SVB customers who lost their deposits remain on the hook for loans • Hacker News Board

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

#141

Post by DelaneyM » Tue, Jun 20, 2023, 12:32 PM UTC

jrflowers wrote: post #62

DelaneyM wrote: post #51

Earlier quoted context omitted.

As a Caymanian I’m doing to take exception to your non-sequitur about Cayman being a “well-known tax haven”. Cayman is one of the most financially transparent, if not _the_ most financially transparent, location in the world. We fully comply with FATCA, CRS, and AEOI, to the extent that it takes even a native Caymanian multiple weeks to open a local bank account. The reason most foreign investors use Caymanian interm…

Cayman is factually a place that is very commonly regarded as a tax haven. You appear to think that that near-ubiquitous reputation is because of some sort of misunderstanding? Can you explain why you think the Cayman Islands does have that reputation? Is it the result of some sort of conspiracy? Angry people weaving tales to assail the reputation of the citizens of Cayman?

Many people misunderstand the difference between legal tax mitigation and tax avoidance.

If your country allows companies or individuals to not be taxed on assets they locate overseas somehow, that’s on your country, not on us. And it has nothing to do with the money being here. All we can do is ensure that money flows are transparent and legal, which we do.

We put a lot of effort into being the world’s safest and best neutral third party location, and sometimes companies which are orchestrating tax mitigation schemes put money here while doing so. But they’re not putting money in Cayman to hide it, they’re putting money here because if you need to put money somewhere here is the easiest place to put it.

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

#142

Post by DelaneyM » Tue, Jun 20, 2023, 12:39 PM UTC

theRealMe wrote: post #105

refurb wrote: post #99

Earlier quoted context omitted.

I think you two are using different definitions of "tax haven". You're using it (and your source) as "low or minimal taxes" are levied against corporations and people in the Cayman islands. The grandfather's definition is "a great place to hide your money so you don't have to pay the taxes you're supposed to pay". I would normally define "tax haven" as the second.

Entities DO hide their money in tax havens to avoid paying taxes. They avoid paying taxes BECAUSE tax havens have low or no taxes. Those two definitions are defining two ends to the same thing. The caymans have low or minimal taxes. The caymans are also used by entities to hide their money so they don’t have to pay taxes. Entities are not incorporating in the Caymans for any reason other than avoiding taxes. And the…

Companies are not putting money in Cayman to hide it.

Some companies put money outside of their operating or home country to minimize taxes, but Cayman has no part of that besides being “not their operating country”.

And it’s actually less often the tax treatment of funds which brings companies to Cayman, and much more often the simpler regulations. Operating globally often means a geometric growth in financial complexity. Cayman is a neutral third country, which simplifies things tremendously. Think of us like a financial cache.

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

#143

Post by DelaneyM » Tue, Jun 20, 2023, 12:46 PM UTC

ImPostingOnHN wrote: post #122

refurb wrote: post #109

Earlier quoted context omitted.

True, but if you're looking to hide your money you want two things: 1) low taxes within the country and 2) low transparency as to who owns what in the country. That's why Switzerland used to be a great place to hide your money decades ago - low taxes and numbered accounts where it was illegal to reveal the true identify of the account holder. Based on DelaneyM's comment - Caymans has the 1st but not the 2nd.

it seems the topic is havening the money, not "hiding" it, so 2) isn't necessary

My point is that the ability of a company to put money offshore for tax benefits is on the home/operating country, not the offshore location.

Cayman invests a lot of energy in sensible and globally integrated financial regulations. We specialize on that as a country. So when companies are moving money around globally we often feature in that. But we can’t be held responsible for what those funds transfers are used for.

We can be transparent (and we are exceptionally so), we can be responsive to global financial crimes queries (we are that as well). But what are we supposed to do about another country’s laws?

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

#144

Post by DelaneyM » Tue, Jun 20, 2023, 12:51 PM UTC

theRealMe wrote: post #96

DelaneyM wrote: post #51

Earlier quoted context omitted.

As a Caymanian I’m doing to take exception to your non-sequitur about Cayman being a “well-known tax haven”. Cayman is one of the most financially transparent, if not _the_ most financially transparent, location in the world. We fully comply with FATCA, CRS, and AEOI, to the extent that it takes even a native Caymanian multiple weeks to open a local bank account. The reason most foreign investors use Caymanian interm…

You might not like it, but the Caymans are absolutely known as a tax haven. You can’t really be arguing that people stash money in the Caymans “because of the transparency”… “The Cayman Islands are considered a tax haven because the Caymans do not impose a corporate tax, making it an ideal place for multinational corporations to base subsidiary entities to shield some or all of their incomes from taxation. The Cayman…

By the way, Cayman has pretty substantial taxes. We operate a thriving country with no national debt and a great social safety net.

We just charge them differently. There’s an effective 22% consumption tax (with carve-outs for basics), levied on all imports and increased on luxuries. We have 7% taxes on all property transfers (for both income and to minimize house flipping). We have a ton of fees on any government interaction which aligns regulatory burdens with income.

