Yellen says government will help SVB depositors but rules out bailout • Hacker News Board

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

#951

Post by gbcfghhjj » Sun, Mar 12, 2023, 10:08 PM UTC

beebmam wrote: post #937

rqtwteye wrote: post #540

Earlier quoted context omitted.

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…

Simply put, I think this kind of attitude is based in economic resentment. There's a whole part of the US that hasn't seen much benefit from the unbelievably successful startup world. I remember when people used to go build something useful themselves instead of complaining about the success of others. Why don't we try to get back to that kind of culture?

It's more than not seeing a benefit, there's many parts of the US where people rightly or wrongly blame tech salaries plus remote work for pricing them out of being able to afford a home and other basic life necessities. Of course the situation is more nuanced than that in reality but tech workers have a tendency to show up in once reasonably priced areas, buy up houses for cash and drive around in fancy luxury cars, which doesn't help the perception. There's also a perception that much of this money is coming via proximity to wealthy financiers and 15 years of ZIRP rather than true hard work.

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

#952

Post by lordfrito » Sun, Mar 12, 2023, 10:10 PM UTC

azinman2 wrote: post #804

lordfrito wrote: post #682

The lack of understanding here about how banks work is astounding. Are these the same people who feel it's their God given right to "move fast and break things"? Disruption is great. Too bad for the music industry. Too bad for journalism. Too bad for legacy taxi services, etc. Disruption is great, except when it happens to you? Aren't we all here in the business of managing risk? Or, after a decade of cheap money, ha…

Disruption in the definition of Clayton Christensen as you’re likely using doesn’t apply to the failing of banks. Disruption is a theory about innovation and entrepreneurship. SVB didn’t get disrupted by some new player who leapfrogged how banking works- they made poor choices for a world where interest rates went up. Having been a bank for 40 years with a great reputation, no one who held their money there expected…

Yeah not talking about bank "disruption" in the classic/rigid definition of the term.

I'm more commenting on how the the general attitude of the tech entrepreneur (willing to take risks, to swing and miss, move fast and break things) has been cross pollinated over to the finance (DeFi, VC tech funds, crypto affiliated banks) to largely disastrous (but not wholly unexpected) results.

What really bothers me is that these "financial geniuses" walk and talk (and in the case of SBF dress) like typical typical tech entrepreneurs, but when push comes to shove they are just the same old reckless wall street sociopaths trying to privatize profits and socialize the losses.

Your classic tech entrepreneur had skin in the game, was willing to swing and miss, learn from their mistakes, and get up and try again. In a forum that claims to be full of "real" true-scotsman tech entrepreneurs, there seem to be a lot of people here that think/talk like wall street sociopaths.

I feel like the last 5-10 years are full of more and more of these "jumped the shark" moments in the tech space (Theranos, WeWork etc). Innovation is dead. Low hanging fruit all picked. In it's place is a new priesthood, full of grifters who preach innovation while robbing us blind and getting bailed out.

To your point about "40 year stable banks", yeah it really sucks that normal people are caught up in this mess. But something tells me that what happened at this bank is unique to the tech/disruption space/narrative I mention above.

Personally I believe the contagion will be limited to poorly run banks making bad/reckless decisions. I guess the next few days/weeks we'll know for sure if this is a limited thing, or a widespread problem.

I sure hope people go to jail over this.

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

#953

Post by azinman2 » Sun, Mar 12, 2023, 10:18 PM UTC

lordfrito wrote: post #952

azinman2 wrote: post #804

Earlier quoted context omitted.

Disruption in the definition of Clayton Christensen as you’re likely using doesn’t apply to the failing of banks. Disruption is a theory about innovation and entrepreneurship. SVB didn’t get disrupted by some new player who leapfrogged how banking works- they made poor choices for a world where interest rates went up. Having been a bank for 40 years with a great reputation, no one who held their money there expected…

Yeah not talking about bank "disruption" in the classic/rigid definition of the term. I'm more commenting on how the the general attitude of the tech entrepreneur (willing to take risks, to swing and miss, move fast and break things) has been cross pollinated over to the finance (DeFi, VC tech funds, crypto affiliated banks) to largely disastrous (but not wholly unexpected) results. What really bothers me is that the…

There is crossover in finance with crypto web3 blahblahblah. But I wouldn’t conflate the larger innovation in tech with that. It and VR/AR have gobbled a lot of attention, but meanwhile we’re on the edge of what will be a total transformation in the next 10-20 years with AI. I didn’t think we’d be here in 2023 but it’s quite clear the rate of innovation is now insane. That’s just one area - just about every industry has tech running through it now in a way that wasn’t the case 10 years ago. A lot of it is quite boring so you don’t see it in the news, but that doesn’t mean it’s not happening or these companies are scam or worthless… far from it.

