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SVB was literally playing by the rules outlined in banking regulations to reduce risks. Those rules are dumb, don't really reduce risk and don't fit SVBs busine

by bhawks 4y ago

SVB was literally playing by the rules outlined in banking regulations to reduce risks. Those rules are dumb, don't really reduce risk and don't fit SVBs business customers but they must be followed. Society forced SVB to structure it's capital this way - society should be responsible to make the customers of SVB whole (SVB equity holders should be wiped out though - the risks of the business model are clear and arguably they should be aware of them as owners). Afterwards we as a society should take a long hard thought about the success record of centrally planned economies.

watwut 4y ago
I really don't think this is true.
ericmay 4y ago
SVB went bust and it busted because it made very poor decisions and had double interest rate exposure and unlike other banks (JPM, WF, BA, etc.) its depositors jointly all took their money out and created a bank run. SVB didn’t ask VCs and founders to all withdraw their money. There’s nothing for society to do except for the FDIC to sort it what’s left and make sure the insured get their money and then the remaining assets are split up as fairly as possible. > Afterwards we as a society should take a long hard thought about the success record of centrally planned economies. I disagree. Going down the centrally planned economy route would be a huge mistake for the US (it’s a universal mistake for all countries except perhaps in dire circumstances like a global war). We should avoid central planning mistakes like bailing out or subsidizing bad businesses. Etc.
bregma 4y ago
> Those rules are dumb, don't really reduce risk Yes, they reduce risk. They do not eliminate risk. If you're gambling on a "sure thing" or "have a system" it doesn't mean you're always going to beat the house. The house relies on suckers and rubes misunderstanding risk.
lp0_on_fire 4y ago
"society" is a funny way of spelling "banking lobbyists and the politicians in their pockets".

by bhawks 4y ago

watwut 4y ago

I really don't think this is true.

ericmay 4y ago

SVB went bust and it busted because it made very poor decisions and had double interest rate exposure and unlike other banks (JPM, WF, BA, etc.) its depositors jointly all took their money out and created a bank run. SVB didn’t ask VCs and founders to all withdraw their money. There’s nothing for society to do except for the FDIC to sort it what’s left and make sure the insured get their money and then the remaining assets are split up as fairly as possible. > Afterwards we as a society should take a long hard thought about the success record of centrally planned economies. I disagree. Going down the centrally planned economy route would be a huge mistake for the US (it’s a universal mistake for all countries except perhaps in dire circumstances like a global war). We should avoid central planning mistakes like bailing out or subsidizing bad businesses. Etc.

bregma 4y ago

> Those rules are dumb, don't really reduce risk Yes, they reduce risk. They do not eliminate risk. If you're gambling on a "sure thing" or "have a system" it doesn't mean you're always going to beat the house. The house relies on suckers and rubes misunderstanding risk.

lp0_on_fire 4y ago

"society" is a funny way of spelling "banking lobbyists and the politicians in their pockets".