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Roku filed an 8-K saying that of its $1.9B of cash, $487M is stuck at SVB

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Re: Roku filed an 8-K saying that of its $1.9B of cash, $487M is stuck at SVB

#181

Post by SkyPuncher »

olalonde wrote: post #72

As a side note, I find it fascinating how fractional reserve banking is not only legal but considered indispensable to the economy. It just sounds like a big scam. Why do private bankers get to create money and decide who gets it? It feels like there has to be a better way.

The whole system is basically built on "putting money to work" as quickly as possible. Money sitting in "storage" just isn't useful to anyone.

Most of the economy relies on an expectation that a service you provide now will be paid off in the next 30, 60, 90 days.

Re: Roku filed an 8-K saying that of its $1.9B of cash, $487M is stuck at SVB

#182

Post by SkyPuncher »

majormajor wrote: post #80
jiveturkey wrote: post #69

Earlier quoted context omitted.

all companies with this size of cash have an internal treasury function

Obviously Roku is a lot larger than your typical startup, but it's a curious blind spot risk that all the VC's who panic-messaged founders to take out their cash yesterday didn't bother to try to mitigate it in advance across their portfolios of companies. The more money you have, the less competence you need - hardly a surprise, but... there are no shortage of articles that make it to HN with VCs talking up their ow…

This is simply not a risk that most people would even consider worth thinking about.

Yes, banks fail. However, the large, reputable ones fail few and far between. If you're a seed/Series A startup, you'd be much better off focusing on creating value. Your far more likely to fail to find PMF than you are to have your bank go belly up.

Re: Roku filed an 8-K saying that of its $1.9B of cash, $487M is stuck at SVB

#183

Post by SkyPuncher »

macintux wrote: post #172
muyuu wrote: post #36

wow they lost almost half a billion WOW they had how much money???

They didn’t lose it, they’ve temporarily lost access to it.

Until it's returned, it's unclear if they'll actually get it all back.

Re: Roku filed an 8-K saying that of its $1.9B of cash, $487M is stuck at SVB

#184

Post by [deleted] »

rsync wrote: post #178
olalonde wrote: post #72

As a side note, I find it fascinating how fractional reserve banking is not only legal but considered indispensable to the economy. It just sounds like a big scam. Why do private bankers get to create money and decide who gets it? It feels like there has to be a better way.

"It just sounds like a big scam. Why do private bankers get to create money and decide who gets it? It feels like there has to be a better way." It's a time-shift. That's all. You can absolutely run an economy - and a culture - without leverage and even without debt. In such an environment it will take multiple lifetimes to accumulate a single lifetimes worth of provision and security ... and we all decided we wanted…

[deleted]

Re: Roku filed an 8-K saying that of its $1.9B of cash, $487M is stuck at SVB

#185

Post by unity1001 »

olalonde wrote: post #72

As a side note, I find it fascinating how fractional reserve banking is not only legal but considered indispensable to the economy. It just sounds like a big scam. Why do private bankers get to create money and decide who gets it? It feels like there has to be a better way.

> It just sounds like a big scam

It is. Its what happens when a country's currency is used as the exclusive foreign exchange currency in international trade and that country can print money like a banana republic without that currency losing value. The US went apesh*t on the foreign exchange currency position of the dollar and not only printed $ from the Federal Reserve but also allowed quite high % ratios for private banks to do fractional reserve lending.

The legal % ratio was reduced after the 2008 crisis, but right at the end of Obama's 2nd term, they were restored to 2008 levels. So the cycle that started 2008 crash started again - not necessarily backed by high risk mortgages this time, but whatever could be used as a collateral.

Now that many countries are moving to trading in their own currencies, all the printed dollars are coming back to the US and hiking up inflation and causing all this mess.

So youre right. Its literally a scam. It could work if it was tightly regulated with low %es and what the banks could show as the backing asset could be very tightly regulated. But we all know what the corporate lobbies do to regulations in the US...

