money. It was VC money, that's money intentionally being gambled in high risk endeavors. It's not right for thr tax payers to bail out rich VCs who gambles their money. On the flip side, I also have worked in startups much of my career, and think I and people like me should be paid for our work. I think we should help the startups out, bail them out, but without helping the VCs. I think…

> The issue is it wasn't pension money. It was VC money... You're going to shit yourself when you learn who some of the LPs are.

What is an LP?

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

#866

Post by oldgradstudent »

GenerWork wrote: post #806
oldgradstudent wrote: post #698

Earlier quoted context omitted.

> 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? If you want to be paid by the government, you should be aware that salaries are significantly lower, and perks are non-existent. The government regulates banks and provides deposit insurance to to 250K. The whole point of deposit insurance is…

>and perks are non-existent. I thought that government perks were a major way to attract people in order to make up for the lower pay (pensions, more vacation, etc).

These are more benefits than perks.

Still, total compensation is way lower for most government jobs.

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

#867

Post by prepend »

madamelic wrote: post #512
prepend wrote: post #444

Earlier quoted context omitted.

> 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…

> So people with this much wealth asking for a bailout is literally rich people asking for coverage because they did something dumb Not people. Businesses. SVB, to my knowledge, mostly consisted of businesses with some well-off individuals mixed in. If we want to punish rich people for the crime of being rich, SVB is likely a bad battlefield because zero-ing out its customers will almost entirely hurt employees who a…

Businesses owned by rich people.

I don’t think we should punish the rich for being rich. But we should reward the rich for being stupid (ie, not managing cash risk).

These companies with cash flow issues have rich investors. YC and other VCs. They have ways to deal with this loss in the private sector. Or they can go out of business.

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

#868

Post by NordSteve »

It is shockingly easy for a company to mitigate the bank failure risk.

1. Open account at Fidelity 2. Purchase brokered CDs in denominations https://www.fidelity.com/fixed-income-bonds/cds

It's not like the risk of banks was a secret. Click on the "Risks" tab at the link above -- it's near the top of the list.

This strategy works for raises of up to several million dollars. If you've raised more than that, spend a bit of money on someone to help you set up a treasury ladder, which scales to any size of raise.

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

#869

Post by braingenious »

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…

>Depositors shouldn’t get anything beyond the insured $250,000

My understanding of what I’ve seen people mention is that depositors shouldn’t get more than the insured 250k from the FDIC insurance fund, not that bank assets shouldn’t be used to make depositors whole.

This sentiment doesn’t come out of nowhere. There have been a few panicked and very angry VCs on social media effectively calling for an immediate and retroactive increase in the limit for FDIC-insured funds.

Essentially there are some folks that want the government to step in to make depositors whole will leaving bank assets to be divvied up to make investors whole.

Some folks see this crisis and immediately jump to “how can I take maximum personal advantage?” It is those people that are creating confusion and pushback wrt the FDIC’s involvement here.

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

#870

Post by corbulo »

tqi wrote: post #353
jmull wrote: post #260

Earlier quoted context omitted.

If you're volunteering to give or invest a few billion into the SVB receivership deal, then go right ahead. Please leave me and my tax dollars out of it. I'm not just hard-hearted, BTW. Unlimited depositor insurance is an awful idea.

ooc why is unlimited deposit insurance a bad idea? A quick Google search didn't have many results, except some brief articles about section 343 of Dodd Frank (which itself seemed limited in scope).

You're in spirit asking for a state bank, not modified private banks. Thats the only way you would get the 'result' you're looking for.

Many private banks with unlimited deposit insurance would simply play more fast and loose with your money because there's basically no risk. Why wouldn't you choose the bank that offers more % return on your money? You're totally insured.

The state insuring all deposits would effectively make it a giant bank (and it would eventually consume them all, on top of now having the power incentive to destroy them). If you're not aware of the flaws of state banks, look into China's banks if you're curious. 'Tofu Dreg' projects would be a good place to start. I think its obvious why we wouldn't want someone like Pelosi to be in charge of a state bank.

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