Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

SVB customers who lost their deposits remain on the hook for loans

wsj.com

Post reply on HN
Print view View original

41–50 of 162 posts

Re: SVB customers who lost their deposits remain on the hook for loans

#41

Post by epgui »

sp332 wrote: post #32
epgui wrote: post #19

Earlier quoted context omitted.

I don’t know if it’s just me that’s heartless, but I think if you’re financially sophisticated enough to bank in other countries or to have more than the insurable limit held in cash (!!! why???) then you ought to have known better or to have known the risks. I never have more than a small amount held in cash, and even if I had a crazy windfall and made some billions, I wouldn’t keep more than a small amount in cash.…

Any company with more than a couple dozen employees is going to have more than $250k in the bank for payday. SVB had some payroll processing companies as clients, so they each had multiple companies' payroll in the accounts that Friday. And the article mentions that the Cayman Islands branch had investment and private equity firms as clients, so they wouldn't get too far with only $250k in their accounts.

Ah… yes, well I don’t know anything about corporate banking. I was thinking about personal banking practices.

Re: SVB customers who lost their deposits remain on the hook for loans

#42

Post by djbusby »

MallocVoidstar wrote: post #15
sedatk wrote: post #8

Earlier quoted context omitted.

ERR_SSL_VERSION_OR_CIPHER_MISMATCH

archive.is is poisoning results to users of Cloudflare DNS again. You can look up its IP (via e.g. 8.8.8.8) and hardcode it locally for their domains to fix it.

How do they know which DNS a client is using?

Re: SVB customers who lost their deposits remain on the hook for loans

#43

Post by [deleted] »

sp332 wrote: post #32
epgui wrote: post #19

Earlier quoted context omitted.

I don’t know if it’s just me that’s heartless, but I think if you’re financially sophisticated enough to bank in other countries or to have more than the insurable limit held in cash (!!! why???) then you ought to have known better or to have known the risks. I never have more than a small amount held in cash, and even if I had a crazy windfall and made some billions, I wouldn’t keep more than a small amount in cash.…

Any company with more than a couple dozen employees is going to have more than $250k in the bank for payday. SVB had some payroll processing companies as clients, so they each had multiple companies' payroll in the accounts that Friday. And the article mentions that the Cayman Islands branch had investment and private equity firms as clients, so they wouldn't get too far with only $250k in their accounts.

[deleted]

Re: SVB customers who lost their deposits remain on the hook for loans

#44

Post by jmyeet »

mdasen wrote: post #14

This article feels like rich people who were trying to get around US law/regulations/taxes now wanting the protections afforded by it. They deposited money in SVB's Cayman Islands subsidiary (a country that's a well-known tax haven). SVB goes under and the Cayman Islands have no deposit insurance so their deposits are wiped out. Now they want their money back or their debt forgiven. The SVB Cayman deposits didn't pay…

100% this.

Here's the lesson I want people to take away from this: only when the government gives money to ordinary people is it somehow a moral hazard. The wealthy will never say no to government money. Worse, they will expect it and lobby for it.

It's why student loan forgiveness is somehow a moral hazard but forgiving PPP loans isn't.

So here you have a bunch of rich people who wanted to avoid paying any US taxes and being outside the protections the US financial system offers. And they may well get burned. It won't stop puff pieces like this from the WSJ to somehow paint the problems of a Cayman Islands hedge fund manager being a slippery slope to the government seizing Iowa farms.

Sucks to suck.

Re: SVB customers who lost their deposits remain on the hook for loans

#45

Post by hyevbnff »

epgui wrote: post #19
mdasen wrote: post #14

This article feels like rich people who were trying to get around US law/regulations/taxes now wanting the protections afforded by it. They deposited money in SVB's Cayman Islands subsidiary (a country that's a well-known tax haven). SVB goes under and the Cayman Islands have no deposit insurance so their deposits are wiped out. Now they want their money back or their debt forgiven. The SVB Cayman deposits didn't pay…

I don’t know if it’s just me that’s heartless, but I think if you’re financially sophisticated enough to bank in other countries or to have more than the insurable limit held in cash (!!! why???) then you ought to have known better or to have known the risks. I never have more than a small amount held in cash, and even if I had a crazy windfall and made some billions, I wouldn’t keep more than a small amount in cash.…

High yield savings accounts give up to 5% atm.

