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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

#991

Post by NDizzle »

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…

Please explain why Roku had half a billion dollars sitting in a checking account and how we rectify that, and 119.5 billion other problems, without yet more money printing that affects everyone.

Move fast and break things, banking edition. Can I sign something somewhere to opt out of responsibility for these kind of things?

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

#992

Post by lordfrito »

azinman2 wrote: post #953
lordfrito wrote: post #952

Earlier quoted context omitted.

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…

Agreed, GPT etc. (I hate calling it AI) is going to be transformative and disruptive in the classic sense. And I too am surprised that we'd be here in 2023.

Agreed SVB wasn't subject to SBF type people. But I think that a lot of tech narratives/buzzwords get thrown around (Web 3.0, transformation, green economy, etc) when in actuality its just the same old sociopathic wall street behavior, dressed up in new jargon.

I've seen articles talking about how the SVB board knew something was up. Their risk committee met more than 18 times in 2022 (up from 7 in 2021). Yet they had no chief risk officer? [1]

And I agree, not fair when average people get caught up in this. Which is why I'm a fan of holding the people responsible accountable, so we can avoid a repeat of this in the future. Bailouts just encourage further bad behavior.

[1] https://www.forbes.com/sites/noahbarsky/2023/03/12/silicon-v...

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

#993

Post by almog »

nemo44x wrote: post #939
almog wrote: post #905

Earlier quoted context omitted.

They had plenty of time to hedge against that risk — the Fed since almost a year now has been "higher for longer". Believing and pumping the Fed pivot narrative and by doing so betting wagainst the Fed is what failed them.

I’m not saying the SVB management is not to blame. Their business should go to 0. I’m just saying that the gov policy and erratic Fed policy caused this. The Fed is creating a lot of problems right now. They’re going to kill the patient trying to kill the cancer.

How do you distinguish cause and blame then?

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

#994

Post by gwright »

unity1001 wrote: post #911
gwright wrote: post #902

Earlier quoted context omitted.

> Per capitalist philosophy, the bank should sink, along with whatever deposit was in there - "Buyer beware". Why do you think that? There is no axiom of "capitalist philosophy" that says "when one party screws up all parties must maximally feel the pain". There is a framework for unwinding these sorts of things. Depositor agreements as well as the relevant regulations and laws regarding business agreements and contr…

> Why do you think that? There is no axiom of "capitalist philosophy" that says "when one party screws up all parties must maximally feel the pain". That was a capitalist business in which the depositors were LENDERS of that business with the understanding that the business would use their money for profit making activities and give them an interest rate and other returns in the process. Along with whatever investmen…

> Precisely. And the limit is $250,000. The government is responsible with bailing out that amount by law. Not the rest.

You seem to be assuming that there are no assets available to match to the depositors above the $250,000 per account. The legal framework doesn't prohibit additional amounts over $250,000 from being made available to the depositors and as far as I can tell the assets are available to do that.

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

#995

Post by hackerlight »

iancmceachern wrote: post #990
hackerlight wrote: post #970

Earlier quoted context omitted.

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.

You've learned wrong, VC is by definition a category of investments and you attempting to relabel it as gambling is an attempt to persuade via rhetorical device rather than via sound argument.

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

#996

Post by duxup »

brankoB wrote: post #677
duxup wrote: post #534

Earlier quoted context omitted.

> I'm pretty baffled to see so much of this on HN. HN comment quality, thoughtfulness, and etc seems to drop off with higher visibility…. and sadly generally too. The more visible the more comments resemble Reddit or the god awful knee jerk hot takes you get in local newspaper comment sections :( It’s a bummer as I’ve enjoyed the generally high comment quality on HN for a long time.

The parent comment was fine, it just sounds like you're upset about what they said rather than how they said it.

I wasn’t talking about the parent comment.

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

#997

Post by throw0101c »

akrymski wrote: post #985
rmilk wrote: post #772

Earlier quoted context omitted.

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.

We're not talking about SVB: we're talking about the customers of SVB.

If you're a not-small company (many dozens of people, which a few million in assets), why would you put all your financial eggs in one basket? Even if they're generally well-run, any institution can be hit with 'bad luck' like ransomware by some zero-day.

Just by having (say) one-quarter of your assets at another institution it makes sure you can make payroll and pay your bills for some period of time while things are sorted out at the 'primary'.

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

#998

Post by omginternets »

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…

Except that’s still not really what happened. The depositors are being made whole with a mix of SVB’s capital and funds previously paid to the FDIC by the banks, and pooled for related purposes. Taxpayers aren’t footing the bill.

It’s not meaningfully a bailout. Certainly, it’s different from 2008 in an important way.

Again, we can talk about “bailing out” depositors, if you really want to use that word, but let’s not be misleading.

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

#999

Post by [deleted] »

omginternets wrote: post #998
lisasays wrote: post #932

Earlier quoted context omitted.

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…

Except that’s still not really what happened. The depositors are being made whole with a mix of SVB’s capital and funds previously paid to the FDIC by the banks, and pooled for related purposes. Taxpayers aren’t footing the bill. It’s not meaningfully a bailout. Certainly, it’s different from 2008 in an important way. Again, we can talk about “bailing out” depositors, if you really want to use that word, but let’s no…

[deleted]

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

#1000

Post by lisasays »

omginternets wrote: post #998
lisasays wrote: post #932

Earlier quoted context omitted.

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…

Except that’s still not really what happened. The depositors are being made whole with a mix of SVB’s capital and funds previously paid to the FDIC by the banks, and pooled for related purposes. Taxpayers aren’t footing the bill. It’s not meaningfully a bailout. Certainly, it’s different from 2008 in an important way. Again, we can talk about “bailing out” depositors, if you really want to use that word, but let’s no…

Taxpayers aren’t footing the bill.

Even if the transaction turns out to be cash-neutral for the government - or even provides a small profit, as with TARP - it is still providing very considerable resources in the form of liquidity, coercive muscle - and sheer gravitas.

It’s not meaningfully a bailout.

Tomato, Tomah-to.

In the same ways as if you go driving cross country with inadequate money in the bank (and inadequate insurance), and then have a major breakdown -- forcing you to ask your parents or your friends to wire you money -- they are unambiguously bailing your sorry ass out, even you promise to sell your precious vinyl collection that pay them back, once you get home.

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