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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

#481

Post by jraines »

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…

> they no longer deserve credit for taking risks and doing something new

What on earth. Putting money in the bank was never a risk founders were lauded for, nor should it be on the titanic list of things they have to worry about.

We can brawl in the peanut gallery over FDIC limits and precedents and moral hazard (which lies with the banks, btw) but at the end of the day there can only be one “best country to start a startup” and whatever that is, it’s definitionally one where you don’t have to worry about getting rugged by the bank because someone you wouldn’t know from Adam made a bad bond trade.

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

#482

Post by tiffanyh »

ah765 wrote: post #441
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…

Mark Cuban is a standup guy. Can speak from personal experience.

Rest of your comment, I mostly agree with though.

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

#483

Post by linuxftw »

Taniwha wrote: post #318
fwlr wrote: post #238

A lot of people are asking “how is this not a bailout?” right now. I would caution against dismissing them, it’s a legitimate question. Pointing to the “Taxpayers will not pick up the bill” line counts as dismissive: this is a press release, and it’s from the government, that’s two strong reasons for some skepticism. So, in earnest, how is it not a bailout? Feel free to offer your answer! Mine is: “Banks are required…

One reason why it's not (mostly) a bailout is that SVB's deposits are (as far as we know) still backed by bonds and mortgage backed securities, the problem is that those securities can't be easily sold right now (because people want higher valued investments) - a sudden forced sale means selling at a loss (or a cash flow crisis which is how SVB got into this state), holding on to them and letting them play out and th…

No, they liquidated those positions at a loss because of outflows. They are actually short the cash.

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

#484

Post by 0xDEF »

kamikaz1k wrote: post #466

People who want a full picture and like listening to a conversation instead of an article can listen to the recent All-In Podcast episode which discusses root cause and options. https://youtu.be/CEee7dAk25c

lol

The right-libertarian techbros at All-In Podcast are the last people who will tell you the truth about this. They are at the core of the rot. David Sacks will probably do his usual monologue blaming dead Ukrainian children.

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

#485

Post by beezle »

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.

Are you also willing to pay a fee for that when interest rates are so low the bank does not earn enough spread to cover the costs of maintaining those accounts?

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

#486

Post by mbesto »

lambic2 wrote: post #185
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 don't understand this comment. 1) SVB was not managed by VC's. 2) SVB went under because they bought US Treasuries, not because they took risky bets on startups.

> not because they took risky bets on startups.

SVB regularly provides credit to risky startups, which is why they existed in the first place (because other banks wouldn't lend at those rates). So, yes, they sorta did place risky bets on startups.

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

#487

Post by FooBarBizBazz »

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 are you on about?

The final decision was eminently reasonable.

The bank's shareholders are getting wiped out. The depositors are protected. Banks -- who depend on the continued faith of the public -- chip in a little more in insurance. The taxpayer pays nothing.

A bunch of software companies get to succeed or fail now on the basis of whether their business models and execution make any sense, as opposed to whether their bank bought enough interest-rate swaps.

Small regional banks can continue to exist. This will not necessitate even more consolidation in American capitalism. And there will be no follow-on bank runs to jeopardize grandma's CDs.

Seriously, what is there to complain about? The government did its job here. It governed. Fairly and competently.

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

#489

Post by chadash »

humanistbot wrote: post #312
fwlr wrote: post #238

A lot of people are asking “how is this not a bailout?” right now. I would caution against dismissing them, it’s a legitimate question. Pointing to the “Taxpayers will not pick up the bill” line counts as dismissive: this is a press release, and it’s from the government, that’s two strong reasons for some skepticism. So, in earnest, how is it not a bailout? Feel free to offer your answer! Mine is: “Banks are required…

> If there’s a shortfall they will charge the banks a little extra in their next insurance payment, but keep in mind we’re talking about at most a few billion dollars spread over every bank; they are unlikely to pass on a small cost like that, but even if they do pass on the cost to the taxpayer it will be something like $10 per person maximum. Sounds like a bailout at the taxpayers' expense, just with extra steps. A…

This is quite different than a bailout. They can’t just go to their customers and say, hey, we got this bill now you have to pay for it. They can raise fees, but then customers can go to another bank. They can lower what they pay in interest rates, but again, customers can go to other banks. Or customers can buy treasuries instead of keeping money in bank accounts. Banks are not the only place to keep money, nor the only way to raise money. Sure, chances are that some of the money will come from raising rates on customers, but some of this will just come out of bank profits.

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

#490

Post by bcantrill »

I have never seen such cognitive dissonance here at HN -- which I feel is really saying something! As an SVB customer who had to wire payroll on Tuesday, our perspective is naturally sharpened, but I found the lack of empathy here over the weekend galling. On the one hand, this is understandable, and Silicon Valley has done much to earn collective distrust. On the other hand, this is emphatically not all of us: many of us have been outspoken about our disagreements with the techbro culture, and have endeavored to create companies that are exemplars of what we want to see in the world. Speaking personally, I spent a lot of time DM'ing people privately who were saying absolutely outrageous things online, and almost uniformly hearing back: "No no, not you -- I love what you're doing." Well, if you want to see startups solving hard technical problems we need to have some real talk about how that has to be structured financially -- and maybe stop tweeting images of guillotines when our employees are anxious about their next paycheck?
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