Re: SVB customers who lost their deposits remain on the hook for loans

#46

Post by alphanullmeric »

khuey wrote: post #6

Live by the sword, die by the sword as far as doing business in regulation-free tax havens goes, I guess?

Sounds like we agree that living by the sword should be allowed correct? Or do you still intend on making it illegal for others to do what they want with their own money even if you wouldn’t be on the hook for their losses?

Re: SVB customers who lost their deposits remain on the hook for loans

#47

Post by cactusplant7374 »

mdasen wrote: post #14

This article feels like rich people who were trying to get around US law/regulations/taxes now wanting the protections afforded by it. They deposited money in SVB's Cayman Islands subsidiary (a country that's a well-known tax haven). SVB goes under and the Cayman Islands have no deposit insurance so their deposits are wiped out. Now they want their money back or their debt forgiven. The SVB Cayman deposits didn't pay…

Will we get the names of those rich people?

Re: SVB customers who lost their deposits remain on the hook for loans

#48

Post by jiveturkey »

mdasen wrote: post #14

This article feels like rich people who were trying to get around US law/regulations/taxes now wanting the protections afforded by it. They deposited money in SVB's Cayman Islands subsidiary (a country that's a well-known tax haven). SVB goes under and the Cayman Islands have no deposit insurance so their deposits are wiped out. Now they want their money back or their debt forgiven. The SVB Cayman deposits didn't pay…

> burying the lead

(lede, not lead)

Not at all. The article gets right into it, immediately. It's not a surprise ending or afterthought. Sure the headline is slightly clickbait (but just slightly). The article reads just like you've summarized.

Re: SVB customers who lost their deposits remain on the hook for loans

#49

Post by citizenkeen »

bhaney wrote: post #33
epgui wrote: post #19

Earlier quoted context omitted.

I don’t know if it’s just me that’s heartless, but I think if you’re financially sophisticated enough to bank in other countries or to have more than the insurable limit held in cash (!!! why???) then you ought to have known better or to have known the risks. I never have more than a small amount held in cash, and even if I had a crazy windfall and made some billions, I wouldn’t keep more than a small amount in cash.…

They certainly did know better. They're just hoping if they whine loudly enough now, they won't have to deal with the consequences of the risks they knowingly took and would have happily benefitted from without a word.

Play capitalism games, win capitalism prizes.

Re: SVB customers who lost their deposits remain on the hook for loans

#50

Post by yieldcrv »

mdasen wrote: post #14

This article feels like rich people who were trying to get around US law/regulations/taxes now wanting the protections afforded by it. They deposited money in SVB's Cayman Islands subsidiary (a country that's a well-known tax haven). SVB goes under and the Cayman Islands have no deposit insurance so their deposits are wiped out. Now they want their money back or their debt forgiven. The SVB Cayman deposits didn't pay…

mmmm not quite

> SVB Cayman Islands … which had deposits from the bank’s clients in China, Singapore and other parts of Asia, including venture-capital and private-equity firms

A) non-Americans should never bank directly in the US given the option of the Cayman Islands because the US not a competitive jurisdiction in comparison to more competitive jurisdictions such as the Caymen Islands, its way more than just the tax rate. It requires complete indoctrination and hubris to assume the US is the most right and claims to the title to all capital. In this case, the US has onerous requirements levied on non-US persons in an effort to create a “tax person” that had no reason to be created, but its not about avoiding that status because there may be no tax event regardless, it’s about the mountain of paperwork. Its not based on an intention of Congress its just fallout from a nebulous regulatory environment.

B) The FDIC placed this subsidiary into receivership and made them unsecured creditors. In order to harbor your opinion, the FDIC most likely shouldnt have done that. It doesnt pay into FDIC insurance so FDIC shouldnt have taken it over. So its more like the US took funds it shouldnt have and the investors/depositors were correct to rely on the advances of the Cayman Islands but the US, once again due to nebulous regulatory quirks, chose to seize the parent organization and everything under it in a hurried mess, which maybe a more developed nation could do better.

C) The FDIC did pick winners in coordination with the Treasury and Federal Reserve, which undermines your stance on the people you denigrate under poor assumptions. There was actually no way to make everyone whole immediately, without the credit facility from the Federal Reserve to give a 100% LTV loan on treasuries, marked UP to a price nobody would pay on the market.

If any VC and PE funds were US based General Partners, then I would mostly agree with you, partially because even their offshore feeders can bank directly in the US. But the FDIC also probably should have just ignored that subsidiary either way, or not called them unsecured creditors.

Post reply on HN