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SVB chief pressed lawmakers to weaken bank risk regulations

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Re: SVB chief pressed lawmakers to weaken bank risk regulations

#71

Post by dehrmann »

somsak2 wrote: post #18
bratao wrote: post #8

I want to have sympathy for the depositors, but it is hard to knowing that they chose to keep their funds in an bank that was actively lobbying to weaken risk regulations. There multiple products that would help in this situation, such as insurances and virtual accounts that split between multiple FDIC accounts/banks. Bailing out these depositors would send the wrong message and encourage moral hazard, i.e., the beli…

> it is hard to knowing that they chose to keep their funds in an bank that was actively lobbying to weaken risk regulations what an insane standard. as a customer of any company I'm now supposed to investigate their lobbying activity? what else do I need to do due diligence on?

Agreed. They put their money in a regulated bank that's an FDIC member. Banks are a bit like the US airline in that they're heavily regulated, how they treat you and the fees the charge are all over the place, but they're all safe.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#72

Post by lisasays »

BoiledCabbage wrote: post #66
OliverJones wrote: post #29

Regulatory capture, it's called. Man, it does a lot of damage. Long ago I and colleagues opened accounts at SVB for two different outfits with VC money. It was simply the thing to do when getting started converting that money into software that would then produce lots more money. It was simply the thing to do. We didn't have CFOs. We knew darn well our deposits would exceed the household-banking FDIC insurance limit.…

> Regulatory capture, it's called. Man, it does a lot of damage. It's not regulatory capture. It's plain and simple deregulation. It's the end result of all the people arguing that "federal regulations only slow innovation. Deregulate so we can be more efficient and profit." There were regulations in place, there were a group of people who like to get rid of regulation. They obliged. They weren't captured, it's pract…

The thing is, it isn't "people" arguing that -- to an extent that would suffice influence policy, in any case. By itself, this belief contingent (and its effect on public policy) would be quite marginal.

At the end of the day, it's lobbyists, PACs and think tanks connected to specific business interests who are able to work the system, and get these marginal political beliefs converted into legislation (and court appointments).

That's how the term "regulatory capture" applies.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#73

Post by dehrmann »

mrkurt wrote: post #27
bratao wrote: post #17

Earlier quoted context omitted.

I´m not, but I do expect sophisticated companies such as Roku to do better risk management than me.

If this was just Roku money, I doubt there would be an uproar. This hit a lot of very small startups with, like, $2mm and 14 months to live. These are not sophisticated companies.

Setting aside whether or not the due diligence is to be expected, early-stage startups are in no position to do it, so they listen to their VCs.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#74

Post by dehrmann »

lapcat wrote: post #63

How we get bipartisan corruption: • Lack of public financing for political campaigns. • Lesser of two evils thinking, where each party gives their own politicians a pass because "the other side is worse". • Corporate consolidation of the news media, where the culture and even the personnel of reporting and politics are interchangeable. • "Success" (AKA greed is good) as a national ethos, with no pushback from religio…

Regulatory capture isn't the same thing as corruption. In cases like this and the Boeing 737 MAX, the systems are too complex to regulate without some amount of insider input. The problem is it's hard to tell when the input is constructive and when it trades off safety.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#75

Post by salawat »

lp0_on_fire wrote: post #45
mrkurt wrote: post #32

Earlier quoted context omitted.

There's no bailout. SVB is dead. People are pushing for depositors to get their money back. Which is, I think, reasonable. Putting your company money in a bank account should be safe. We should regulate banks like SVB to make it more safe. We should also make sure when the regulations fail the people who use a bank, they can continue doing business.

Every bank account in the United States is insured up to $250,000 by the FDIC. I have zero sympathy for these depositors who decided it would be "too costly" or "too much hassle" to split their deposits into multiple accounts. If you've got $25,000,000 dollars at SVB, you need 100 accounts. This is not rocket science. I really hope that they find a buyer to make depositors whole but if one cannot be found why should…

Incorrect.

Every depositor has 1 account per account type per institution insured up to 250k.

If you had 100 accounts of the same type at the same institution, you're still only getting 250k back from the FDIC.

