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Urgent: Sign the petition now

ycombinator.com

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Re: Urgent: Sign the petition now

#731

Post by peteforde »

JohnFen wrote: post #687
peteforde wrote: post #515

Earlier quoted context omitted.

Not a stupid question. Good to ask what you don't know. Yes, we're talking about startups with their operating capital frozen and struggling. Many of the commenters here appear to be confusing bank depositors with bank investors. If you started a startup, it's very likely that your funds would be frozen. > And how can a bank 'loose' money from checking accounts As usual, it's complicated. Banks have always used the m…

> Unfortunately, they don't teach this stuff in high school. They sure did when I was in high school. When did that change?

I'm impressed. I went to high school in the 90s in Canada, at a shop/tech focused school. There's lots of things I think are super important (business, ethics, communications, financial literacy, civics, things like cooking and cleaning that used to be called "home ec") that were simply not on the menu for us.

Sure, there might be the occasional teacher who could spend a few minutes on a good question, but it was not part of any curriculum, so far as I could tell.

Re: Urgent: Sign the petition now

#732

Post by aaomidi »

dlubarov wrote: post #718
aaomidi wrote: post #610

Earlier quoted context omitted.

Open 4 banks and you’ll lose at most 25%? Use treasures bills if you’re that concerned.

They did use mostly T-bills, and spread out the cash over 6 banks - that's why it's "only" $3.3bn out of $42bn.

I mean then you accept that banks aren’t risk free? I’m not sure why people have been under the assumption they are.

Re: Urgent: Sign the petition now

#733

Post by harry12345 »

Why the hell are non-interest bearing demand accounts even at risk? These are simple accounts used for operations like payroll. Shouldnt this just be a separate business altogether which charges fees to its customers for the work?

Re: Urgent: Sign the petition now

#734

Post by dehrmann »

JohnFen wrote: post #677
dehrmann wrote: post #540

Earlier quoted context omitted.

I have no idea why this idea is suddenly so unpopular. People see putting money in banks as a de-facto safe decision. $250k might be a reasonable cutoff for individuals, but it's clearly way too low for businesses. If that threshold had been more like $10M, SVB might have even survived since depositors would have had faith they could access enough of their funds within a day of a bank failure. Instead, there was a ba…

> I have no idea why this idea is suddenly so unpopular. It's not suddenly unpopular. It's never been popular to ask people to rescue businesses just because the lost a bet. > it's clearly way too low for businesses. Right, but businesses have a number of ways to limit their risk that individuals don't have. FDIC is not the only protection available, it's just the one that doesn't cost you anything.

> It's never been popular to ask people to rescue businesses just because the lost a bet.

No one's asking for SVB or shareholders to be bailed out, they're asking for depositors to be bailed out. When you put money in the bank, you don't think of it as "making a bet."

Re: Urgent: Sign the petition now

#735

Post by subsistence234 »

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 ?

two accounts at two different banks already decreases the expected loss by 45% or so. (not 50%, because of contagion)

Re: Urgent: Sign the petition now

#736

Post by dehrmann »

muzz wrote: post #597
dehrmann wrote: post #507

Earlier quoted context omitted.

> Everyone knows that amounts over $250K were not insured. This is technically true, but I think there's a feeling that traditional banks are de-facto safe places to keep money. Depositors losing money in bank runs feels like a 19 20's problem.

Because 2008 was so long ago? What were the CFOs of these companies doing.

I don't think depositors lost money in 2008.

The lessons from 2008 were to look out for risks of an asset class failing and that packaging risky, correlated assets doesn't make them much safer. The lesson here is sudden interest rate increases can cause bank failures. This was a mostly unknown unknown.

Re: Urgent: Sign the petition now

#737

Post by NonEUCitizen »

xupybd wrote: post #547
axlee wrote: post #523

Earlier quoted context omitted.

I don't even understand why he would even make that comment in good faith in the first place. They are not asking for risks to be socialized, but they are asking for their "deposits" to be safe and the depositors to be "whole". Well, sounds like a lot like socializing the losses, unless there is a magical way to make the depositors whole without burdening the taxpayer.

There is a risk in using a bank. The risk should be low and it's normal to assume your money is safe in the bank. This incident proves it's not. The tax payer didn't take on this risk so why should they have to cover the losses?

It is not normal to assume your money is safe in the bank beyond the FDIC insured amount. A lot of startups have highly compensated (higher salary and/or more stock options than engineers) CFOs -- what are they doing?

Re: Urgent: Sign the petition now

#738

Post by dehrmann »

ashwagary wrote: post #707
erik_seaberg wrote: post #647

Earlier quoted context omitted.

From whom? A search for "bank failure private insurance" kept talking about FDIC and sometimes SIPC.

>From whom? Lloyds and AIG will insure just about anything, they'll happily protect $x million or billion for a nominal fee.

This isn't a viable solution; AIG almost went under in 2008.

Re: Urgent: Sign the petition now

#739

Post by AlchemistCamp »

JohnFen wrote: post #646
AlchemistCamp wrote: post #473

Earlier quoted context omitted.

YC didn’t make SVB’s decisions or cause any of this and most SVB customers were not YC startups. Your suggestion is equivalent to saying that if I were to support hundreds of kickstarters for various board games and resell them for a profit to collectors over the years and then kickstarter imploded after taking on extreme financial risks, then I should bail out all the new customers of kickstarter who paid and didn’t…

> then kickstarter imploded after taking on extreme financial risks, then I should bail out all the new customers of kickstarter who paid and didn’t get their games But what you're saying is the same thing: that taxpayers (random third parties who weren't even working in their ecosystem) should take the hit instead.

Addressing systemic risks that individual actors aren’t well incentivized to handle is part of what governments and taxes are for. The $250k of FDIC insurance per bank customer exists because otherwise incentives drive bank runs even for banks with broad consumer bases.

Spending taxes on preventing financial meltdowns from cascading actually makes the government and its citizens wealthier than not doing so.

Re: Urgent: Sign the petition now

#740

Post by tarsinge »

nocoiner wrote: post #8

LOL, nope. Not interested in taking another spin on the “privatize gain, socialize loss” merry-go-round. The banks had to be saved in 2008 because they were, like, the financial system. I don’t see why private companies and funds that are much less integral to the functioning of the economy as a whole should be saved by the public fisc. Sorry about your disruption.

There is an intermediate solution that seems always conveniently ignored: You ask for taxpayers money to save a business and its employees? Then it’s a good old nationalization. Everyone is happy except shareholders and execs that are rightfully not made whole for their bad bets and management, no special exception to market rules.
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