30 ms·

Urgent: Sign the petition now

• JackFr 4y ago
  TLDR: Sad face. I want your money.
• moshegramovsky 4y ago
  Socialize the risk, privatize the profits? Why don't the startups talk to their VCs who can talk to their LPs? They probably represent something like 75% of US wealth. I'd say they have enough money to take care of themselves.
• Slava_Propanei 4y ago
  [dead]
• chitowneats 4y ago
  The title is accurate. Edit: the original title was correct and gave helpful context.
• nickhalfasleep 4y ago
  Like there are no atheists in foxholes, there are no Libertarians in bankruptcy.
  • optimalsolver 4y ago
    Ayn Rand just got disrupted.
    • dctoedt 4y ago
      > Ayn Rand just got disrupted. Ayn Rand needs to be memory-holed.
• newaccount2023 4y ago
  [flagged]
• Dinux 4y ago
  For a moment I thought it was a joke, but no they seem for real
• notmindthegap 4y ago
  Genuinely asking: for startups who were not banking with SVB, is the recent event a good thing from a competitive standpoint?
  • muyuu 4y ago
    provided their main customer base is not from the area or the sector then it's pretty fantastic for them, especially if they had significant competition in their business model and many of those competitors are now insolvent
  • dilyevsky 4y ago
    Imagine half of your vendors/customers are insolvent. Is this good?
    • slondr 4y ago
      Of course, many startups' customers are not other startups.
      • School-Cotton 4y ago
        On the other hand, many are.
      • Lionga 4y ago
        In YC it often is. You are almost expected to prop up other YCs companies with your funds. If everyone buys each others services everyone can show their super duper growth and nobody lost anything (except VCs who invest later).
    • fastball 4y ago
      So if you're B2C (not B2B) and you only have 1 or 2 non-vital vendors that are likely to be impacted?
    • nightmarish 4y ago
      [flagged]
• whiddershins 4y ago
  What is the provenance of the title, is this editorializing in the submission?
  • MatthiasPortzel 4y ago
    I really hope it doesn’t get updated to “Sign the petition now” because that is not the type of descriptive title that I like to see on HN.
  • mtmail 4y ago
    10 minutes earlier it was posted with the blog post title https://news.ycombinator.com/item?id=35113681 https://news.ycombinator.com/item?id=35113681 but users came to the same conclusion: despite the blog title it's asking for a bailout.
• nocoiner 4y ago
  LOL, nope. Not interested in taking another spin on the “privatize gain, socialize loss” merry-go-round. The banks had to be saved in 2008 because they were, like, the financial system. I don’t see why private companies and funds that are much less integral to the functioning of the economy as a whole should be saved by the public fisc. Sorry about your disruption.
  • mberning 4y ago
    100% agree. These titans of industry can surely help themselves.
    • throwwwaway69 4y ago
      The free markets will resolve this I'm sure
  • jarym 4y ago
    Are you saying if I deposit more than $250k (which is NOT a lot for a business) into a reputable and regulated US bank at negligible rates of interest I should just accept the impact of the bank shutting down due to events unrelated to my actions and choices? And that my deposit should vanish into thin air?
    • KerrAvon 4y ago
      I think you should be made whole, but only if you submit a public statement supporting welfare for individuals as well as corporations in trouble. If you want a socialist handout from the government, fine, but you can’t be a hypocrite about it.
    • secondcoming 4y ago
      In the UK, consumer deposits are protected only up to £85k. Everyone has several bank accounts. If the person on the street knows this, it’s not too much to ask that someone running a business does too.
      • deleted 4y ago
• chrissoundz 4y ago
  Kind of insane to watch all this unfold.
• mska 4y ago
  Is SVB the default bank for YC companies?
  • hijinks 4y ago
    SVB is pushed on most companies raising money because the VCs can easily transfer money from their account to the company. So companies looking to raise are pushed to open a SVB account. If they keep the money there is up to them.
    • Ekaros 4y ago
      So is this about the VCs money?
