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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

#801

Post by EFreethought »

gruez wrote: post #746
bentlegen wrote: post #278

Earlier quoted context omitted.

The C-suite paid themselves millions of dollars via bonuses and stock sales right before insolvency. Executives got paid. What’s to stop future bankers from running the same playbook? (We can debate that this the stock sale was premeditated/signaled months in advance, but the stock had already declined 80% from its 2021 peak and they surely knew about the tough liquidity position months ago — external observers drew…

>The C-suite paid themselves millions of dollars via bonuses and stock sales right before insolvency. This is highly misleading. The bonuses were calculated/awarded from last year. The stock sales were pre-scheduled.

"Last year" as in the year they had no Chief Risk Officer? Got it.

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

#802

Post by sbaiddn »

nerdponx wrote: post #724
sbaiddn wrote: post #713

Earlier quoted context omitted.

Your company is the equity holder. You loosing last months paycheck is no different than what happens in the rest of the country any time an employer declares insolvency. Also, I don't think people in SV appreciate how much rancor and resentment their behavior has generated in the last fifteen years.

Plenty of people not in SV, engaging in actual productive enterprise, were also using SVB.

While I sympathize with them more than I would a tech bro, the principle is the same.

What would happen if this happened to an employer's bank in Indiana?

Your company's assets don't exist any more and you're insolvent. US bankruptcy protection is very generous, apply for it and try and to regroup.

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

#803

Post by anon291 »

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…

> 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?

I'm in the same position as you but this is a terrible take.

No one thinks we deserve to lose money or jobs.

They simply do not believe that other American taxpayers who likely make less than you should have to spend their hard earned money (or risk having it devalued by printing) in order to bail you out.

And they are broadly correct.

It is wrong to demand other people's money due to your own misfortune, especially when the misfortune is a lost business or job, versus something more existential. The reality is that most tech workers will be fine.

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

#804

Post by azinman2 »

lordfrito wrote: post #682

The lack of understanding here about how banks work is astounding. Are these the same people who feel it's their God given right to "move fast and break things"? Disruption is great. Too bad for the music industry. Too bad for journalism. Too bad for legacy taxi services, etc. Disruption is great, except when it happens to you? Aren't we all here in the business of managing risk? Or, after a decade of cheap money, ha…

Disruption in the definition of Clayton Christensen as you’re likely using doesn’t apply to the failing of banks. Disruption is a theory about innovation and entrepreneurship. SVB didn’t get disrupted by some new player who leapfrogged how banking works- they made poor choices for a world where interest rates went up.

Having been a bank for 40 years with a great reputation, no one who held their money there expected a meaningful risk the bank would collapse. The same with AIG and any other major bank collapse for a long time player. Sure let those responsible have repercussions, but innocent account holders of America’s future trillions of GDP, investment funds holding onto the money of pension accounts, farmers and wineries shouldn’t bear the brunt of investments gone sour leading to a liquidity crunch.

Note that 3 VCs taking out their cash quickly allowed the bottom to fall out.

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

#805

Post by sbaiddn »

hn_throwaway_99 wrote: post #765
sbaiddn wrote: post #712

Earlier quoted context omitted.

Dont confuse the issue. No one has a problem with creditors getting as much of their money as possible by selling assets. The problem is that SVB's book value of assets is far smaller than the debts. Imagine their value on a firesale. the creditors then take a haircut. It's basic bankruptcy. What people oppose is taxpayers absorbing the losses beyond $250 000 as promised, and there's a very good reason for this: its…

Hallelujah, parent's comment is a straw man. I've been vehement against taxpayer money being used to make depositors whole, but nobody is saying they shouldn't be paid out of the assets of the bank. I'd also be in favor of the feds helping to orchestrate a bailout by getting purchased by another bank/banks, or doing whatever it takes to get depositors access to as much of their money as quickly as possible. But all t…

To be completely open, I wouldn't even be opposed to bailing all the depositors out if strict conditions are placed that disincentivize playing with house money

I haven't come up with a way to do this [1], nor has anyone else. So, we're back at square one: I can't bail you out with out encouraging destabilizing destructive behavior.

[1] well I have, but public executions for economic crimes are unconstitutional.

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

#806

Post by GenerWork »

oldgradstudent wrote: post #698
idopmstuff wrote: post #339

Earlier quoted context omitted.

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…

> 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? If you want to be paid by the government, you should be aware that salaries are significantly lower, and perks are non-existent. The government regulates banks and provides deposit insurance to to 250K. The whole point of deposit insurance is…

>and perks are non-existent.

I thought that government perks were a major way to attract people in order to make up for the lower pay (pensions, more vacation, etc).

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

#807

Post by anon291 »

idopmstuff wrote: post #558
tsimionescu wrote: post #416

Earlier quoted context omitted.

First of all, even if the company you work for goes bankrupt, you're very likely to still receive your salary, as debts to workers are the highest priority in any bankruptcy case. So the risk to workers' livelihoods is being way overblown. Of course, if a substantial amount of your compensation was company stock, you may lose a lot on that, but that is par for the course with stock. Second of all, the purpose of havi…

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…

You do not have a right to a job at the taxpayers expense. We all feel for you and are rooting for the workers but no one has an inmate right to others money. Especially when the right being demanded is size figure salaries.

If you were to lose your job, there is a standardized insurance that kicks in that all Americans get.

You are demanding special, better treatment at the tax payers expense.

Look, everyone on this forum is going to be affected by this. I myself was laid off a few weeks ago due to the tech bubble.

It's still not right to demand other people's money and act entitled. We all get it's hard out there right now.

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

#808

Post by datavirtue »

shadowgovt wrote: post #692
reb wrote: post #580

Earlier quoted context omitted.

Plenty of startups fit that bill and will nonetheless be impacted by SVB’s failure, while the most pointless businesses surf by on their founders’ access to inherited wealth and political power. Any revenge on them will be short-lived and will have serious, lasting consequences for middle class workers throughout the industry. For anyone reading this who doesn’t already know: startups aren’t all snotty trust fund kid…

No, but the median salary for a software engineer is still 120k, a little under double the median salary across all industries. It's hard to dredge up deep, deep wells of sympathy for folks who were already playing the salary game at double the value of half the players. One can't escape the sense that if they've done the kind of budgeting that a regular American does, they will be fine.

Regular Americans spend every dime that comes in.

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

#809

Post by version_five »

computing wrote: post #789
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…

have you read the financials of the banks you bank with? have you read the source code of every app/other software that you use? Interesting new world folks are suggesting here, where depositors can't trust the highly regulated banks they bank with.

I know how much money I have at risk and how much is insured. It would be pretty irresponsible for me to not and just assume someone will step in and give me their money if I lose mine.

I'm personally a conservative investor, which means amongst other things I forgo notional returns by making safer investments. So it definitely makes my angry to see people that had a less responsible money management strategy get to participate in all the upside and not have to take the downside.

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

#810

Post by azinman2 »

jmull wrote: post #691
roflyear wrote: post #533

Earlier quoted context omitted.

There's a lot of things I don't like spending my tax money on but I am ok with it because largely I have benefited very much from living in the US

I agree that some things are worth spending tax dollars on. I do not agree that anything is worth spending tax dollars on. IMO, a taxpayer bailout of Silicon Valley startups -- highly speculative businesses by their nature -- is a really poor use of federal funds.

It’s literally a significant portion of America’s economic future you’re killing off, plus wineries, farmers, and VC’s pension fund holdings. It would be insane to let that just go boom.

Mass unemployment in tech is not in national interests. It will lead many foreigners to head home and start/join competitors and strangle future GDP.

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