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SVB Hall of Shame

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Re: SVB Hall of Shame

#171

Post by davidw »

flybrand wrote: post #68
davidw wrote: post #6

Earlier quoted context omitted.

> The people in the VC community who triggered the bank run did the right thing by their startups. I don't really have a horse in this race, but: while the above argument makes sense, what about all their future startups? Everyone says nice things about how it was good to have this bank that understood startups and treated them well, and now that is all gone. And no one who had deposits lost their money anyway. It se…

Harder to have future startups if your current portfolio dies.

Aren't they sophisticated enough to know that this was unlikely?

Re: SVB Hall of Shame

#172

Post by syllablehq »

kondro wrote: post #91

Call me naïve, but if I put money in a bank I should be able to get it back whenever I want. If I didn't want it to be liquid, I'd buy something less liquid. The very concept of a bank run is ridiculous. If all a bank's customers want their cash back, they should be able to get it back without affecting the liquidity of the bank. Transaction accounts don't earn me anything and have fees of their own. There's little i…

Yes, this is naïve, but it's a typical assumption. Cash _should_ be liquid, and almost everyone operates with the assumption that it always _will_ be liquid. but fiat cash is not what people think it is. A dollar in your bank account is not real. It's more like a share in the bank corporation which may or may not be perfectly pegged to the approximate value of the non-elected Fed's manipulated US dollar.

Fiat is a theoretical ideal "decreed by the government" which is imposed onto a system with leaky constraints. The system is... super complicated. And super problematic. Macroeconomics is... fuzzy.

This is the whole reason why Bitcoin was created in the first place. Bitcoin is fiat created by the masses which has hard constraints. Its economics are a hard science. Bitcoin is as liquid as the system that trades it. Does a Bitcoin have value? Well, universal value, no. But the Bitcoin network has value because it facilitates value transfers (even if you convert to fiat on both sides - look up international remittance fees). And the network is mitigated by the token. So if the system has value, and the token is intrinsic to the network, does a Bitcoin have value?

Yeah Bitcoin is complicated, and far from perfect. But when you start to understand how complicated and problematic government fiat is... maybe folks who still think Bitcoin is worthless may want to take another look. We need stronger money networks. #theNetworkIsTheValue.

Re: SVB Hall of Shame

#173

Post by sacnoradhq »

kondro wrote: post #161
tablespoon wrote: post #149

Earlier quoted context omitted.

> Call me naïve, but if I put money in a bank I should be able to get it back whenever I want. If I didn't want it to be liquid, I'd buy something less liquid. The very concept of a bank run is ridiculous. If all a bank's customers want their cash back, they should be able to get it back without affecting the liquidity of the bank. Then the product you really want is a safe deposit box to put your literal cash in. Th…

Cash is basically illegal for many transactions related to financial services and is likely to become illegal for everything greater than $10k in Australia very soon: https://treasury.gov.au/policy-topics/economy/black-economy/...

Australia and India are among those who bought (no pun intended) into the fallacy that cash is for criminals, and you're only a good consumer if you use traceable electronic funds from megacorp SIBs.

There are millions, if not billions, of unbanked people whose survival depends on cash.

And the US has civil asset forfeiture, were cops call "dibs" on cash and the owner has to essentially disprove a negative they're using it for a legal purpose in order to recover it.

Re: SVB Hall of Shame

#174

Post by [deleted] »

davidw wrote: post #6
idopmstuff wrote: post #2

> The board was asleep at the switch. They are now unemployable. That's not really how this works. The CAO of the bank was CFO of Lehman. People in these positions just get credit for the fact that they had a front row seat for this sort of financial implosion, so they can (theoretically) help whoever else's board they join avoid that sort of thing. > But those players within the venture capital community who were si…

> The people in the VC community who triggered the bank run did the right thing by their startups. I don't really have a horse in this race, but: while the above argument makes sense, what about all their future startups? Everyone says nice things about how it was good to have this bank that understood startups and treated them well, and now that is all gone. And no one who had deposits lost their money anyway. It se…

[deleted]

Re: SVB Hall of Shame

#175

Post by soumyadeb »

Scenario planning on two VC reactions on Thus (3/9)

1) VC1 - SVB is perfectly safe . Don't worry and keep the money there.

2) VC2 - We are hearing rumors about SVB. You should play safe and move it to another bank. Here is a guy who can help with opening accounts etc.

And SVB shuts down on Friday (3/10).

Guess, which VC would I recommend to a new founder?

Yes. Feds saved SVB but there is a world where it might not have and my money could have been locked for days forcing me to miss payroll. In any case, I would have had a sleepless weekend.

Founder here.

Re: SVB Hall of Shame

#176

Post by mathattack »

The VCs did what they had to do. It’s poor financial management to not run for the door when the last one standing may be holding the bag.

I just find it strange that after all that SVB is using the bailout as marketing. “All your new dollars are safe too!”

Re: SVB Hall of Shame

#177

Post by jrockway »

kondro wrote: post #91

Call me naïve, but if I put money in a bank I should be able to get it back whenever I want. If I didn't want it to be liquid, I'd buy something less liquid. The very concept of a bank run is ridiculous. If all a bank's customers want their cash back, they should be able to get it back without affecting the liquidity of the bank. Transaction accounts don't earn me anything and have fees of their own. There's little i…

I guess they do this because someone figured out they could. I'm sure once upon a time there was a bank that only took deposits and just stored your cash in a big vault. They went out of business when they realized they had to pay for the vault but couldn't use any of the money in it.

This is like showing ads on something you already pay a monthly subscription for. Remember when cable TV was supposed to be ad-free? That died when people realized they could make more money by double-dipping. And everyone was apparently fine with it.

Re: SVB Hall of Shame

#178

Post by aj7 »

The board was asleep at the switch. They are now unemployable.

You’re dreaming.

Boards are mainly hired to do nothing in established companies.

Re: SVB Hall of Shame

#179

Post by sacnoradhq »

borski wrote: post #109
kondro wrote: post #91

Call me naïve, but if I put money in a bank I should be able to get it back whenever I want. If I didn't want it to be liquid, I'd buy something less liquid. The very concept of a bank run is ridiculous. If all a bank's customers want their cash back, they should be able to get it back without affecting the liquidity of the bank. Transaction accounts don't earn me anything and have fees of their own. There's little i…

> Australian banks make their money through mortgages Where do you think your banks get the money to loan out for mortgages? I’ll give you a hint: your deposits. This is how banks work.

Please do us a favor: don't assume the other party is ignorant of fundamentals because such a comment doesn't serve a purpose.

Re: SVB Hall of Shame

#180

Post by jrockway »

Danieru wrote: post #140
Aeolun wrote: post #123

Earlier quoted context omitted.

Since they can loan out much more than they get in deposits that’s not strictly true right? You can have 10 house loans for every house sized deposit (or something similar).

You are confused about how fractional reserve works. The 10x multiplier is on the bank's equity. For every dollar of home loan there is a dollar or more of deposits. The multiplier effect of fraction reserve occurs over iterated loans and depositing. The fraction term comes in because the bank can lend out a fraction, less than 1, of deposits.

Yup. A bank run is problematic because if you keep 99% of the money but 100% of your customers want cash today, then you're screwed.
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