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Urgent: Sign the petition now

ycombinator.com

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Re: Urgent: Sign the petition now

#661

Post by standapart »

standapart wrote: post #566
garry wrote: post #443

Earlier quoted context omitted.

This isn't some sort of complex bid call option strategy. This is a checking account, and one choice out of many that founders make regularly. To my knowledge SVB was never required, and startups always had choice.

Requirements aren't the only way to steer someone to a product. Google pays Apple billions to be the default search engine on iOS. Nor does the lack of a requirement indemnify someone from responsibility.

When the smoke has cleared, it would be interesting to quantify whether this event affected a (statically significant) higher percentage of YC offspring than other incubator offspring.

Could be a selling point for alternative incubators in the future.

Perhaps being a part of YC puts you at greater risk from these events. Draw your own conclusion about the reason why.

Re: Urgent: Sign the petition now

#662

Post by benmccann »

rahimnathwani wrote: post #185
garry wrote: post #144

Earlier quoted context omitted.

The equity holders and management of SVB are likely to be wiped. In the petition we specifically call this out: we are not asking for their risks to be "socialized." Depositors have a reasonable expectation that when they choose a bank (especially a publicly traded bank that is regulated) that their deposits are safe. If this is not true, then most people will only bank with the largest banks. That's not a good situa…

The possibility of changing the rules of the game once it's started can create moral hazard. For example, if people believe that the govt will use taxpayers' money to reimburse funds that were not FDIC protected, then they won't be careful about picking their bank. And it's a lot of money (e.g. 30% loss on $200bn is about $600 per US resident household). But I'm conflicted, because: - the federal administration doesn…

> And it's a lot of money (e.g. 30% loss on $200bn is about $600 per US resident household).

I'm not sure where you got this number, but it's different than what I've seen. Yes, SVB had $200B in deposits, but it had $15B in unrealized losses. The FDIC is probably contributing $12B as roughly 6% of deposits were insured. That means the gap is probably $3B if the government is to step in, which is very different than the $60B you're suggesting. If these instruments can't be held to maturity then the losses may be greater as many of them are illiquid and would have to be sold at a discount, but the government has the liquidity to avoid that.

Re: Urgent: Sign the petition now

#663

Post by geodel »

downvotetruth wrote: post #581
cmurf wrote: post #284

Earlier quoted context omitted.

Correct. The $250,000 FDIC cap is a favor to banks. They only pay fees to insure up to that amount. And it's bogus. The FDIC should require deposits to be insured, no matter the amount.

I'm not going to pay to insure a millionaire. Insurance is not free.

With the way things are going, don't be surprised if some silicon valley innovator come with insurance product that can be purchased after the fact. With marketing like "Come, Disrupt the Insurance Industry" it might just work out fine

Re: Urgent: Sign the petition now

#664

Post by dougmwne »

garry wrote: post #358
prepend wrote: post #133

What would I gain as a taxpayer in return for this bailout? Would the taxpayer receive 10% equity in YC? It seems like YC could have insured these funds, but didn’t. They saved money and accepted the risk. This risk is now realized. Seems bizarre that YC would be made whole. Certainly it saves jobs, but it benefits YC more than anyone else.

These are deposits at a bank. We're advocating for protection of 37,000 small business accounts, a small number of which are YC. We discovered about 30% of YC companies would not be able to make payroll even after the $250,000 insured amount if they were to wait months for their payments. That is detailed on the FDIC website currently as the process for remediation. This petition represents the lived experience of th…

Honestly, you should be going back to the lobbying drawing board. This is going to be enormously unpopular with the general public. VCs are already very rich, even if they take a haircut. They already have huge resources to be able to extend bridge loans to the companies they‘re partial owners in. What does the tax payer get out of absorbing the costs of this systemic risk taking? Are you going to give the public a stake in your companies, or do you want to just take our money and give nothing back?

Re: Urgent: Sign the petition now

#665

Post by grugagag »

SkyMarshal wrote: post #575

Uh, why does this need to be flagged? Agree or disagree, it’s a legit thing to discuss.

