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Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
41–50 of 102 posts
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#42Earlier quoted context omitted.
Sadly enough, this makes a lot of sense to me and seems to be exactly what's happening.
How is the breakdown of trust a bad thing in this case? All that incestuous, unwarranted mutual trust and people helping each other only serves to shield the lazy and incompetent. What is that trust based on? It's based on nothing. For the most part, people in SV have no shared values aside from a desire to get rich at all costs (which is common, though maybe not universally shared). Such forms of trust should not ex…
Trust is shared values, not shared goals.
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#43No, and Im not sure why it would unless you are willing to paint broad swaths of people with the same brush. IMHO, there are still a bunch of ambitious and talented people. Most of them with good intentions, many of them smart, but all human. To be honest, I didn't even see that many examples of bad behavior. Some bank managers took some big risks and an unlikely event blew up in their face. Some CEOs and VCs panicke…
What shareholder bailout? If you’re referring to SVB, shareholders will be wiped out. Only depositors are being bailed out (/made whole).
Everyone knew FDIC limited to $250k an account. They put more in anyway and got bailed TF out. It's a bailout of depositors who didn't hedge risk among multiple accounts. Make no mistake, it's a bailout. I'd be more OK with it if regular citizens didn't get shafted at every opportunity but the wealthy always get a pass.
Steal a $2 bag of chips, get a year in jail. Take a stupid risk on overfunding your account over FDIC insurance, the taxpayers have your back, whether they want to or not.
It's garbage.
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#44The weirdest part is how many people think depositors should actually take a haircut, or that is should be on the depositor to prove the financials of their chosen bank for bankruptcy risk.
Not really a view of Silicon Valley though, unless people making said comments are from Silicon Valley.
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#45Earlier quoted context omitted.
What shareholder bailout? If you’re referring to SVB, shareholders will be wiped out. Only depositors are being bailed out (/made whole).
Everyone knew FDIC limited to $250k an account. They put more in anyway and got bailed TF out. It's a bailout of depositors who didn't hedge risk among multiple accounts. Make no mistake, it's a bailout. I'd be more OK with it if regular citizens didn't get shafted at every opportunity but the wealthy always get a pass. Steal a $2 bag of chips, get a year in jail. Take a stupid risk on overfunding your account over F…
I have no idea what you’re commenting in response to, but the parent comment had a typo that said shareholder bailout, and regardless of your opinion as to whether this was a bailout for depositors or not, it most certainly wasn’t one for shareholders. That’s all I was saying.
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#46Earlier quoted context omitted.
Everyone knew FDIC limited to $250k an account. They put more in anyway and got bailed TF out. It's a bailout of depositors who didn't hedge risk among multiple accounts. Make no mistake, it's a bailout. I'd be more OK with it if regular citizens didn't get shafted at every opportunity but the wealthy always get a pass. Steal a $2 bag of chips, get a year in jail. Take a stupid risk on overfunding your account over F…
I have no idea what you’re commenting in response to, but the parent comment had a typo that said shareholder bailout, and regardless of your opinion as to whether this was a bailout for depositors or not, it most certainly wasn’t one for shareholders. That’s all I was saying.
I know, I wasn't fussing at you, I was just ranting in general. I've been in tech since I was a little kid in 1983, and it's all gone to pot, taken over by money men corrupting the hope that it once was.
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#47No. I already thought SV has a greater than average concentration of irresponsible “move fast and break things” types. Eventually the adults adults will always have to take over to avoid a disaster.
We're talking about a 40 year old bank that bankrupted itself with a 1.5% 10-year mortgage backed security. I don't think "moving fast and breaking stuff" is what got us here.
Just gonna Google some stuff and read some articles and put important facts and sources here to try to answer the burning question I have: Why did they choose to realize that loss now?
> Last week, depositors started pulling out their money and to meet that demand, the bank had to sell its investment in bonds whose value had declined due to rising interest rates.
