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Bank run on Silicon Valley Bank

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Re: Bank run on Silicon Valley Bank

#311

Post by zht »

hackernewds wrote: post #283
FormerBandmate wrote: post #65

Earlier quoted context omitted.

This destroys the entire economy, making startups and corporations much harder to run to the point of impossibility. Even in countries run on Sharia law, they still find proxies for interest

curious what are these proxies? I thought under Sharia law charging interest is "illegal"

bank buys the house and you rent-to-own it. coincidentally the total amount of the rent is higher than what the bank bought it for.

not "interest", but yea, pretty much interest

Re: Bank run on Silicon Valley Bank

#312

Post by [deleted] »

hollerith wrote: post #276
FormerBandmate wrote: post #137

Earlier quoted context omitted.

They’re selling equity to get capital. That’s pretty dire straits, FTX was doing that before they went under (I’m not saying this is FTX, I’m just saying it can be akin to the nuclear option)

For what reason besides raising cash does a company ever sell shares in itself? How does your statement make any sense? (I am assuming that by "capital" you mean cash.)

[deleted]

Re: Bank run on Silicon Valley Bank

#313

Post by notch898a »

gnicholas wrote: post #305
honeybadger1 wrote: post #291

Earlier quoted context omitted.

It seemed like a tongue in cheek joke about people projecting that women are strong(like south park style joke I guess) and if you say they are not..you are cancelled? I dunno, I appreciate humor, but yeah that was swift admin action on that.

I think the vast majority of flagging is by regular HNers (with some karma threshold), not admins. I try not to make too many jokes on HN. They have to be very clearly funny and/or very spot-on to survive HN's this-isn't-reddit ethos, which seems to be pretty strictly enforced.

My anecdotal experience is jokes/poorly supported takes get downvotes.

If you want to get flagged, the best way to do that is to make an irrefutable strong argument that ruffles political or economic feathers of a popular ideology on HN. There's nothing that enrages people here more than an unpopular but sound argumen they don't like, so they flag it to make it go away. If they can quickly disprove you or make you to look an idiot, they'll downvote rather than flag so that everyone can see their moral or intellectual superiority in the full thread.

Re: Bank run on Silicon Valley Bank

#314

Post by ryan_j_naughton »

notyourday wrote: post #49
johnbellone wrote: post #36

Earlier quoted context omitted.

Per account. Edit: It seems I am incorrect. > The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per ownership category. Deposits held in different ownership categories are separately insured, up to at least $250,000, even if held at the same bank.

> Per account. Per account "type" and structure. For DDAs if you are married it will be: You: $250k Your+your wife: $250k You POD your wife : $250k Your wife: $250k Your wife POD you: $250k

DDAs?

Re: Bank run on Silicon Valley Bank

#315

Post by actionablefiber »

PragmaticPulp wrote: post #202
recursivedoubts wrote: post #21

Daily reminder that bank runs wouldn't be a thing if we did duration matching, forbidding banks from borrowing short and lending long. As always, the underlying problem in banking is that the banks are lying, telling two or more people they own the same dollar at the same point in time. If they locked deposits for a period of time they could safely (and morally) loan that money out without lying, and, in fact, there…

This is kind of like saying we can eliminate most automobile fatalities by eliminating cars and making everyone walk or take the train everywhere. Yes, it would solve one type of problem. But nobody wants your solution because it’s an unreasonable trade off for everyone to solve an extremely rare edge case. Single-minded optimization for single edge cases is really easy in fantasy worlds, but in the real world people…

What an odd choice of analogy. Incidents where someone driving a car hurts or kills someone else is in fact an extremely common "edge" case. It happens, like, several hundred thousand times more frequently than bank runs do.

Re: Bank run on Silicon Valley Bank

#316

Post by jongjong »

sanderjd wrote: post #306
jongjong wrote: post #243

Earlier quoted context omitted.

Why does a business need a loan? They can just sell shares/equity to raise funds. It's better in every way; there's skin in the game. Why would anyone even want to loan money to a startups? If the startup founders go out of business and flee the country, the lender loses everything. The downside is unlimited. Yet if the startup does well and it becomes a billion dollar company, the lender will get maybe 20% return on…

These would be good questions to ask an undergraduate microeconomics professor. They have answers. It's not that nobody has ever thought about this before.

I know the answer; it's because being able to issue unlimited money, diluting the public's savings and salaries and then collecting interest on it benefits certain powerful people in a risk-free manner. That's not the answer which an economics professor would give me though. They are not trained to use their analysis skills so much as providing canned explanations. These economics professors have to pay their bills too and their paychecks come from the people earning interest on the big loans... The paychecks of economists literally come from this system that they're supposed to analyze in an unbiased way. Not going to happen.

Damn it can someone please just give me free money so I don't have to be confronted with this reality and think about this stuff every day? Maybe if I could also benefit from it without having to work, it would be easier to just let it be. It's exhausting to get screwed every day and knowing exactly how I'm being screwed and yet having no power to do anything about it except whining online to random people hoping desperately that the system will improve just enough that I can get the tiniest opportunity. I've been working on side hustles for 10 years straight but I've never had the social connections to get traction regardless of how good the product is or how much users love it.

Re: Bank run on Silicon Valley Bank

#317

Post by tempsy »

bluGill wrote: post #263
kapilvt wrote: post #223

Earlier quoted context omitted.

That’s not quite how payroll works

Right, but gp was talking about people not businesses

no i wasn’t. i said an individual could easily have $250k in cash to show you that it is not a significant amount of money from a business perspective. nothing about what i said referred to keeping $250k in a non interest bearing account as being a smart decision for an individual

Re: Bank run on Silicon Valley Bank

#318

Post by TheAlchemist »

dublinben wrote: post #176
rippercushions wrote: post #15

From https://techcrunch.com/2023/03/09/silicon-valley-banks-share... : Becker said the bank has “ample liquidity” to support its clients “with one exception: If everybody is telling each other that SVB is in trouble, that will be a challenge.” Pro tip: if you're CEO of a bank that's facing a bank run, don't tell the press that you'll be in trouble if everybody takes their money out.

Matt Levine is fond of this highly relevant quote by Bagehot: “Every banker knows that if he has to prove that he is worthy of credit, however good may be his arguments, in fact his credit is gone.” It seems that CEOs of banks haven't learned anything since 1873 when this was observed.

100% true ! They are already gone.

However, not to defend the guy, but as a CEO of this bank he ... has to say something. And whatever he says it will be bad anyway.

Re: Bank run on Silicon Valley Bank

#319

Post by Animats »

Small depositors (under US$250K) can get paid off quickly if the FDIC takes over, but larger ones may have to wait until SVB's loans are sold off to other banks for cash.

The collapse of a solvent but illiquid bank is well worked out in the US. Here's a 60 Minutes episode where they got to cover the process.[1] It's not too bad for the customers, but it is really bad for bank management. The 60 minutes video shows the moment when the FDIC people show up and tell the CEO he's finished.

[1] https://www.youtube.com/watch?v=TAE8i40A5uI

Re: Bank run on Silicon Valley Bank

#320

Post by phphphphp »

xboxnolifes wrote: post #271
phphphphp wrote: post #66

Earlier quoted context omitted.

Sure, and everyone knows that their favourite person in the world could just run them over in a car and kill them in seconds, but if your best friend says to you, “you know, I could drive my car into you and you would die… your life could be snuffed out with a moments notice” you may start to question your friendship.

Sounds like a normal conversation with my friends.

Sounds like you have a ready-made customer base for a bank in crisis.
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