To do what you're proposing, you'd have to have 100 accounts at different FDIC insured institutions. The logistics there is vastly different, but meshes quite well with designing for fault tolerance/resilience.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#76

Post by lapcat »

dehrmann wrote: post #74
lapcat wrote: post #63

How we get bipartisan corruption: • Lack of public financing for political campaigns. • Lesser of two evils thinking, where each party gives their own politicians a pass because "the other side is worse". • Corporate consolidation of the news media, where the culture and even the personnel of reporting and politics are interchangeable. • "Success" (AKA greed is good) as a national ethos, with no pushback from religio…

Regulatory capture isn't the same thing as corruption. In cases like this and the Boeing 737 MAX, the systems are too complex to regulate without some amount of insider input. The problem is it's hard to tell when the input is constructive and when it trades off safety.

"Two months later, SVB added former Obama Treasury Department official Mary Miller to its board"

"Around that time, federal disclosure records show the bank was lobbying lawmakers"

"Virginia Sen. Mark Warner (D), for whom Becker held a fundraiser at his Menlo Park, California, home in 2016, according to an invite obtained by The Sunlight Foundation and OpenSecrets. The bank’s political action committee also donated a total of $10,000 to Warner’s campaigns in the 2016 and 2018 election cycles."

The "insider input" is money.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#77

Post by nouveaux »

NordSteve wrote: post #53
OliverJones wrote: post #29

Regulatory capture, it's called. Man, it does a lot of damage. Long ago I and colleagues opened accounts at SVB for two different outfits with VC money. It was simply the thing to do when getting started converting that money into software that would then produce lots more money. It was simply the thing to do. We didn't have CFOs. We knew darn well our deposits would exceed the household-banking FDIC insurance limit.…

Startups have to do risk management all of the time -- it's a core activity of entrepreneurship. Can we trust this vendor? Is this new hire going to work out? Will this API vendor scale to what we need/be around in the future? Finance is no different. There are no "safe" investments, only varying levels of risk and reward. Mitigating the risk of a single bank failure locking up your $2MM raise is a couple hours of wo…

Putting money in a bank is risk management.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#78

Post by azinman2 »

lisasays wrote: post #72
BoiledCabbage wrote: post #66

Earlier quoted context omitted.

> Regulatory capture, it's called. Man, it does a lot of damage. It's not regulatory capture. It's plain and simple deregulation. It's the end result of all the people arguing that "federal regulations only slow innovation. Deregulate so we can be more efficient and profit." There were regulations in place, there were a group of people who like to get rid of regulation. They obliged. They weren't captured, it's pract…

The thing is, it isn't "people" arguing that -- to an extent that would suffice influence policy, in any case. By itself, this belief contingent (and its effect on public policy) would be quite marginal. At the end of the day, it's lobbyists, PACs and think tanks connected to specific business interests who are able to work the system, and get these marginal political beliefs converted into legislation (and court app…

And they convince millions of people it’s the right thing to do, so they keep getting voted in on it. It appeals to existing political mindsets. You can’t ignore the politicalization of it.

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#79

Post by [deleted] »

OliverJones wrote: post #29

Regulatory capture, it's called. Man, it does a lot of damage. Long ago I and colleagues opened accounts at SVB for two different outfits with VC money. It was simply the thing to do when getting started converting that money into software that would then produce lots more money. It was simply the thing to do. We didn't have CFOs. We knew darn well our deposits would exceed the household-banking FDIC insurance limit.…

[deleted]

Re: SVB chief pressed lawmakers to weaken bank risk regulations

#80

Post by [deleted] »

nouveaux wrote: post #77
NordSteve wrote: post #53

Earlier quoted context omitted.

Startups have to do risk management all of the time -- it's a core activity of entrepreneurship. Can we trust this vendor? Is this new hire going to work out? Will this API vendor scale to what we need/be around in the future? Finance is no different. There are no "safe" investments, only varying levels of risk and reward. Mitigating the risk of a single bank failure locking up your $2MM raise is a couple hours of wo…

Putting money in a bank is risk management.

[deleted]
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