> SVB Bank had last week sold its $21-billion bond portfolio consisting of US Treasuries and mortgage-backed securities at a loss of $1.8 billion.
> Over 95 percent of these mortgage-backed securities were over 10 years in duration, with a weighted average yield of 1.56 per cent.
> The bank had invested heavily in Mortgage-backed securities and US Treasuries last year through deposit money to earn higher returns. The bank had seen a huge influx of deposits but struggled to find enough credit demand to deploy that money at desired yields.
> As per reports, SVB had over $80 billion worth of investments in mortgage-backed securities.
https://www.moneycontrol.com/news/business/mc-explains-what-...
> Investors and depositors tried to pull $42 billion from Silicon Valley Bank on Thursday in one of the biggest US bank runs in more than a decade, according to a Friday regulatory filing.
> At the close of business on March 9, the bank had a negative cash balance of $958 million, according to an order taking possession of the bank filed Friday by California’s bank regulator, the Department of Financial Protection and Innovation.
> The scale of attempted withdrawals was so large that the bank ran out of cash and ways to get it.
https://webcache.googleusercontent.com/search?q=cache:O_auqz...
> The run was sparked by a letter that Silicon Valley Bank Chief Executive Officer Greg Becker sent to shareholders Wednesday. The bank had suffered a $1.8 billion loss on the sale of US treasuries and mortgage-backed securities and outlined a plan to raise $2.25 billion of capital to shore up its finances.
> But the root of its demise goes back several years. Like many other banks, SVB ploughed billions into US government bonds during the era of near-zero interest rates.
> When interest rates rise, bond prices fall, so the jump in rates eroded the value of SVB’s bond portfolio. The portfolio was yielding an average 1.79% return last week, far below the 10-year Treasury yield of around 3.9%, Reuters reported.
https://www.cnn.com/2023/03/13/investing/silicon-valley-bank....
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#48Earlier quoted context omitted.
We're talking about a 40 year old bank that bankrupted itself with a 1.5% 10-year mortgage backed security. I don't think "moving fast and breaking stuff" is what got us here.
I feel like the 10 year MBS investment might actually have been a case of excess risk. In a world of zero interest rates (which I presume is when they invested in the MBS), 1.5%-2% yield makes SVB quite a bit of extra profit. Their investment may have been a case of greed and poorly controlled risk.
Go back to 2021 before rates go up and tell me what you’d do. Kinda damned either way. The bank had to make profit to survive btw. They dont pay for their services on good will.
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#49Earlier quoted context omitted.
How is the breakdown of trust a bad thing in this case? All that incestuous, unwarranted mutual trust and people helping each other only serves to shield the lazy and incompetent. What is that trust based on? It's based on nothing. For the most part, people in SV have no shared values aside from a desire to get rich at all costs (which is common, though maybe not universally shared). Such forms of trust should not ex…
Trust is shared values, not shared goals.
That's one interpretation but many people are incapable of separating the two so they have a different definition of trust. For example, if one has blackmail on someone else and both parties know it, the one who knows the dirt may feel that they 'trust' the other because of the fear that they instill in the other.
E.g. I may say that I trust my bank with my money but, in fact, I have no shared values with them. I only trust them to the extent that I know that their executives are well off and they don't want to go to jail. I assume that they will do everything they can within the law to screw me over though, so my trust is limited.
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#50The weirdest part is how many people think depositors should actually take a haircut, or that is should be on the depositor to prove the financials of their chosen bank for bankruptcy risk. Not really a view of Silicon Valley though, unless people making said comments are from Silicon Valley.
How bank runs were historically handled in the US is that the depositors lost all of their money. Banks runs are a recurring problem that have a history going back hundreds of years. That's changing now though, the SVB depositors will be made whole by the government in order to avoid a wider banking crisis and what that means for everyone else is TBD but it looks like some form of insurance that's better than $250k.