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Urgent: Sign the petition now
861–864 of 864 posts
Re: Urgent: Sign the petition now
#862Earlier quoted context omitted.
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.
But we're talking about businesses here. They are certainly well-incentivized to properly handle the money in these amounts. The risk of losing it (and potentially the business) sounds like excellent incentive.
From my POV, they did "properly" handle their money by putting it in a large, trusted bank with a great reputation and focus on their type of business.
What was your cash management strategy with your startup (assuming you have relevant experience)?
Re: Urgent: Sign the petition now
#863Earlier 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). This calculation really put it in perspective. CEO of HN asks that every family in America send his friends $500.
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Re: Urgent: Sign the petition now
#864Earlier quoted context omitted.
110% agree. At some point, risk HAS to be treated as what it is, risk, rather than just "another way to do things". We have so many banks treating risk as what it is, and pricing for it, well these people decided to go to another bank to get funding, well deal with it. It's not like the average citizen has this luxury.
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…
> If this is not true, then most people will only bank with the largest banks. That's not a good situation.
It is an elite class of people who banked at SVB. Most people bank with less risk-taking community banks or the very large ones.
Casting SVB as an underdog and the people who bank with them as helpless is upside down.