Damage control. This risks turning into a megathread that would want to stay on the front page for a few days and that would make some people uncomfortable. It conveniently gets flagged or gets demoted to 100th page where fewer pairs of eyes reach.

Re: Urgent: Sign the petition now

#666

Post by rahimnathwani »

benmccann wrote: post #662
rahimnathwani wrote: post #185

Earlier quoted context omitted.

The possibility of changing the rules of the game once it's started can create moral hazard. For example, if people believe that the govt will use taxpayers' money to reimburse funds that were not FDIC protected, then they won't be careful about picking their bank. And it's a lot of money (e.g. 30% loss on $200bn is about $600 per US resident household). But I'm conflicted, because: - the federal administration doesn…

> And it's a lot of money (e.g. 30% loss on $200bn is about $600 per US resident household). I'm not sure where you got this number, but it's different than what I've seen. Yes, SVB had $200B in deposits, but it had $15B in unrealized losses. The FDIC is probably contributing $12B as roughly 6% of deposits were insured. That means the gap is probably $3B if the government is to step in, which is very different than t…

You're right, the gap is likely much smaller.

I did a quick calculation based on:

- $200bn deposits (on which we agree)

- press reports that Jefferies and hedge funds are offering to buy claims at up to 70c on the dollar (suggesting 30% loss)

Re: Urgent: Sign the petition now

#667

Post by grugagag »

Ekaros wrote: post #325
greatpostman wrote: post #190

Rich fat cats all over Silicon Valley looking for society to socialize their losses. YC has an incredible amount of wealth as it is.

Shouldn't they have enough capital to well recapitalise the startups they funded? At least if they fully believe that they are great and will make the money back multipletimes?

Why would they if somebody else does it for them?

Re: Urgent: Sign the petition now

#668

Post by JohnFen »

dehrmann wrote: post #524
sourcecodeplz wrote: post #31

Might seem like an ahole but can't you guys making 100k+ per year ride it out? We are talking about startup a here, have we forgotten the risks and implications that come with this model?

When you join a startup, you don't really think about their traditional bank failing as a risk factor. It's a step away from "what if the office collapses in an earthquake" or some other p9999 off-chance risk.

When you join a startup, you are thinking that there's a good chance the startup will fail. The exact mechanism isn't in your thoughts, because it doesn't really matter.

Re: Urgent: Sign the petition now

#669

Post by rumdonut »

cmurf wrote: post #579
analognoise wrote: post #557

Earlier quoted context omitted.

What's weird is that you can insure an account for more than that, it's just not free. So if you had "substantially more" than that, you should be financially savvy enough to insure your accounts and pay for the insurance on them as a cost of doing business. That's why we insure anything - in case something happens.

I found no information on how to do this with a cursory Google search. What comes up are other stratgies, like multiple bank accounts, each at different banks. Or instruments like certificates of deposit, which aren't suitable for payroll. So if banks offer more insurance for a fee, I can't easily tell how to do this. My business banking account has nothing about such a feature, either online search or looking at the…

Yep. I find it funny - though I feel bad for the small businesses that may have been oblivious - that a VC CEO is complaining when he effortlessly could have hired a financial consultant for a day to look into the first bank he encouraged his customers to use. A regional bank that had an obvious and alarming reputation of being the only place in town that would make high-risk loans to high-risk ventures. If anyone outside SVB was in the responsible position to avoid this situation, it was this CEO, and I’d suggest - if he truly believes in maintaining innovation and having those responsible suffering the consequences - that he personally go first in making his companies whole, rather than the taxpayer.

Re: Urgent: Sign the petition now

#670

Post by CyanBird »

popol12 wrote: post #537
Ekaros wrote: post #364

Earlier quoted context omitted.

Chose to exceed that and also not diversify at the same time. In my mind they have only themselves to blame. They could have gotten one or two more accounts if they are legitimate businesses.

What if you have 3 billions to deposit, like Circle ? Open 1200 accounts in 1200 different banks ?

You can buy specific insurance in case of bank defaults. That's what large businesses do on the regular, it is not a new or strange thing

People here simply decided to not inform themselves or seek appropriate assistance and therefore got bitten

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