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Yellen says government will help SVB depositors but rules out bailout

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Re: Yellen says government will help SVB depositors but rules out bailout

#661

Post by cheeseblubber »

martythemaniak wrote: post #218
version_five wrote: post #200

As others have said, if depositors are bailed out, it's a bailout. Pretending that changing the definition makes a difference is childish. Whatever the government decides to do, this makes the VC and startup industry look really weak and entitled, and knocks them down from risk takers building the future to the same status as a bunch of bankers looking for a handout. There was an opportunity here for VCs with lots of…

Indeed. The bank was trying to raise money and recapitalize itself several days before this and instead of investing, VCs panicked, told their portcos to withdraw immediately, and started a bank run.

The VC's who told their portfolio companies to withdraw will be fine. The ones who didn't cause the bank run will be hurt the most.

Re: Yellen says government will help SVB depositors but rules out bailout

#662

Post by moomoo11 »

FartyMcFarter wrote: post #573
idopmstuff wrote: post #558

Earlier quoted context omitted.

I'll probably get my next paycheck or two, but I'll lose my job. You're pretty clearly saying here that I should lose my job, along with many other people, because of the bank at which my company's cash is stored. > Perhaps they shouldn't keep money in the bank in the first place, but find other uses for them. I work at a small startup that's raised five million dollars. Not a huge amount of money, but obviously losi…

I'm not sure your founders are as "extremely" prudent as you claim them to be. For example, couldn't they have spread their funds throughout more banks instead of putting their eggs in one basket?

should have put it into gold right?

Re: Yellen says government will help SVB depositors but rules out bailout

#663

Post by ec109685 »

manuelabeledo wrote: post #132

I see a lot of unexpected saltiness and clear misconceptions in any thread about SVB. “Depositors shouldn’t get anything beyond the insured $250,000”. Then what do we do with the billions in remaining assets? Appropriate them, and leave small and mid businesses hanged to dry? “This is a bailout”. It would be if shareholders were to get their money back, which doesn’t seem likely. The government will use the bank asse…

The flip side is also true: people claiming that unless the government provides a bailout, depositors above 250k will be wiped out.

There’s a procedure to handle this, including dispersing the assets:

“The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.”

Re: Yellen says government will help SVB depositors but rules out bailout

#664

Post by throw0101c »

idopmstuff wrote: post #339
manuelabeledo wrote: post #132

I see a lot of unexpected saltiness and clear misconceptions in any thread about SVB. “Depositors shouldn’t get anything beyond the insured $250,000”. Then what do we do with the billions in remaining assets? Appropriate them, and leave small and mid businesses hanged to dry? “This is a bailout”. It would be if shareholders were to get their money back, which doesn’t seem likely. The government will use the bank asse…

I'm pretty baffled to see so much of this on HN. Like a whole lot of people here, I've worked at startups for my whole career. People here are effectively suggesting that I shouldn't get my paycheck and that the company I work for should lose most of its money because our CEO used a well-reputed bank? Absolutely wipe out the equityholders of SVB. They deserve nothing, because that's what you should end up with if you…

> […] because our CEO used a well-reputed bank?

I'm just a Regular Joe, and I have saving and chequing accounts at two banks in case there's an account discrepancy / disagreement with one, I still have some funds I can pay bills with until things get sorted out. Stuff happens:

* https://en.wikipedia.org/wiki/2012_RBS_Group_computer_system...

I also have a couple of hundred dollars worth of cash (e.g, in case of power outages).

If you're a multi-million dollar operation, why do you have a single point of failure with regards to finances?

(And this has nothing to do with 'deserve': if you play golf during a thunderstorm, would you be surprised if you got zapped?)

Re: Yellen says government will help SVB depositors but rules out bailout

#665

Post by salawat »

JJMcJ wrote: post #400
belter wrote: post #382

Earlier quoted context omitted.

It's coming from the same system that probably led you to work at Startups your whole career. High risk for high reward on a lightly regulated capitalist system. If your CEO or CFO put all the money in one risky bank, it was bad financial management.

It wasn't risky as long as prime rate stayed super low. But that rate has been creeping up for months now. SVB was too small to qualify for risk assessment under the revised banking rules. So they could get away with money in volatile securities that were very interest rate sensitive. That said, SVB seemed very solid until Thursday morning.

Only because people weren't asking the right questions.

It's like driving into a parking structure and seeing exposed rebar. It might still be standing now; but if you're smart, you need to find somewhere else to park.

Re: Yellen says government will help SVB depositors but rules out bailout

#666

Post by ec109685 »

mym1990 wrote: post #480
yeahsure22 wrote: post #304

Earlier quoted context omitted.

