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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

#461

Post by KennyBlanken »

LewisVerstappen wrote: post #235
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…

> prominent VCs behaved during the brief period of uncertainty A ton of the prominent VCs were writing out checks from their personal bank accounts so that founders could meet payroll. > For some silly reason I had some respect for the startup industry before this, now I see it as a joke Wait seriously? You somehow lost more faith from this than you did from - crypto - Adam Neumann - $100m seed rounds and like 30 oth…

A lot of prominent VCs were also screaming their heads off that other banks were about to fail.

These people played a zero-sum game, purposefully generating as much panic as possible to force the fed to act.

> Having your bank account randomly disappear isn't one of the risks that anyone should have to take.

The fed has sat on its hands for decades and done nothing to mandate better protection for ACH transactions, done nothing to mandate phasing ou magstripe transactions (Europe has been on chip and pin for decades), our check cashing system is a complete mess in ways scammers take advantage of, and debit cards have a fraction of the protection credit cards do despite "real money" being involved instead of credit.

But then a bunch of billionaires force hundreds of companies to do business with just one bank, that bank is outright incompetent in how it manages its funds and employed people who were central in the last financial crisis, and suddenly it's "well, we must act to protect confidence in the banking system"?

I have zero confidence in the banking system. My money doesn't feel remotely safe from being stolen. I can't even find a bank that will do hardware 2FA instead of SMS 2FA, which is worse than not having it at all.

What is jpow doing about that?

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

#463

Post by MaxHoppersGhost »

Fede_V wrote: post #378
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…

Joe Weisenthal (who is always worth listening too in matters of finance) put it well here: https://twitter.com/thestalwart/status/1634985524007157760?s... Some VCs were definitely better than others: the very worse was probably the All In Crew who were trying to spread a bank run to tie the government's hand. Truly despicable.

The All In Crew are the kings of rent seekers. Chamath himself made billions off the SPAC boom which should tell you all you need to know about them.

Mr Libertarian himself David Sacks crying for govt intervention was hilarious. What a clown.

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

#464

Post by lanza »

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…

> 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.

You have some serious disillusion.

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

#465

Post by boh »

LewisVerstappen wrote: post #235
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…

> prominent VCs behaved during the brief period of uncertainty A ton of the prominent VCs were writing out checks from their personal bank accounts so that founders could meet payroll. > For some silly reason I had some respect for the startup industry before this, now I see it as a joke Wait seriously? You somehow lost more faith from this than you did from - crypto - Adam Neumann - $100m seed rounds and like 30 oth…

"Having your bank account randomly disappear isn't one of the risks that anyone should have to take." Companies actually do. That's why they keep their assets as cash at a minimum and typically don't concentrate that cash in one institution. Risk management is a big part of institutional financial management. This isn't the first bank failure and this isn't going to be the last. This situation will, however, probably make bank bail outs less likely in the future. The political fall out will be huge. 100% this is a big point in the 2024 election. (Having a bank named Silicon Valley Bank collapse couldn't be a better metaphor).

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

#467

Post by sethev »

lopkeny12ko wrote: post #322
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…

What did VCs do wrong here? They warned of impending solvency problems at SVB and told founders to withdraw their money ASAP. And indeed, the bank failed the next day. The companies in trouble are those who didn't listen to the VCs.

Everyone withdrawing their money ASAP is what caused the solvency problem. There's a big difference between warning people of a problem and encouraging them to behave in a way that creates it.

No bank could survive this kind of run. See https://en.wikipedia.org/wiki/Bank_run

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

#468

Post by bnralt »

LewisVerstappen wrote: post #235
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…

> prominent VCs behaved during the brief period of uncertainty A ton of the prominent VCs were writing out checks from their personal bank accounts so that founders could meet payroll. > For some silly reason I had some respect for the startup industry before this, now I see it as a joke Wait seriously? You somehow lost more faith from this than you did from - crypto - Adam Neumann - $100m seed rounds and like 30 oth…

> Having your bank account randomly disappear isn't one of the risks that anyone should have to take.

Not only is it a risk many take, but many end up losing a significant amount. The FDIC actually has a list of the numerous failed banks they've helped depositors recover assets from here[1]. You can see that depositors often lose a lot when banks fail.

Now I don't think this is a good thing, and I think it would be worthwhile to have a conversation about a systemic way to avoid this. But it was eye-opening to see so many not advocating any systemic approach, and instead just saying "the government should do whatever it can to cover all SVB loses because people like us are special."

[1] https://closedbanks.fdic.gov/dividends/

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

#469

Post by YZF »

AmericanOP wrote: post #161
serf wrote: post #8

> No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer. i'm out of touch with how much of this works, can someone explain how this is paid without burden to the taxpayer?

SVB has assets but not liquidity. This is not like 2008 where the assets themselves are worthless.

Aren't they (at least some large portion of the assets) mortgage backed securities, i.e the same sort of stuff like 2008? If the economy collapses and the housing market collapses then they can become worthless. Very different than lessay US government bonds. Right now they're worth their market value which right now isn't worthless but also isn't enough...

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

#470

Post by whodidntante »

And we wonder why people are turning to marxism. If the "people" are being forced to bail out a bunch of rich people who create self serving incestuous relations between their companies to game the system and bend and break laws when it suits them, why not just have the "people" own everything ?

As a capitalist, I am appalled by the behavior of the VC industry and the government that enables them.

And, yes, it is a bailout. There may not be any taxpayer money front and center, but this will be paid by the average person in some way, and not by the people who created this fiasco, or those who are going to benefit from it.

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