this is so fucked I hate these evil SV libertarian crooks. this is wrong
Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
581–590 of 1001 posts
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#582So 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.
They went around begging for bailouts when they could have just had the companies sell the uninsured deposit claims at a discount, paid their workers, and, as equity, eaten the loss.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#583So 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.
Your take does not seem to reflect reality to me. SVB did not offer particularly attractive interest rates to depositors. No one banked with SVB because of some extra APR on their savings/checking accounts. SVB mismatched interest rate risk and deposit flight risk, bungled a poorly timed asset sale and report thereof, and then compounded the problem with a few silly comments to the public at exactly the wrong time.
No, they banked there because SVB would throw money at VC's and founders (ski trips, free meals, lines of credit) who in turn would recommend/force their companies to use the bank. For all the talk of being "friendly" and "relationships" thats basically it.
The average american now has to cover the loss, either through eventual taxes, or through passthrough costs from their bank (who will not give them a free meal or ski trip).
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#584tl;dr coin toss: heads SVB wins, tails you lose
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#585So 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.
Your take does not seem to reflect reality to me. SVB did not offer particularly attractive interest rates to depositors. No one banked with SVB because of some extra APR on their savings/checking accounts. SVB mismatched interest rate risk and deposit flight risk, bungled a poorly timed asset sale and report thereof, and then compounded the problem with a few silly comments to the public at exactly the wrong time.
The fact that thier motivations were convoluted should not make the tax payer any more on the hook for the consequences.
A disgraceful bailout, if entirely unsurprising.
Shades of "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks".
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#586If they had wanted to avoid a contagion, they could have just given a 6-month 100% deposit backstop to all the other banks, and let SVB play out naturally. But then the VCs might have lost a little money.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#587So 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…
The people I lost respect for was a large portion of HN commenters calling on bank depositors - largely small businesses - to be snuffed out because there was a run on their bank. The comments have largely been factually wrong, misleading, and downright psychopathic. I am glad our government is not controlled by such people, but I question the value of this forum going forward given the large portion of it that is so…
All of these companies could have sold their uninsured deposits at a discount, made payroll, and let their equity holders take the loss. This is what equity holders are supposed to do. Instead they went on an embarrassing twitter begging campaign and unfortunately succeeded. The whole "workers missing mortgage payments" or "destroying a generation of innovation" is an insane, buck-passing take.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#588I 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…
It's 0 % shocking to see the lack of empathy and schadenfreude, if you've been in H1B related discussion on this site over the years.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#589All bank deposits should be guaranteed by the state. Just like tap water is guaranteed to be drinkable, ... Bank accounts are the basis of many things.
Its possible. Its called sovereign money. You basically have an account with the central bank just like private banks do (but they dont want anybody else to have)
These accounts pay strictly zero but can never default.
Anybody who wants to get a return can deposit with a private bank but then they need to monitor that bank because if it mismanages risk they are on the hook.
The thing to understand is that private banks are experts at risk free profiteering and passing the buck, not at managing risks which is really hard work
The monetary system is an absurd and unfair anachronism and it lurches from disaster to disaster.
Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC
#590It's a bailout. They're putting the cost, presently unknown and probably not huge, on the other banks. But the message to depositors everywhere, of every size, is "don't worry about your bank's solvency, we'll protect you". So market scrutiny is removed as a discipline on bank asset strategy. That leaves regulation as the only control. That politicizes and bureaucratizes bank lending. And the general presumption that…
Who scrutinizes the banks they make business with? To me, that is exactly the role of the regulators. Make sure the banking system is sound, and if you get the license to run a bank, you do it under certain rules that will protect depositor's money. I don't see how depositors should be held responsible in this case. And worst of all, you are actually punishing depositors who trusted the bank and the banking system, versus the ones that caused the run. Which in my view are also not to judge, since they were only protecting their assets.