Why do the rules keep changing after the game has been played? And why does it seem to always favor people who are already wealthy beyond imagination? The rules were 250k insured. If you had excess deposits, additional coverage could easily be purchased.

I am not sure why you think the 250k limit is the end of the road in what is an extremely complex process. The 250k is so that depositors can be paid out quickly while the rest of the process gets going, which could take months or years. In SVBs case the 250k payouts will only account for 5% of the deposits. SVBs assets, while hampered, are still substantial. What do you propose is done with those assets?

This is what will be done:

“The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.”

Re: Yellen says government will help SVB depositors but rules out bailout

#667

Post by [deleted] »

idopmstuff wrote: post #339
manuelabeledo wrote: post #132

I see a lot of unexpected saltiness and clear misconceptions in any thread about SVB. “Depositors shouldn’t get anything beyond the insured $250,000”. Then what do we do with the billions in remaining assets? Appropriate them, and leave small and mid businesses hanged to dry? “This is a bailout”. It would be if shareholders were to get their money back, which doesn’t seem likely. The government will use the bank asse…

I'm pretty baffled to see so much of this on HN. Like a whole lot of people here, I've worked at startups for my whole career. People here are effectively suggesting that I shouldn't get my paycheck and that the company I work for should lose most of its money because our CEO used a well-reputed bank? Absolutely wipe out the equityholders of SVB. They deserve nothing, because that's what you should end up with if you…

[deleted]

Re: Yellen says government will help SVB depositors but rules out bailout

#668

Post by mlyle »

flappyeagle wrote: post #630
jjulius wrote: post #551

Earlier quoted context omitted.

It's this. I would also like to point out that it's perfectly okay to simultaneously take pleasure in an industry being culled of precisely what you described, while also feeling bad for some of those who may lose their jobs as a result. Ain't nuance neat?

This isn’t nuanced. It’s confused. If startups were going under because it turns out that they were pointless and there was no market, and they ran out of runway… then sure. But this is their house catching on fire and all of their money just vanishing through no fault of their own. It doesn’t distinguish between good startups and dumb ones, real businesses and nonsense — how could you root for this beyond pettiness?

> But this is their house catching on fire and all of their money just vanishing through no fault of their own.

You can choose to hold money in multiple banks. There are services that will happily set up laddered CDs across many institutions for you to diversify exposure and maximize insurance.

To use your tortured analogy: if my neighbor's house burned down, and he didn't buy fire insurance... I would be sad, but I don't exactly think it's my problem (or the government's) to pay to make him whole.

> If startups were going under because it turns out that they were pointless and there was no market, and they ran out of runway… then sure.

I know we all like to believe we control our own destiny. Tiny little inconsequential-seeming choices wobble startups between success and failure every single day. Having a good product is such a tiny piece of it all.

Re: Yellen says government will help SVB depositors but rules out bailout

#669

Post by epistasis »

startupsfail wrote: post #645
epistasis wrote: post #609

Earlier quoted context omitted.

I think this mostly comes from the PayPal mafia sort of attitude: libertarian when it helps me, bail me out when it helps me, start a bank run when it helps me. There was a time when tech did seem like a better business movement. Certainly better than the financial sectors, or heavy industry, or pharma. But then we let Thiel and Musk become the face, with Sachs and Calacsnais (or however you spell his name) become th…

Yes, it seems that the antisocial defectors are going to win in the short term and may have more power in the long term. Any suggestions onto how to inject some discipline and long-term thinking into this?

I am not smart enough to have a full solution, but I think part of it must include some honest examination of all the players here, including the big ones whose mere opposition has a chance of crushing new founders. So a lot of that has to come from other established players in the space. Maybe being a little bit less eager to hop on to rounds led by these folks. Use soft power at a minimum.

But what do I know, I'm just a nobody in the space! Others who have more power, wealth, and wisdom will be able to handle this better. (And I should point out that I don't absolve SVB of their errors here either, it's just that I think their errors are more about miscommunication about a bad situation of their own doing that had a clear solution ).

Re: Yellen says government will help SVB depositors but rules out bailout

#670

Post by dantheman »

manuelabeledo wrote: post #132

I see a lot of unexpected saltiness and clear misconceptions in any thread about SVB. “Depositors shouldn’t get anything beyond the insured $250,000”. Then what do we do with the billions in remaining assets? Appropriate them, and leave small and mid businesses hanged to dry? “This is a bailout”. It would be if shareholders were to get their money back, which doesn’t seem likely. The government will use the bank asse…

Any government money beyond FDIC insured amount is a bailout.
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