Prior to joining SVB, CEO Gentile was CFO for Lehman Brothers GIB - https://news.ycombinator.com/item?id=35110431
He left Lehman Brothers 1 year before the 2008 collapse so I don't think you can connect anything here.
SVB chief pressed lawmakers to weaken bank risk regulations
91–100 of 102 posts
Re: SVB chief pressed lawmakers to weaken bank risk regulations
#92Earlier quoted context omitted.
> Regulatory capture, it's called. Man, it does a lot of damage. It's not regulatory capture. It's plain and simple deregulation. It's the end result of all the people arguing that "federal regulations only slow innovation. Deregulate so we can be more efficient and profit." There were regulations in place, there were a group of people who like to get rid of regulation. They obliged. They weren't captured, it's pract…
The thing is, it isn't "people" arguing that -- to an extent that would suffice influence policy, in any case. By itself, this belief contingent (and its effect on public policy) would be quite marginal. At the end of the day, it's lobbyists, PACs and think tanks connected to specific business interests who are able to work the system, and get these marginal political beliefs converted into legislation (and court app…
> The thing is, it isn't "people" arguing that -- to an extent that would suffice influence policy, in any case.
You also seem to be discounting the fact that plenty of people (for example influential people in SV) have spent a lot of time arguing that regulation is in general bad. That spreads here on HN quite frequently. This is the outcome of that rhetoric.
There is also a political part that champions it, they've and a large part of the voting public believes this. It's not just a few small lobbyists that twisted politicians arms on behalf of their clients. There are politicians looking for places where there are regulations so they can cut them as that's a key part of their platform. People suggest areas and they agree.
You keep making it sound like the concept of cutting regulations is political heresy across the board and lobbyists are having to sneak to get these done. It's widely promoted in a certain sphere and this is what it results in.
Re: SVB chief pressed lawmakers to weaken bank risk regulations
#93Regulatory capture, it's called. Man, it does a lot of damage. Long ago I and colleagues opened accounts at SVB for two different outfits with VC money. It was simply the thing to do when getting started converting that money into software that would then produce lots more money. It was simply the thing to do. We didn't have CFOs. We knew darn well our deposits would exceed the household-banking FDIC insurance limit.…
> If we lowly startup entrepreneurs can't trust institutions like banks reliably to provide their services, and we can't trust the government to do their part in maintaining that reliability, who can we trust?
Oh great, another entrepreneur crying "Woe is me".
Consider that your lowly regular employees have to make far more specific financial decisions every single year.
- We have to choose health plan options that will govern our and our family's literal lives over the next year
- We have to make specific retirement plan elections and understand market risks because our actual lives after retirement age depend upon them, since there are no such things as pensions any more
- We have to figure out the tax implications of all of the above, which intersect in odd and complex ways ways (Why is my health plan linked to a tax-free retirement account, again? Figure it out!)
- In addition to all this, if we ever happen to hold more than 250k in cash, we have to worry about the exact same thing here.
Seriously though, if you do actually think that figuring all this risk out is a waste of money as a founder, make sure you provide optimization guides for your employees that go into details about optimizing the complex financial decisions that you make them do every year. Working on that might open your eyes to also looking more carefully at the institutions you bank with.
> This regulatory capture is freakin' ridiculous and has to come to an end.
True. But this is also true of all the stuff I mentioned earlier, especially taxes. Regulatory capture hurts lowly employees far worse and far harder than it hits entrepreneurs. Fixing one will help fix the other.
Re: SVB chief pressed lawmakers to weaken bank risk regulations
#94Earlier quoted context omitted.
And they convince millions of people it’s the right thing to do, so they keep getting voted in on it. It appeals to existing political mindsets. You can’t ignore the politicalization of it.
That's exactly how they operate - by trying to convince everyone that it's the inevitable result of the groundswell of public opinion in favor of aggressive regulation. In reality, it isn't.
> to convince everyone that it's the inevitable result of the groundswell of public opinion in favor of aggressive regulation.
This wasn't aggressive regulation - it was removing regulation. Again, regulations would have helped.
The same things we've learned since the 1930s still apply. And when someone rolls back those regulations under claims it's "stifling profit or innovation" we end up in the same spot.
Re: SVB chief pressed lawmakers to weaken bank risk regulations
#95Always the same story with these guys...
Re: SVB chief pressed lawmakers to weaken bank risk regulations
#96Earlier quoted context omitted.
That's exactly how they operate - by trying to convince everyone that it's the inevitable result of the groundswell of public opinion in favor of aggressive regulation. In reality, it isn't.
> to convince everyone that it's the inevitable result of the groundswell of public opinion in favor of aggressive regulation. This wasn't aggressive regulation - it was removing regulation. Again, regulations would have helped. The same things we've learned since the 1930s still apply. And when someone rolls back those regulations under claims it's "stifling profit or innovation" we end up in the same spot.
Typo: meant to say deregulation, of course.
Re: SVB chief pressed lawmakers to weaken bank risk regulations
#97Earlier quoted context omitted.
I´m not, but I do expect sophisticated companies such as Roku to do better risk management than me.
If this was just Roku money, I doubt there would be an uproar. This hit a lot of very small startups with, like, $2mm and 14 months to live. These are not sophisticated companies.
There's solo freelancers that run things through their LLC as well. It's not just all fat cats for sure.
Re: SVB chief pressed lawmakers to weaken bank risk regulations
#98Earlier quoted context omitted.
If taxpayers help wealthy depositors get more than their insured amounts, (and more than a normal liquidation of assets) that is a bailout It may or may not be the right thing to do, but it most definitely is a bailout.
Yes that's reasonable. That's probably not what's happening here. In some ways, the _promise_ of the FDIC getting depositors almost all their money back is enough. The biggest problem people have right now is time. Over time, everyone will probably get most of their deposits from SVB back from SVB assets. What people (the ones who know what they're talking about, anyway) are asking for is closer to taxpayers covering…
But why can their investors not cover the costs? Surely the same VCs who lent the startups money can lend them some more for the short period until SVB's assets valuation gets sorted out? Aren't they the ones to lose most if the startups go down under?
Re: SVB chief pressed lawmakers to weaken bank risk regulations
#99Prior to joining SVB, CEO Gentile was CFO for Lehman Brothers GIB - https://news.ycombinator.com/item?id=35110431
He left Lehman Brothers 1 year before the 2008 collapse so I don't think you can connect anything here.
The seeds of Lehman’s collapse were planted years before its eventual collapse. Pushing the envelope as far as one can get away with (literally) seems to be the key to success as a banking executive.
Re: SVB chief pressed lawmakers to weaken bank risk regulations
#100How we get bipartisan corruption: • Lack of public financing for political campaigns. • Lesser of two evils thinking, where each party gives their own politicians a pass because "the other side is worse". • Corporate consolidation of the news media, where the culture and even the personnel of reporting and politics are interchangeable. • "Success" (AKA greed is good) as a national ethos, with no pushback from religio…
Regulatory capture isn't the same thing as corruption. In cases like this and the Boeing 737 MAX, the systems are too complex to regulate without some amount of insider input. The problem is it's hard to tell when the input is constructive and when it trades off safety.
Overengineering is a choice. You can take the slower way, with fewer points of failure, and while you can't (or might not even want to) always stop people from trying to a build a faster solution, you CAN make them pay for the real cost of any adverse incidents which occur under their aegis. If the ship is already burning, you treat the passengers (within reason) and you fine the carrier; you don't bail the latter out, on the promise that they'll make the former whole.
The very paradigm of allowing these entities to lobby their way to private profits and socialized losses is indeed corruption.