Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Yellen says government will help SVB depositors but rules out bailout

ft.com

Post reply on HN
Print view View original

871–880 of 1001 posts

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

#871

Post by closeparen »

fwlr wrote: post #148

Eh, the depositors aren’t totally blameless here. On Thursday they conspired to perform a huge bank run on SVB, on Friday they succeeded, and on Saturday they were demanding the government and taxpayers make them whole by Monday. They deserve to get their money back and they eventually will once SVB’s assets are liquidated. But that’s not good enough, they want it now , and they won’t hesitate to make you pay for the…

Many commenters have argued that it is the personal responsibility of depositors to be on top of the health of any institution where they have more than $250k. An obvious consequence of that is that it's their duty to cause the largest possible bank run at the earliest possible moment.

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

#872

Post by prepend »

_hl_ wrote: post #511
prepend wrote: post #444

Earlier quoted context omitted.

> just don’t understand why folks on the internet are so passionate about the depositors being hit by this. I think most of America can’t even imagine having over $250k in an account. So people with this much wealth asking for a bailout is literally rich people asking for coverage because they did something dumb (banked with a bad bank, didn’t account for risk, didn’t insure, didn’t manage funds). It’s not hate so mu…

It's mostly businesses though, not people. If you have >1 employee you def. should have at least 250K in the bank.

Not really. If you have 25 employees, you probably need $75-150k to make payroll every two weeks.

You would cover this through rotating receivables through accounts. And you’d likely have multiple accounts to avoid the $250k threshold.

My local bagel store owner talks about this and has different accounts for different purposes. And he banks with some national level bank and still splits money across accounts.

It’s not a good idea to have large amounts of cash sitting in single accounts.

If you have two employees then you don’t need much cash in an account at all.

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

#873

Post by gnicholas »

joering2 wrote: post #816

now there are lines withdrawing from First Republic. Question to those who know better... all my "digital" savings are with Bank of America and Chase (eight-digits) - these are biggest banks in the US. Should I be concerned?

These banks are too big to fail, so I would guess they will be net beneficiaries of the current panic. If you have 10x the FDIC limit, it's probably good to diversify, but it seems highly unlikely the govt would let either bank even come close to failing.

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

#874

Post by 1vuio0pswjnm7 »

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 get the schaudenfraude, but this will not hurt big tech and VCs and much as tens of thousands of small businesses, and the people employed at them."

It's good for those "businesses" if VC and Big Tech are unharmed because were it not for VC investment and Big Tech acquisitions, these "companies" would have no money to pay the people who "work" at them.

Legitimate businesses that can pay employees from revenues and generate profits are generally not SVB's customers. They can use normal banks.

Arguably a "job" that depends on interest rates being "zero" and investors writing checks cover payroll is not something anyone should be relying on longterm.

"Generic screeching against the tech world" is a red herring. Perhaps it is easy for "tech" companies to dish out hype but difficult for them to accept any negative commentary. The question that must be considered is whether the "tech" company's so-called "business model" really is one. Arguably these "companies" never had a successful business model and never found one, if they remain reliant on VC, SVB and Big Tech. Intermediaries, surveillance, data collection, advertising services, all purely parasitic activity. If this is not something the world really needs and is willing to pay for, entities like SVB and their customers will burn out or fade away.

Big Tech fans commenting on HN have used the phrase, "The market has spoken" in the past to foreclose any debate on the merits of the so-called "tech" industry. Well, here the market is speaking.

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

#875

Post by cowsandmilk »

NordSteve wrote: post #868

It is shockingly easy for a company to mitigate the bank failure risk. 1. Open account at Fidelity 2. Purchase brokered CDs in denominations https://www.fidelity.com/fixed-income-bonds/cds It's not like the risk of banks was a secret. Click on the "Risks" tab at the link above -- it's near the top of the list. This strategy works for raises of up to several million dollars. If you've raised more than that, spend a bi…

> spend a bit of money on someone to help you set up a treasury ladder, which scales to any size of raise.