I don’t think SVB was subject to the SBF type person, or certainly it wasn’t the case their money was tied up in a blockchain. I don’t think it’s fair to call them grifters even if they fucked up by building a model for a pre inflation world.

I’m fine letting SBF et al go bust; it was pure speculation. But pension funds, hundreds of diverse startups, wineries and farmers don’t deserve to go down with one of the top 20 biggest banks. The domino effect is too massive.

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

#954

Post by rodgerd » Sun, Mar 12, 2023, 10:22 PM UTC

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…

> it’s going to have a lot of downstream impacts

When Netflix started sacking animators and animation studios to use AI startups instead, there are downstream impacts.

When bookstores shut up shop because of Amazon there were downstream impacts.

When Dell and HP lay people off because it's hard to sell against Azure and AWS, there are downstream impacts.

You're going to have a hard time arguing that the sector responsible for disrupting others' live deserves special consideration beyond what already exists - FDIC plus liquidated assets with a likely haircut - particularly when those companies appear to have been mismanaging their own money.

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

#955

Post by shrimpx » Sun, Mar 12, 2023, 10:27 PM UTC

mixdup wrote: post #880

drdrek wrote: post #492

Earlier quoted context omitted.

Its too much to expect from VCs, they are each trying to maximize their gain. Creating consensus and cooperation is very hard, especially in bad times. It's exactly why governments exist, In some cases a web of self interested parties will produce horrible results and central authority can be more effective.

This is fine, but when things are rosy the VCs and startups can’t claim that government regulation is communism and choking off their ability to do whatever they want If you want the backstop if the government you have to be willing to play within its rules during the good times too

Companies will always look to (a) maximize the amount of available decision power and (b) externalize decision risk as much as possible.

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

#956

Post by phs318u » Sun, Mar 12, 2023, 10:30 PM UTC

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…

> just because of their choice of financial institution

There’s a moral hazard to all choices made in business. Making a choice based on insufficient due diligence is a hazard. Chasing higher rewards at higher risk is a hazard. Are you saying the government should indemnify businesses for their choices?

My understanding is that SVB avoided some restrictions placed on other banks. It’s not clear to me the why’s and wherefor’s of this but there are only two options. Either malfeasance on the part of SVB, or ignorance/risk-taking on the part of the customers.

The scahdenfreude I believe comes because it’s assumed many customers would be from the “this time it’s different” school of business, in which case there’s a lesson akin to caveat emptor begging to be learnt.

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

#957

Post by girvo » Sun, Mar 12, 2023, 10:34 PM UTC

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…

…where does the extra money go then? If a bank has more than the insured deposits still, but is insolvent, where does the rest of it go? To the depositors, is what makes sense to me.

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

#958

Post by fwlr » Sun, Mar 12, 2023, 10:40 PM UTC

jzb wrote: post #856

fwlr wrote: post #343

Earlier quoted context omitted.

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.

Hey, good news btw. Great, actually. FDIC just announced all depositors to be made whole on Monday morning - and at no cost to the taxpayers either! The lag between the immediate payout to depositors and the eventual recovery of value from SVB’s remains seems like it will be covered by the Deposit Insurance Fund, i.e. the cost will be spread out to all banks.

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

#959

Post by Khaine » Sun, Mar 12, 2023, 10:55 PM UTC

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…

No. People don't want you to get special treatment. Your firm should have insurance to cover the deposits over 250K, or split the money across several banks. It didn't as such it should deal with the consequences. Which are it may not get all of its deposits back.

When a building company, building my house goes bust. The government doesn't step in to get someone to finish building it. When I order goods from a company and it goes bust, the government doesn't step in to ensure I get my goods.

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

#960

Post by Gibbon1 » Sun, Mar 12, 2023, 11:03 PM UTC

idopmstuff wrote: post #617

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…

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.

People saying that depositors need to be ratfucked reminds me of a guy writing about living through the great depression. First he knew about it was one morning when his dad showed his mom the paper with a headline about the stock market crashing. And saying 'good that'll teach those guys'. Six months later his dads tailor shop went under and his dad never had stable employment after that.