891–900 of 1001 posts
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> It was VC money, that's money intentionally being gambled in high risk endeavors. The high risk endeavor does not have anything to do with the bank where you deposit the money raised. Here, it does not matter if the source of money is a VC or another.
They could have deposited the funds at a bank that charged a fee to hold it instead of FTXing it.
The truth is VCs are terrified their investments in their startups are going to go to 0. That’s why the biggest most vocal people are VCs talking about this. So they are framing the “we need to make depositors whole” as if they care about small business when really they are just talking their own book. The real solution is that VCs should give a loan to all their startups so that they can make payroll. Isn’t that the…
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I think I lean towards you, but what people are actually suggesting is that these startups shouldn't be bailed out when they went with a bank with super-high promised rates, while they of course knew their deposits over $250k were uninsured.
I haven’t heard anything about high rates being the primary thing drawing people to SVB. The trap seems to have been giving startups access to credit that other banks would not provide, but only if you agree to do all your banking with SVB. That, and also several big VCs that required their portfolio companies to bank there. These things are what herded everyone into the building before it caught fire.
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…
On the other hand, if the bank had sufficient assets to make their depositors whole, how did they fail in the first place?
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>What people oppose is taxpayers absorbing the losses beyond $250 000 as promised, and there's a very good reason for this: its another example of privatizing profits and socializing losses. In other words, it encourages risky behavior because they're gambling with the house's money. But by not bailing them out, you're punishing the depositors, which I wouldn't exactly characterize as "gambling with the house's money…
If a bank is giving depositors unparalleled benefits to bank with them [1], alarm bells should ring. Let me be blunt. The last place I'd do my personal banking is the local bank of a region who's mantra includes: "move fast and break things". [1] benefits include interest rates above average or offer to finance your start up.
>[1] benefits include interest rates above average or offer to finance your start up.
Can you be specific? Which parts of SVB's offerings were suspiciously generous? You mention interest rates, so I checked their archived page as of feb 23 and found that they were offering 4.5% for their money market account. This seems roughly consistent with market offerings[1]. You also mentioned "offer to finance your start up", but is that really supposed to be suspicious? That's literally one of a bank's primary functions.
[1] https://www.economy.com/united-states/money-market-rate
>Let me be blunt. The last place I'd do my personal banking is the local bank of a region who's mantra includes: "move fast and break things".
This feels like something that's only obvious because of hindsight. You could easily make an equally compelling case that you shouldn't bank with banks from new york, because that's the financial capital of the US, and it's the evil bankers that caused the 2008 financial crises.
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…
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Yes, but "worth" is a complicated concept here. What's probably going to happen is that a big bank like JPMorgan is going to buy the remaining assets at 100% book value, and the depositors are going to be made whole out of that. That's not their current market value if sold at fire-sale prices, but banks have the time horizons to hold those assets to maturity and not worry so much about their market value. The stabil…
I do not think there is reasonable pushback on this. If a private company like JPM wants to do it, great! The issue is with using government money to repay depositors beyond what they would otherwise get from the FDIC floor plus liquidation of SVB assets. I am not saying it should not be done (it probably should to avoid forcefully consolidating all banking at the big three), but that it should be a subject of hard q…
Assuming there was no malfeasance and the assets are as described on the books, the bank just needs liquidity so it doesn’t have to fire sale.
Also worth pointing out that every bank likely has the same problem trying to move treasuries from 1-5 years ago right now. The financial big heads should be trying to figure out how to make such a “safe investment” actually safe again.
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> My feeds are full of sociopathic libertarians calling for government to make sure they never suffer any consequences for their failure to adequately manage risk? Not sure to whom you’re referring, but they’re not libertarians.
I mean literally nobody is a libertarian by the dictionary definition, there aren't any on the planet. It's just a word people use to describe a value system where governments only help people like them and everyone else gets fucked. They sure talked a good game though.
And is anyone a "democrat" or "republican" or "socialist" (note small "d", "r", and "s") by the dictionary definition?
All I'm saying is that failing to behave strictly according to dictionary definitions is common to all humans not just "libertarians".