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Yellen says government will help SVB depositors but rules out bailout

ft.com

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

#981

Post by 3np »

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 word "bailout" is a distraction and red herring. For example, FT and Yellen use it as a weasel word here.

I notice several articles and threads derailing into conflations of semantic arguments around what a bailout is with specifics of the topic.

This is a trend (and, I suspect, tactic) on other topics and it only serves polarization. Try to not fall into this trap. It can be possible to call it out in a way which does not further derail the conversation.

(Saying it's a trend does not mean it's merely a recent thing BTW)

https://en.wikipedia.org/wiki/Weasel_word

https://en.wikipedia.org/wiki/Equivocation

https://en.wikipedia.org/wiki/Essentially_contested_concept

https://en.wikipedia.org/wiki/Persuasive_definition

Whether the statement "this is a bailout" is true or not is actually irrelevant.

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

#982

Post by shrimpx »

smfjaw wrote: post #968
shrimpx wrote: post #949

Earlier quoted context omitted.

If the depositor wasn’t ok with that (presumably public) decision they should have pulled out then. Or pulled out when treasury rates started ticking up and the writing was on the wall. Alternatively, they should have bought private insurance for their money or structured their money in multiple banks.

I can only partially agree to this, they did a lot of creative accounting and weren't hedging their interest rate risk. Do you really expect a retail depositor to understand fully the implications of a large bank not holding adequate interest rate swaps? This seems like the perfect example where government oversight is needed as not everyone is an expert in this

Yeah although it's strange to assume something is "not risky" when you don't what it is. If you're ignorant of what it is, and your money depends on it, that seems like cause to be worried and want to hedge the risk.

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

#983

Post by lazyeye »

Apocryphon wrote: post #948
lazyeye wrote: post #881

Earlier quoted context omitted.

Think of in terms of the same sneering contempt we've seen from Silicon Valley towards middle America. Except the idea that Silicon Valley taxpayers should contribute to bailing out anyone else would have been seen as laughable, middle America hasn't been earning multiples of Silicon Valley, and middle America hasn't been censoring everybody else, or monetising privacy abuse/destruction of youth mental health on a sc…

“Learn to weld”, is a refrain I’ve heard.

Perfect.

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

#984

Post by gonzo41 »

randmeerkat wrote: post #190
gonzo41 wrote: post #18

Earlier quoted context omitted.

There's strategic reasons to have those companies beyond they employ a stack of people. The US sees the big auto makers through they eyes of a country that needed at one point to start manufacturing around 100,000 bombers to fight in a war. Government sees industry with a different lens to the markets.

> The US sees the big auto makers through they eyes of a country that needed at one point to start manufacturing around 100,000 bombers to fight in a war. The same companies that said they couldn’t make ventilators at scale when asked to? Bailing those companies out based on an old reference to WW2 was just good marketing, not some deep insight only the government is capable of.

They did make ventilators at scale. Covid's a bad example IMO, mostly because there was and is so much politics around the issue that there wasn't really a concerted push from government at the time. From the outside the administrations looked like it had to be dragged kicking and screaming to solve that problem.

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

#985

Post by akrymski »

rmilk wrote: post #772
throw0101c wrote: post #664

Earlier quoted context omitted.

> […] because our CEO used a well-reputed bank? I'm just a Regular Joe, and I have saving and chequing accounts at two banks in case there's an account discrepancy / disagreement with one, I still have some funds I can pay bills with until things get sorted out. Stuff happens: * https://en.wikipedia.org/wiki/2012_RBS_Group_computer_system... I also have a couple of hundred dollars worth of cash (e.g, in case of power…

Exactly this point. Every single offering brochure on those business checking accounts notes the FDIC limit. If they’re interest checking accounts, they are money market backed and clearly state no guaranteed return rate or even guarantee of capital. Heck, even my not savvy mother knows to keep her money market retirement accounts in different banks just like you describe. How can we possibly allow the CFO of these c…

SVB had no Chief Risk Officer for much of 2022 at all, which they failed to disclose. The previous one left in a hurry after selling $4m worth of stock, along with the CEO.

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

#986

Post by akrymski »

The Deposit Insurance Fund had a balance of $128 billion at the end of 2022, a tiny fraction of the $9.9 trillion of insured bank deposits in the United States.

Now, the FDIC is attempting to sell SVB in order to pay its uninsured depositors. At the end of 2022, more than 90 percent of SVB’s $175 billion in deposits were uninsured by the federal agency.

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

#987

Post by kragen »

kragen wrote: post #980

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?

technically she was only saying she wouldn't bail out investors tho

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

#988

Post by nullc »

wpietri wrote: post #707
nullc wrote: post #695

Earlier quoted context omitted.

> Two, the tech industry, especially the VC-funded end, is forever crowing ... there has been endless puffery and chest-thumping among VCs and tech startups When you find yourself cheering for collective punishment you should know that you are absolutely the bad guy.

I am not in fact arguing for collective punishment. I am arguing for people experiencing the consequences of their choices. The paragraph you quote is about their ardent insistence on being allowed to make those choices without interference.

The text I quoted applies to a tiny number of people, few or even none of whom might actually be caught in SVB (as they may have managed to exit first!). But unless I'm misreading it's being used to justify that the harm was deserved by a vastly larger class.

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

#989

Post by epistasis »

startupsfail wrote: post #645
epistasis wrote: post #609

Earlier quoted context omitted.

I think this mostly comes from the PayPal mafia sort of attitude: libertarian when it helps me, bail me out when it helps me, start a bank run when it helps me. There was a time when tech did seem like a better business movement. Certainly better than the financial sectors, or heavy industry, or pharma. But then we let Thiel and Musk become the face, with Sachs and Calacsnais (or however you spell his name) become th…

Yes, it seems that the antisocial defectors are going to win in the short term and may have more power in the long term. Any suggestions onto how to inject some discipline and long-term thinking into this?

Here's another way:

> Silicon Valley law firms are now making lists of individuals who resigned from boards last week, because they didn’t want to get stuck with the liability, and VCs who catalyzed SVB’s bank run, so they can advise clients to never do business with those people/firms again

https://twitter.com/nicoleperlroth/status/163513968622949171...

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

#990

Post by iancmceachern »

hackerlight wrote: post #970
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…

I dislike these populist, low resolution takes that use rhetorical devices ("gambled" instead of "invested") to try to persuade but are otherwise void of well-reasoned analysis and are more about criticising one's own confusion. If you want something to be justifiably upset about, it's the carried interest loophole.

A VC investment is more like a gamble and less like an investment. I'm not the only one that sees it that way.

After 15 years of working in startups in the Bay Area, I've learned they are gambles, not investments.

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