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SVB chief pressed lawmakers to weaken bank risk regulations

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Re: SVB chief pressed lawmakers to weaken bank risk regulations

#51

Post by mangosteenjuice »

phillipcarter wrote: post #4
mistrial9 wrote: post #2

with no dog in this fight, I see this as some enforcement grudge match from NY capital old-school on California capital new-school, triggered by zero tolerance for crypto. IMO - almost all the leveraged finance in the last 20 years is already over-the-top and mostly "fake money".. who gets the axe first is politics. Supporting statement to this heresy? When the "real economy" tanked due to covid-19 lockdown, the pape…

> Roku (who I have never heard of as a consumer) Roku's been around for a very long time building decent streaming boxes for TVs that don't cost too much. I've been a customer since Netflix started streaming.

I only know about Roku for three reasons.

I had to work on third party software supporting their boxes nearly eight years ago.

They were a meme stock for a bit. I made a small profit since I bought a few shares after I first learned about them.

And some eng director there randomly added me on LinkedIn years ago.

I would have never encountered them as a regular consumer, because I don't watch TV or use any streaming services.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#52

Post by mindslight »

somsak2 wrote: post #18
bratao wrote: post #8

I want to have sympathy for the depositors, but it is hard to knowing that they chose to keep their funds in an bank that was actively lobbying to weaken risk regulations. There multiple products that would help in this situation, such as insurances and virtual accounts that split between multiple FDIC accounts/banks. Bailing out these depositors would send the wrong message and encourage moral hazard, i.e., the beli…

> it is hard to knowing that they chose to keep their funds in an bank that was actively lobbying to weaken risk regulations what an insane standard. as a customer of any company I'm now supposed to investigate their lobbying activity? what else do I need to do due diligence on?

If you loan someone millions of dollars, yes you should probably do some diligence on them.

(The limitless extrapolation of HN never ceases to amaze)

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#53

Post by NordSteve »

OliverJones wrote: post #29

Regulatory capture, it's called. Man, it does a lot of damage. Long ago I and colleagues opened accounts at SVB for two different outfits with VC money. It was simply the thing to do when getting started converting that money into software that would then produce lots more money. It was simply the thing to do. We didn't have CFOs. We knew darn well our deposits would exceed the household-banking FDIC insurance limit.…

Startups have to do risk management all of the time -- it's a core activity of entrepreneurship. Can we trust this vendor? Is this new hire going to work out? Will this API vendor scale to what we need/be around in the future?

Finance is no different. There are no "safe" investments, only varying levels of risk and reward. Mitigating the risk of a single bank failure locking up your $2MM raise is a couple hours of work. Only you can say whether mitigating that risk is worth the effort.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#54

Post by mrkurt »

mangosteenjuice wrote: post #47
mrkurt wrote: post #32

Earlier quoted context omitted.

There's no bailout. SVB is dead. People are pushing for depositors to get their money back. Which is, I think, reasonable. Putting your company money in a bank account should be safe. We should regulate banks like SVB to make it more safe. We should also make sure when the regulations fail the people who use a bank, they can continue doing business.

It is a bailout for any amount over $250,000

$10mm of deposits at SVB is worth way more than $250k. We don't know exactly how much though. That money didn't just vanish, it got tied up in ways that make it hard for depositors to withdraw it.

So no, it's not a depositor bailout for everything greater than $250k.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#56

Post by NordSteve »

mrkurt wrote: post #43
MrMan wrote: post #38

Earlier quoted context omitted.

depositors are only entitled to what is left over after resolution of the assets, nothing more! dont make this situation worse by advocating for something unethical and which is bad for the entire system

Why does FDIC insurance exist at all?

In the general case, it acts to prevent bank runs triggered by individual depositors.

SVB is a special case -- a bank focused on commercial customer base.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#57

Post by chrisbolt »

everybodyknows wrote: post #7

Note that the 2015 lobbying was done by Greg Becker in person. Money quote is at the end: > In 2019, Becker was elected to serve on the board of directors at the Federal Reserve Bank of San Francisco. Becker left the board on Friday.

https://news.ycombinator.com/item?id=35105048

> This is normal. The CEOs of major regional banks are required by law/regulation to be a director at the regional fed. As he is no longer CEO of a regional bank (it no longer exists) he no longer has the seat.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#58

Post by mrkurt »

lp0_on_fire wrote: post #49
mrkurt wrote: post #40

Earlier quoted context omitted.

Yes that's reasonable. That's probably not what's happening here. In some ways, the _promise_ of the FDIC getting depositors almost all their money back is enough. The biggest problem people have right now is time. Over time, everyone will probably get most of their deposits from SVB back from SVB assets. What people (the ones who know what they're talking about, anyway) are asking for is closer to taxpayers covering…

> Over time, everyone will probably get most of their deposits from SVB back from SVB assets. > What people (the ones who know what they're talking about, anyway) are asking for is closer to taxpayers covering the costs of getting that money back sooner. There's a definite cost, but it's not taxpayers writing checks to cover deposit values. Except it's literally asking the taxpayer to cover the costs to cover these f…

I think that's what I said?

There's a cost, we don't know what it is. It's not as high as it sounds when you say "we should only let people get $250k liquid and everyone else should pound sand".

The cost to letting these companies keep their money tied up is a lot of people not getting paychecks. Which suddenly means no tax witholdings. And more unemployed people. And companies that can't pay vendors.

Doing nothing is not free. It might be cheaper, it might not. I get the instinct to hold the man accountable but it's not as simple as most people are suggesting.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#59

Post by capableweb »

mrkurt wrote: post #41
capableweb wrote: post #34

Earlier quoted context omitted.

Even if you end up getting back "only" 250K USD, you end up being in the 1% of the world when it comes to wealth. That sort of cash is really not "normal" or "common" to have in a bank account, in the world at large. Looks differently in concentrated high-wealth areas like Silicon Valley of course, but still plenty of wealth compared to the rest of the world.

That's an incredibly normal amount for a business. That's one payroll cycle for ~50 people making $75k per year each.

Sure, in the context of the US (and specifically Silicon Valley), but context was "SVB depositors weren’t just random individuals, they are some of the wealthiest people and organizations in the country or even the world"

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#60

Post by Ekaros »

lp0_on_fire wrote: post #45
mrkurt wrote: post #32

Earlier quoted context omitted.

There's no bailout. SVB is dead. People are pushing for depositors to get their money back. Which is, I think, reasonable. Putting your company money in a bank account should be safe. We should regulate banks like SVB to make it more safe. We should also make sure when the regulations fail the people who use a bank, they can continue doing business.

Every bank account in the United States is insured up to $250,000 by the FDIC. I have zero sympathy for these depositors who decided it would be "too costly" or "too much hassle" to split their deposits into multiple accounts. If you've got $25,000,000 dollars at SVB, you need 100 accounts. This is not rocket science. I really hope that they find a buyer to make depositors whole but if one cannot be found why should…

I don't expect everyone to essentially game FDIC insurance. And not sure if that is even possible or wanted.

But doesn't mean it is unreasonable to expect people with this level of cash funds not to have more than one egg basket. Split it in two, three or four. One goes down, you still have money locked up but can use other accounts to take care daily operations and possibly mitigate some of the issues.

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