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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

#971

Post by StopHammoTime »

StopHammoTime wrote: post #608

This is a simple liquidity problem. SVB had the treasury bills and loan book to cover all the deposits. They just couldn’t access any of that money. The FDIC should take on the bills and loans, and pay out the cash now. They will collect the entire balance eventually and they have the benefit of time and I imagine they’re authorised to hold assets like this long-term (or do a cash swap with the fed, they have plenty…

The fed has no time value issues. In the latest press release it is obvious they are going to take ownership of the bonds and issue currency directly to cover all of the deposits. As I said, they had the assets and large government institutions are not worried about holding onto those bonds for ten years.

They would never have been able to sell enough to not be able to cover their deposits - that’s when regulators stepped in.

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

#972

Post by hackerlight »

iancmceachern wrote: post #756
nerdponx wrote: post #719

Earlier quoted context omitted.

That's just spiteful. I would rather keep the startups in business than punish the VCs by making them lose money on their current investments.

The VCs caused the run on the bank is what I'm reading.

A run on the bank is a social phenomenon, and "VCs" aren't a singular monolith that acts in concert. The "VCs" didn't want this to happen any more than others.

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

#973

Post by andrewjl »

lotsofpulp wrote: post #146
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”. Then what do we do with the billions in remaining assets? Appropriate them, and leave small and mid businesses hanged to dry? I think the common sentiment is depositors should not get any more than whatever the remaining assets are worth. And I think the prominent people asking the government to bailout depositors are worried about only getting 75% of…

> And I think the prominent people asking the government to bailout depositors

Anyone spouting this kind of rhetoric isn't helping matters, but in any case when it comes to this situation there are really well-defined mechanisms for making depositors whole without bailouts.

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

#974

Post by hackerlight »

wpietri wrote: post #969
hackerlight wrote: post #965

Earlier quoted context omitted.

> bad treasury management There are lots of ways for a startup to die. If you have $2m cash do you really want to manage (2/0.25) bank accounts, adopt all that administrative overhead, just to reduce your probability of death by bank failure, when possibly the added overhead may increase your overall probability of death because now you are distracted and unfocused on the things that are far more likely to kill you?…

I just love that all the people who have discovered treasury management this week think that a) the only way to do that is keep $250k in n accounts, and b) that even if that's what people did, it would be so incredibly burdensome. If startups want to take on bank risk, great. If they don't, also great, and there are many ways for them to do that. They are allowed to manage their risks as they see fit. If they can't,…

> If they can't, that is not a problem for taxpayers to solve.

You haven't made the case that the cost doesn't justify the reduction in systemic risk, let alone the immediate economic fallout of otherwise good businesses going bust. To make that case you would first have to outline what the cost would be, then you would have to explain why that cost is too high relative to the benefit. Both of those steps are missing in your argument. No attempt has been made to quantify the cost or the benefit.

So far it sounds like a moral judgment. They made a mistake (in your opinion), they as a group have tended to be be arrogant, therefore they deserve to suffer the consequences. I don't care for moral judgments, they are uninteresting. Explain it in terms of costs and benefits to the economy and to people.

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

#975

Post by [deleted] »

lisasays wrote: post #932
omginternets wrote: post #825

Earlier quoted context omitted.

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.

Multiple sources attest to the contrary - very consistently a "bailout" is taken to refer to any kind of financial assistance provided to a failing institution (not just to the shareholders). For example, Investopedia: What Is A Bailout? A bailout is when a business, an individual, or a government provides money and/or resources (also known as a capital injection) to a failing company. These actions help to prevent t…

[deleted]

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

#976

Post by CJefferson »

yibg wrote: post #839
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…

One thing I don’t get. People are making a few claims: 1) anything beyond 250k is a known risk, you should’ve spread the money around. 2) why should tax payers be on the hook for more than the 250k amount? The companies took the risk and lost. But if everyone spread their money around and kept each account less than 250k. Then in effect isn’t everyone insured for everything anyways? Imagine there is a service that se…

For many people, and companies, there are not enough banks for them to do that.

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

#977

Post by sammalloy »

CPLX wrote: post #634
nhod wrote: post #544

Earlier quoted context omitted.

Regarding the VC-fueled "onslaught" on the regular old taxi drivers, perhaps you are too young to remember what life was like before Uber and Lyft? Before those companies gave literally millions of people around the world the ability to just up and have a job, with very little hassle? Which obviously has its own issues. But then wait. Zoom out. The former system did too. The new companies disrupted the absurd, custom…

One day someone may come on this message board and say: Perhaps you are too young to remember what life was like before SVB failed? Before banks were made to be more responsible with depositor money so people wouldn't be hurt, and before the sociopathic fake-libertarian culture of Silicon Valley elites was finally dead and buried along with a few of their Tahoe cabins and a couple companies that advanced innovation b…

> advanced innovation by tricking people into ordering food from existing restaurants on fake websites?

Just want to point out that what you are describing is called a "ghost kitchen", and it’s a bizarre and terrible idea that never made any sense in the restaurant environment, because the existing storefront could barely keep up with the original orders, let alone having to use a separate menu with different ingredients and preparation style to keep pace with to-go orders. Whoever it was that came up with this idea really needs to take a step back and see how disastrous the idea has been for retail food establishments.

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

#978

Post by georgeplusplus »

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…

The anger is coming from citizens who are being asked to bail you out when they are already stretched to their financial limits and any such idea will surely make inflation go up.

Sorry to hear about your situation I really am. I'm personally in the camp that we as a collective country have made bad fiscal choices knowingly or unknowingly. It's time to start paying for these choices and stop looking to others else we drown in these bad choices.

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

#979

Post by yibg »

chrisbolt wrote: post #910
yibg wrote: post #839

Earlier quoted context omitted.

One thing I don’t get. People are making a few claims: 1) anything beyond 250k is a known risk, you should’ve spread the money around. 2) why should tax payers be on the hook for more than the 250k amount? The companies took the risk and lost. But if everyone spread their money around and kept each account less than 250k. Then in effect isn’t everyone insured for everything anyways? Imagine there is a service that se…

The deposits are spread over a more diversified set of banks and the risk is reduced.

Not for FDIC. 10 people each with 1mm in 10 different banks. If FDIC covers the entire amount when 1 bank fails, they pay 10mm. If all 10 people spread 100k across 10 different banks and 1 bank fails, FDIC pays 100k x 10 which is still 1mm.

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

#980

Post by kragen »

seems like she decided to do a bailout about 9 hours after this article was posted saying she wouldn't

(https://news.ycombinator.com/item?id=35127063)

life comes at you fast

is a bailout that other banks pay for via a special fdic assessment not a bailout?

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