Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Bank run on Silicon Valley Bank

techcrunch.com

Post reply on HN
Print view View original

541–550 of 889 posts

Re: Bank run on Silicon Valley Bank

#541

Post by dmix »

Animats wrote: post #536

This is what a US bank failure looks like.[1] This 2009 picture shows the CEO of a failed bank near Chicago at the moment the 80-person FDIC team has arrived to take over. He's being told that it is no longer his bank. The bank re-opened for withdrawals the next day under FDIC control, and was later sold off to another bank. [1] https://i.postimg.cc/zGQNQmmf/bankfailed.jpg

https://www.youtube.com/watch?v=KIh6NEBL8BU

Edit: the video was relatively optimistic given the subject matter, at least for bank customers, not the owner. Assuming there's a market for buyers in such a case.

I'm curious if and how the "secret online bidding process" the FDIC runs to find bidders doesn't leak out to the owners of banks. It's possible the banker in the photo heard about it via word of mouth when it was being shopped.

Re: Bank run on Silicon Valley Bank

#542

Post by caminante »

csomar wrote: post #515
rabidonrails wrote: post #439

Earlier quoted context omitted.

Maybe you'd say it's worth the risk, but founders should be very careful about making transfers from accounts owned by their business to their personal accounts because this is literally the definition of embezzlement. I'd speak to your accountant and get their blessing first.

Embezzlement is using company funds for your own personal gain. It doesn't have to be transferred to your own account. If you move company funds in one blob from SVB to Personal account, and then move the same blob from Personal account to Bank XYZ, and document the process, you'll be fine. Of course, you can use your personal account for a while until you setup another business account (which you should have at leas…

I realize you're talking in practical terms. I read about embezzlement because I was curious.[0]

> Embezzlement is using company funds for your own personal gain.

AFAIK, the criteria for embezzlement is much broader than "personal gain." You have to take possession (rightfully), but do something with it (unrightfully).

I can see an argument that the scenario of an employee taking its money from SVB and putting in another bank IS embezzlement if this is done without the CFO/officer's consent. In practical terms, you're probably fine as long as you're trying to act in best interests. [1]

[0] https://en.wikipedia.org/wiki/Embezzlement [1] https://en.wikipedia.org/wiki/Conversion_(law)

Re: Bank run on Silicon Valley Bank

#543

Post by astrange »

malermeister wrote: post #523
borski wrote: post #521

Earlier quoted context omitted.

Citation needed. Also, I’m all ears for a viable replacement that doesn’t devolve into autocracy or government-endorsed corruption, and still allows for taking risk and forward progress.

https://en.wikipedia.org/wiki/Great_Depression https://en.wikipedia.org/wiki/Great_Recession Here's some citation for ya. As for viable replacements that allow for forward progress: https://en.wikipedia.org/wiki/Workers%27_self-management (Also, for that matter, it's not like capitalism doesn't tend to devolve into autocracy and corruption)

Pretty sure worker-owned companies still need investment and loans.

Re: Bank run on Silicon Valley Bank

#544

Post by danielmarkbruce »

astrange wrote: post #537
danielmarkbruce wrote: post #417

Earlier quoted context omitted.

Your employees don't accept t-bills as payment. Your suppliers don't accept them either. To do business, you need money in a bank account. Not all your money, but a decent chunk of money needs to be there for day to day.

Employees will take risky stuff like equity as payment, but the IRS won't take it for their payroll taxes.

The number of employees who take equity as a significant portion (>50%) of their comp rounds to zero.

Re: Bank run on Silicon Valley Bank

#545

Post by zht »

nico wrote: post #155

SVB CEO to VCs: please don’t tell anyone to withdraw their money or we could be in trouble VCs: [immediately texting after hearing the above from the CEO] attention all portfolio companies, SVB seems to be in trouble, don’t keep your money with them

It would be surprising if VCs exhibited any original thought, after watching them fomoing into one thing after another

Re: Bank run on Silicon Valley Bank

#546

Post by zht »

twelve40 wrote: post #421
necubi wrote: post #180

Earlier quoted context omitted.

Well, just as an example SVB gave my startup a bank account and a no personal recourse credit card days after we'd formed the corporation. No way you'd get that from BofA. They understand the startup ecosystem in a way that big banks don't. Now there's some competition from startup-focused banks like Brex and Mercury, but a five years ago SVB was one of the only games in town.

I got a BofA checking account, credits cards and a business car loan in the first month after setting up a brand new corp with 0 assets. It's almost kind of funny how it worked exactly as you described, at BofA. P.S. which makes me wonder how much of SVB friendliness was just smart marketing. If you look up and down this thread, most of the SVB "explanations" here are strictly circular: "they are good for startups be…

Sure and there’s also anecdotes of larger banks doing the exact opposite

Re: Bank run on Silicon Valley Bank

#547

Post by denlekke »

taytus wrote: post #329
vonnik wrote: post #192

SVB is an institution that has supported a lot of businesses in tech. There are a lot of harmful clowns out there fearmongering. They should stop. The failure of a bank like this, if it occurs, would be bad for a lot of people.

We have been banking with SVB for the last 5 years. Not even once, they have done something for us.

why did you bank with them if they have done nothing for you ?

Re: Bank run on Silicon Valley Bank

#548

Post by zht »

taytus wrote: post #351
vikramkr wrote: post #347

Earlier quoted context omitted.

I mean, you just said you backed with them, so clearly they provided you a service, one that other banks may have been hesitant to (traditionally)

Why would other banks be hesitant?

You don’t understand why other banks may be hesitant to work with startups?

Re: Bank run on Silicon Valley Bank

#549

Post by danielmarkbruce »

neural_thing wrote: post #468
danielmarkbruce wrote: post #310

Earlier quoted context omitted.

The mechanism is to watch the banks you have money in. A company still has to pay it's bills. To pay bills, you need some money in a bank, it's unavoidable. So, let's say you are a company with 4 banks accounts. Each has $500k in it. One of them is SVB. You probably just move the $500k into one of the other bank accounts. It's no big deal per se, but you do it. That's a run on the bank if lots of companies do the sam…

Or just use a Too Big To Fail bank. The government will never allow JPM/WF/BofA to go under, that'd wreck the economy.

Maybe. Smart people assumed Lehman wouldn't be left to sink. It was. And it caused a lot of problems. And the people who realized afterward that it was a mistake are retiring right about now.

Re: Bank run on Silicon Valley Bank

#550

Post by throwaway5959 »

rsync wrote: post #530
dublinben wrote: post #176

Earlier quoted context omitted.

Matt Levine is fond of this highly relevant quote by Bagehot: “Every banker knows that if he has to prove that he is worthy of credit, however good may be his arguments, in fact his credit is gone.” It seems that CEOs of banks haven't learned anything since 1873 when this was observed.

Someone should have explained it to him … as if he were a small child … or a golden retriever…

You could have been digging ditches all these years Sam!
Post reply on HN