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Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

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Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#441

Post by ah765 »

version_five wrote: post #112

So they made their decision, everyone can move on. I just hope nobody forgets how prominent VCs behaved during the brief period of uncertainty. The idea of some noble class of investors championing disruption is dead. They're just a bunch of rent seekers like everybody else. For some silly reason I had some respect for the startup industry before this, now I see it as a joke. It's great at a personal level that "foun…

Absolutely. People like Garry Tan, Sam Altman, Michael Seibel, Paul Graham, Mark Cuban, all pushed hard to keep their money, not caring if it's at taxpayer expense. Rich people tend to only care about helping others when it aligns with helping their own pockets.

This may have been the most prudent decision by the government, though it'll be hard to say what would've happened otherwise. But in the end, it sounds like the average person will still be negatively affected, by having small accounts under the $250k limit subsidize insurance for larger accounts.

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#442

Post by chernevik »

chernevik wrote: post #377

It's a bailout. They're putting the cost, presently unknown and probably not huge, on the other banks. But the message to depositors everywhere, of every size, is "don't worry about your bank's solvency, we'll protect you". So market scrutiny is removed as a discipline on bank asset strategy. That leaves regulation as the only control. That politicizes and bureaucratizes bank lending. And the general presumption that…

I would add, it's just hilarious to see so many claim "it's not a bailout because shareholders were wiped out!" Everyone knows bailouts are bad, and that people shouldn't rely on them. But they want their money, so of course _their_ protection isn't a "bailout". It's just . . . depositors made whole!

Yah. A "bailout" is any injection that makes whole any interested party facing losses. As in "The depositors were bailed out".

The hypocrisy around this is really disappointing.

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#443

Post by tempsy »

version_five wrote: post #112

So they made their decision, everyone can move on. I just hope nobody forgets how prominent VCs behaved during the brief period of uncertainty. The idea of some noble class of investors championing disruption is dead. They're just a bunch of rent seekers like everybody else. For some silly reason I had some respect for the startup industry before this, now I see it as a joke. It's great at a personal level that "foun…

the long term fallout was never going to come from only getting 90 cents on the dollar vs 100%

it’s the fact that the lender most willing to work with non traditional borrowers eg tech startups is now gone, and there’s no bank or lender that will replace them. if anything this will mean lending standards will tighten, and it will be very difficult for any customer with a SVB credit line to find another bank willing to lend to them on the same terms.

this is also coming at a time when more startups relied on debt to fund their companies because the equity raising environment is so tough, so now many founders might be forced to attempt to raise equity in a tech bear market on very bad terms if they can at all

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#444

Post by seo-speedwagon »

chernevik wrote: post #377

It's a bailout. They're putting the cost, presently unknown and probably not huge, on the other banks. But the message to depositors everywhere, of every size, is "don't worry about your bank's solvency, we'll protect you". So market scrutiny is removed as a discipline on bank asset strategy. That leaves regulation as the only control. That politicizes and bureaucratizes bank lending. And the general presumption that…

> If you had the wit to think "hey, maybe I should be careful with $5 million" and bothered to put it in T-bills or an insured sweep, you're just a nerd who should know the Government will take care of such things.

It creates the precisely wrong incentives. If you run startup and spend any time, effort, or money to mitigate these risks, you're being irresponsible. The Fed will bail you out, stop wasting your precious runway on nonessential things.

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#445

Post by jmull »

LOL.

Everyone is going to get their full deposits and taxpayers don’t have to bail anyone out.

The sky wasn’t falling.

I was unbelievable how quickly people called for the government to whip out the checkbook and sign a blank check.

I wonder how many are going to opt to pay for depositors insurance for amounts over $250K? (practically zero?)

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#446

Post by kazen44 »

gizmondo wrote: post #317
bradleyjg wrote: post #160

So depositors at banks taking on big risks get elevated interest rates or other perks for years, and when the shit hits the fan depositors that put their money in prudent banks get to bail them out through higher fees. And people wonder why turnout is low. There’s no way to vote for non captured politicians.

Actually a lot of depositors would be happy with a narrow bank that takes no risk, just holds the money at the Fed. But the Fed decided it's too safe so narrow banking is essentially banned. Seems fair if they ensure safety of deposits in return.

before the 1980's, this was actually the case for a lot of countries. (the netherlands had the "spaarbank" for instance).

This was a very boring system. You deposited your money, the bank held your money, you payed X for the account. You got some interested during the time this system was alive, but is far less then with other banks.

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#448

Post by paganel »

tssva wrote: post #224
version_five wrote: post #112

So they made their decision, everyone can move on. I just hope nobody forgets how prominent VCs behaved during the brief period of uncertainty. The idea of some noble class of investors championing disruption is dead. They're just a bunch of rent seekers like everybody else. For some silly reason I had some respect for the startup industry before this, now I see it as a joke. It's great at a personal level that "foun…

The thing I'm most confused about in this comment is that you ever believed that VC's and startups were some kind of noble class.

Not the OP and I hadn't put them in the noble class category, but until a few years ago I had truly believed that the innovation that was still coming out of the US (and out of the West more generally) was in no small part thanks to SV startups (and hence thanks to the VC industry supporting them).

The whole crypto fiasco plus a few other things (these SV people going from worshipping Musk to hating him in a very short period, for example) have convinced me that I was a holding a view that was not based on anything of substance.

Which begs the question: where does real innovation come from in the US (and the West more generally)? The SV start-ups are not providing it, ditto for the FAANGs, what's left?

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#449

Post by furyofantares »

spaceman_2020 wrote: post #394

Can anyone help me understand why would any bank practice proper risk management after this? SVB took on risk by catering to high risk clients (startups). Growth metrics were great as a result. And stock performed spectacularly (up nearly 6x from April 2020 lows at ath). More conservative banks like JPM, however, saw modest growth. If you're a banker and your salary is tied to stock performance, why not just adopt th…

> More conservative banks like JPM, however, saw modest growth.

Also they continue to exist.

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#450

Post by adhesive_wombat »

tssva wrote: post #224
version_five wrote: post #112

So they made their decision, everyone can move on. I just hope nobody forgets how prominent VCs behaved during the brief period of uncertainty. The idea of some noble class of investors championing disruption is dead. They're just a bunch of rent seekers like everybody else. For some silly reason I had some respect for the startup industry before this, now I see it as a joke. It's great at a personal level that "foun…

The thing I'm most confused about in this comment is that you ever believed that VC's and startups were some kind of noble class.

I cannot decide if the idea that VCs are some kind of kindhearted patrons and startups in general are all moral straight arrows dedicated to only good things is outright propaganda or just distilled Silicon Valley delusion. Hanlon's Razor indicates the latter, but I do wonder.

For every one company that genuinely is working out of the goodness of their hearts, there are 10 serial founders seeking to inveigle their way into something as a middleman, sorry "disruptor", then cash out and go round again before anyone notices the cracks.

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