51–60 of 145 posts
I have this innovative idea for business. Imagine you charge money from depositors for keeping their money in a big safe vault. No trading or lending their money. You just keep it safe.
Can someone shine some light on[1][2]? If true, it would seem that some of this panic would have been engineered in order to save VC capital at the expense of the rest of us? --- edit: We really need an analysis of @Jason and @DavidSacks w.r.t [1][2]. They were touting Doomsday on their AllInPodcast[3] but with [1][2] I'm starting to wonder... [1]: https://twitter.com/innoc_bystander/status/16347730533046108... [2]:…
>The federal government’s action is, in my estimation, the right thing to do for this moment in time. There will, though, be long-term consequences for fundamentally changing the nature of a bank: remember, depositors are a bank’s creditors, who are compensated for lending money to the bank; if there is no risk in lending that money, why should depositors make anything? Banks, meanwhile, are now motivated to pursue e…
Limits were not "ignored", the companies simply have no other choice. The problem is systematic and by design. A medium sized startup/business handling only 25 million would need to bank with 100 different banks, obviously that's inconceivable in practice. And now look at some of the more prominent customers. Pinterest, Shopify, CrowdStrike Holdings, Beyond Meat, Andreessen Horowitz, Founder's Fund, Circle. The latte…
I have this innovative idea for business. Imagine you charge money from depositors for keeping their money in a big safe vault. No trading or lending their money. You just keep it safe.
In big business it's called Treasury, which derives from Trezor or Safe.
For example Apple will have a Treasury department to manage it's cash. They don't put it in safes anymore, because, well you seem like an honest person, but your predecessors had a tendency to steal the money from the safe.
You generally don't put it all in one Bank either as they have a tendency to either steal it or gamble it on the markets.
A treasury I worked at had software that would pull money from banks across the world into more trusted banks. That's called cash pooling.
Then traders in the treasury market would buy up government bonds from stable governments.
This costs money and is big business.
So perhaps there's a market for treasury as a service (TAAS).
Earlier quoted context omitted.
>But that's not how it works! I would imagine the people advocating for a 'bailout' (using the most generous possible definition here) want this to become how it works. Like how in Germany the government guarantees every German bank balance. I have enough problems, I don't want to have to worry that my bank balance will disappear unless I spread it around in order to abuse a technicality.
> Like how in Germany the government guarantees every German bank balance. Up to 100.000€, they don't guarantee it without limit, and they don't guarantee it for anything that isn't insured. Greensill's insolvency recently got lots of media attention since local governments deposited large sums and were not (fully) covered by the normal mechanisms that protect private and business customers.
I have this innovative idea for business. Imagine you charge money from depositors for keeping their money in a big safe vault. No trading or lending their money. You just keep it safe.
You can recklessly make money off it for years then when you eventually get it wrong the government will step in and fix your "Oopsie"
That sounds way more profitable.
>Banks are, at their core, facilitators: depositors lend their money to a bank, for which they are paid interest, and banks lend that money out, again for interest. That's not why I have a bank account. It's how you avoid paying fees to get checks cashed. If you want interest, you put it in a savings account, or a CD, also in a bank. The only safe alternative is savings bonds. If you want to gamble the money, then yo…
I have this innovative idea for business. Imagine you charge money from depositors for keeping their money in a big safe vault. No trading or lending their money. You just keep it safe.
It's called "narrow banking" or full-reserve banking. It's been tried, and was rejected by the very same regulators who now had to bail out SVB: https://www.econlib.org/why-does-the-fed-oppose-narrow-banki...
This does not sound like keeping all the cash in a vault, this looks like reselling a service of the government not meant for this use.
It could be interesting to see if a service oriented to very low interests (or even negative) rates would be (in theory) feasible.
>The federal government’s action is, in my estimation, the right thing to do for this moment in time. There will, though, be long-term consequences for fundamentally changing the nature of a bank: remember, depositors are a bank’s creditors, who are compensated for lending money to the bank; if there is no risk in lending that money, why should depositors make anything? Banks, meanwhile, are now motivated to pursue e…
Limits were not "ignored", the companies simply have no other choice. The problem is systematic and by design. A medium sized startup/business handling only 25 million would need to bank with 100 different banks, obviously that's inconceivable in practice. And now look at some of the more prominent customers. Pinterest, Shopify, CrowdStrike Holdings, Beyond Meat, Andreessen Horowitz, Founder's Fund, Circle. The latte…
This has been pointed out so in the past 48 hours that I am beginning to think people are just willfully ignoring it.
This is still a better situation than 2008, where banks were bailed out to the extent that management even stayed (despite deserving prison), and shareholders lost nothing. So that's the worst possible outcome, today's is probably second worst. But I don't see what would be better. Ben talks about loss of trust now, but we'd actually lose more trust if depositors weren't bailed out, and probably contagion would sprea…
I see this mentioned a lot, but I have still not seen a valid explanation of why this would be the case.
Do we think a lot of companies in random industries will run and pull out their cash from banks to put it... where?