Re: Roku filed an 8-K saying that of its $1.9B of cash, $487M is stuck at SVB

#186

Post by karpierz »

olalonde wrote: post #177
karpierz wrote: post #139

Earlier quoted context omitted.

I guess it's unclear what you mean by "creating money". Anytime I lend money to someone, they're going to spend it on something. They have a liability (their debt to me) and an asset (the thing they "bought", which could be anything from a T-bill, to a bagel). Basically, any debt "creates money."

If you lend money to someone, it's no longer available for you to spend. However, if a bank loans out the money that you deposited, both the borrower and you can spend it. This is known as money creation, as it expands the money supply.

> if a bank loans out the money that you deposited, both the borrower and you can spend it.

When you "spend" money that you deposited with the bank, what you're actually doing is getting the money you lent to the bank paid off.

What's the difference between that and you lending money to someone to buy a bagel/T-bond, and then at some point in the future, getting money back so that you can buy a sandwich/car?

Re: Roku filed an 8-K saying that of its $1.9B of cash, $487M is stuck at SVB

#187

Post by quickthrowman »

paulclinger wrote: post #164
tiffanyh wrote: post #159

Earlier quoted context omitted.

That’s called a safety deposit box.

Chase doesn't allow storing cash in them (other than collectible items) and I know that others banks don't allow either (most likely to limit their liability). I lived through Washington Mutual going through FDIC receivership back in 2008 (I was their employee, shareholder and account holder at that time) and their stock price dropped to almost zero when the news broke about that. I'm curious why this is not the case…

> I'm curious why this is not the case here.

SIVB trading was halted during premarket at 8:35 EST due to pending news, and never resumed trading.

Re: Roku filed an 8-K saying that of its $1.9B of cash, $487M is stuck at SVB

#188

Post by zopa »

rpeden wrote: post #112
phkahler wrote: post #100

Earlier quoted context omitted.

They don't create money, they loan out deposits. It's not as scammy as people think. You are free to put your cash in a mattress instead.

Sure, but loaning out deposits creates money, does it not? Most of that loaned out money is getting deposited into another bank account. And that deposited loan will (minus a percentage kept in reserve) get loaned out again. And so on, etc. I might be missing something important, though.

If a bank loans you money and you use it to build a house, or start a restaurant, then in due course there will be:

  - new money, created by the loan; and
  - a new, valuable asset — the house or restaurant — worth very roughly that amount of money.
Case by case these won’t always balance, but we trust private banks and borrowers to get it broadly right in aggregate. It all works out except for when it doesn’t.

But somebody had better be creating money in a growing economy. Otherwise the stock of desirable stuff will grow while the stock of money remains constant. And once that happens, people start hoarding money rather than doing the hard work of investing in new productive assets. But creating new productive assets is where the growth comes from, not to mention a big chunk of the jobs.

I doubt bank-created money is the only way to avoid deflation and depression. But it’s about the least centrally-controlled alternative I can think of.

Re: Roku filed an 8-K saying that of its $1.9B of cash, $487M is stuck at SVB

#189

Post by 1123581321 »

briffle wrote: post #127
xeromal wrote: post #117

Earlier quoted context omitted.

Same here but SVB was the 18th largest bank in the US.

Can you name the 16th and 17th largest banks? Most of us can think of a few big ones, and a handful of local ones.

Most of the top 20 are household names. Many in the top 50 as well. However, a few are top ranked because they have strong regional presence in tech/finance capitals and Silicon Valley is of course one of them.

Re: Roku filed an 8-K saying that of its $1.9B of cash, $487M is stuck at SVB

#190

Post by paxys »

k8t wrote: post #26

This is not a perfect analysis, but: - Roku has 487M in SVB - After the 8-K released, Roku lost 323M in market cap Basically, the market is expecting around 30c of value recouped for every dollar inside of SVB. (note: I know this analysis isn't perfect, but it gives a rough idea)

You are making the assumption that that $1 in a company's checking account corresponds to $1 of their market cap, which is not even remotely the case.

A much more believable hypothesis is that investors saw the headline, went "Roku is affected by SVB!!" and panic sold.

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