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

#145

Post by DelaneyM » Tue, Jun 20, 2023, 1:05 PM UTC

2OEH8eoCRo0 wrote: post #63

DelaneyM wrote: post #51

Earlier quoted context omitted.

As a Caymanian I’m doing to take exception to your non-sequitur about Cayman being a “well-known tax haven”. Cayman is one of the most financially transparent, if not _the_ most financially transparent, location in the world. We fully comply with FATCA, CRS, and AEOI, to the extent that it takes even a native Caymanian multiple weeks to open a local bank account. The reason most foreign investors use Caymanian interm…

https://en.wikipedia.org/wiki/Cayman_Islands > The nation's low tax rates have led to it being used as a tax haven for corporations; there are 100,000 companies registered in the Cayman Islands, more than the population itself. The Cayman Islands have come under criticism for allegations of money laundering and other financial crimes, including a 2016 statement by former US president Barack Obama that described a par…

Our decision to have lower taxes, because we don’t need to raise more money, seems an odd thing to criticize us for.

Companies do not choose Cayman. They choose “not my home/operating country”, then as a well regulated and safe third party location many of them end up in Cayman. And you should be glad they do, because here they operate transparently and legally, and if it’s for tax benefits whatever tax loopholes exist in their home countries are closed they’ll have no choice but to richly comply. (BTW, In surveys the most frequent reason cited for being in cayman is regulatory neutrality, not tax mitigation.)

And if Obama has a problem with hundreds of companies sharing an address, I can’t wait until he finds out about Delaware. Or a post office!

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

#146

Post by itairall » Tue, Jun 20, 2023, 1:29 PM UTC

SilverBirch wrote: post #140

>Those investment firms were stunned in late March when they found out their deposits weren’t protected, and the FDIC—acting as SVB’s receiver—had drained their bank accounts, The Wall Street Journal reported previously. I don't really understand the reporting here. Really? The investment firms with funds in a tax haven were 'stunned' when they found out their deposits weren't protected? That doesn't sound credible t…

It is an obvious propaganda piece but the average person believes whatever they read so why not?

These people are the opposite of stupid when it comes to money. Cunning, ruthless, underhanded, obsessed, win at all cost, win even at the expense of your own grandkids.

When we have no culture though beyond sports, video games and a wealth creation, net worth game, it is hard to imagine this not happening.

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

#147

Post by ImPostingOnHN » Tue, Jun 20, 2023, 1:40 PM UTC

DelaneyM wrote: post #143

ImPostingOnHN wrote: post #122

Earlier quoted context omitted.

it seems the topic is havening the money, not "hiding" it, so 2) isn't necessary

My point is that the ability of a company to put money offshore for tax benefits is on the home/operating country, not the offshore location. Cayman invests a lot of energy in sensible and globally integrated financial regulations. We specialize on that as a country. So when companies are moving money around globally we often feature in that. But we can’t be held responsible for what those funds transfers are used fo…

the home country is the Cayman islands, the operating country may be different, and either way, the motivation and ability to use the Cayman Islands as a tax haven derives from both countries

> Cayman invests a lot of energy in sensible and globally integrated financial regulations. We specialize on that as a country.

the reason the Cayman islands may have made all those investments is because that is what is expected of a mature tax haven

> we can’t be held responsible for what those funds transfers are used for

> what are we supposed to do about another country’s laws?

I mean, if you don't want to be a tax haven, you could raise taxes to be less favorable to businesses, but I'm not saying you should do anything, because this conversation is descriptive, not prescriptive

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

#148

Post by PeterisP » Tue, Jun 20, 2023, 1:53 PM UTC

refurb wrote: post #101

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 get your point, but think of it this way - if you kept your money in a bank without deposit insurance, while also borrowing money from said bank, and then the bank went under, sure your money is gone, but is it fair for the bank to say "hey we lost your money, but we still expect you to pay us back the money you borrowed". That doesn't seem fair to me.

That makes sense, however the main cause here, as described in the article, is that they kept their deposits in one bank, but borrowed money from another bank - a related one, but a different one.

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

#149

Post by throwaway173738 » Tue, Jun 20, 2023, 2:05 PM UTC

Presumably the assets from the loan still exist? If those were somehow deposited in SVB there might be a case. But if you buy a house with a mortgage and then a bank run wipes out your lender, you still own the house and could conceivably sell it to cover the cost of the loan. Frankly if you’re sophisticated enough to bank in multiple countries I would think you’d know that.

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

#150

Post by red-iron-pine » Tue, Jun 20, 2023, 2:29 PM UTC

omnimus wrote: post #120

citizenkeen wrote: post #49

Earlier quoted context omitted.

Play capitalism games, win capitalism prizes.

Play capitalism games, win socialism prizes. Thats what they would like.

i.e. socialize the losses, capitalize the gains.