This is effectively what you are hiring a bank to do for you, but with them determining over large sets of depositors what the cash flow needs are expected to be. The focus of your company isn’t building these investment instruments for your cash. Spending time on this is a distraction for most start ups.

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

#876

Post by nemo44x »

ak_111 wrote: post #370

The only comic thing in this entire tragedy is watching the fanatics who have been relentlessly preaching to others such dictums as “move quick and break things” and “only the paranoid survive”, extolling the virtues of “creative destruction” and repeating ad infinitum the Reagan quote "The top 9 most terrifying words in the English Language are: I'm from the government, and I'm here to help" cry out for government i…

The government and its institutions (The Fed) had a big part in this though. They flooded the market with cash, sold a bunch of bonds with low interest rates (lowest ever) to tons of banks that had to figure out how to manage that cash and did so by buying “the safest investment”, and then that same institution jacked up interest rates to the highest in 20 years over the course of 10 months.

So no, if the government and the fed would actually let the market set interest rates then this doesn’t happen. If the UST had to sell bonds at the real market rate for them then this doesn’t happen.

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

#877

Post by roland35 »

manquer wrote: post #835
roland35 wrote: post #532

Earlier quoted context omitted.

Exactly! My personal finances are nowhere near as sophisticated as even a small start-up, but I make sure I have multiple sources of cash and credit just in case I lose access to one for whatever reason temporary or permanent (bank failure, fraud, forget password, etc). It isn't too difficult: open up a second savings account, apply for an extra credit card, open a HELOC if available. I have to believe there is some…

It isn’t too difficult for you as individual to open an account anywhere . Startups don’t have that luxury it was and still pretty difficult to do banking as an early stage startup . There is a reason why there are only 2-3 banks specialized in this sector and everyone banked with them. If you were a small startup keeping your money in SVB was the safest thing you could have done till last week. They were the largest…

I have a hard time believing a business can't simply open a second checking account somewhere, assuming they have the cash and don't need any extra features. Maybe if it was a very early company. VCs and advisors failed their companies if this was their only advice.

Also "safest thing since last week" isn't super convincing! Maybe I'm just more conservative since I used to bank with Wachovia which failed in 2008.

As an engineer I am expected to have a disaster recovery plan. Sure it's unlikely that AWS goes out of business, but what if we lose access? Lose data? Ransomware? Businesses need to have some basic planning around this kind of stuff or else they run this type of risk unfortunately.

Again I hope they get all their deposits back. But they should hopefully be able to stay in business for a short time until the dust settles.

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

#878

Post by mixdup »

omginternets wrote: post #825
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…

Respectfully, I think you are the one playing with definitions. “Bailout” refers to shareholders. It refers to bailing out the institution, not it’s depositors. We can talk about a depositor bailout if you want, but let’s not pretend it’s the same thing, not pretend it’s what the term “bailout” commonly refers to.

We’re changing the (very well) known rules in the middle of a crisis and acting like we didn’t know what happened could happen, when we did. This is a bailout

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

#879

Post by stcredzero »

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…

"Generic screeching against the tech world."

This is why direct democracy can't work for long. The average voter has a hazy and sometimes downright broken model of reality. I don't know how else to describe someone who wants to get back at Facebook by ganking the paycheck of some engineer at a 10 person startup.

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

#880

Post by mixdup »

drdrek wrote: post #492
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…

Its too much to expect from VCs, they are each trying to maximize their gain. Creating consensus and cooperation is very hard, especially in bad times. It's exactly why governments exist, In some cases a web of self interested parties will produce horrible results and central authority can be more effective.

This is fine, but when things are rosy the VCs and startups can’t claim that government regulation is communism and choking off their ability to do whatever they want

If you want the backstop if the government you have to be willing to play within its rules during the good times too

Post reply on HN