• Zebfross 4y ago
  I would say it's risky to keep such large deposits with a small bank. We use Wells Fargo for a reason; they make conservative investments and are very unlikely to be shutting down.
  • shawn-butler 4y ago
    Wells Fargo needs to be shut down. Hard to think of a more corrupt Western banking institution
    • wankle 4y ago
      Wells Fargo is the least corrupt large bank I can think of. They were nice and helped bail out one of the 2008 losers then those influx employees started doing mischievous things and gave WF a bad name for a while. I think they've got all that sorted now.
      • shawn-butler 4y ago
        Doesn’t track: https://violationtracker.goodjobsfirst.org/?parent=wells-fargo&order=pen_year&sort= https://violationtracker.goodjobsfirst.org/?parent=wells-far... And particularly egregious: https://violationtracker.goodjobsfirst.org/violation-tracker/-wells-fargo-bank-12 https://violationtracker.goodjobsfirst.org/violation-tracker...
        • wankle 4y ago
          We've been with WF since the early 2000's so for us, what I reported is based on our experience with them.
• dougmwne 4y ago
  I honestly can’t think of a sector less deserving of a bail out.
  • AlchemistCamp 4y ago
    Why is that? This is small and medium sized venture-backed startups, a sector that’s taken a tiny fraction of US investment but represented a major portion of its GDP growth. They did nothing wrong and were failed by their bank. Why are small tech startups building something new less deserving than say, giant banks that knowingly took extreme risks in 2008, or giant auto businesses that refused to modernize and truly compete with Japanese competitors in the 80s? I think it would be refreshing to see a cheaper bailout of small and medium sized businesses actually innovating and building new things instead of giant incumbents.
    • doodlesdev 4y ago
      They did something, they put their money in a bank which was lobbying for less regulations so they could make riskier plays, which put way too much depositor money into MBS (what the actual fuck). They didn't do their due diligence and now they are paying the price. They will receive dividends in advance and any employees which for some reason had money in the bank will still keep their 250k FDIC insured cash. If they had more that's their problem, 250k is a lot. Anyways, I'm not American so this doesn't affect me directly (not my money), but as an outsider I find it ludicrous how accepting everyone is being about mismanaged banks and companies that didn't do their due dilligence. I thought America was all about owning the consequences to your actions, but when shit hits the fans everyone forgets about it and comes back asking for help from Uncle Sam.
      • _dain_ 4y ago
        >they put their money in a bank which was lobbying for less regulations so they could make riskier plays my bank does that. your bank does that. every bank on the planet does that. depositors don't have any say in what the bank does.
      • 4y ago
• UmYeahNo 4y ago
  When we little guys put our eggs in one basket, or put excessive reliance in business we have no control of we get accused, sometimes implicitly, sometimes explicitly, of being incompetent. That we should've known better. Hmmm.... The cynic in me says this letter is less about bailing out the small companies trying to make payroll and more about the VC's not wanting to lose massive investments.
  • geodel 4y ago
    Even if there are small companies I don't think they are in some honest business of producing useful physical goods and charging fair money for that. Most likely they are half-assed scammy SAAS crap. Absolutely not sure why these world beaters hacking everything under Sun need to be bailed out by some stodgy old institution anyway.
    • Laaas 4y ago
      Why are SaaSs scammy?
      • meltyness 4y ago
        SaaSs are scammy especially when they involve: - Repackaging an existing codebase or business model - ... as a black box - ... attempting to rent it out - ... with worse data privacy - ... exploiting systemic economic excesses - ... ... inflicting societal harm - ... ... often with minimal upside to the consumer short-term - ... ... or long-term - ... colluding with large existing players - ... ... to create a treadmill of declining product quality - ... ... to facilitate government surveillance and information operations - ... ... to "play defense" against competitors It's kind of like how OOP was intended to stratify and contain developers, except instead of abstracting commodity PCs there's a whole different calculus which basically implies that the ultimate consumer of computing equipment is like, 2 or 3 big companies, because financing. You know how the old democratic saying goes, "none of us is as strong as the 2-3 permanent CEOs of reality."
  • andrepd 4y ago
    Couldn't agree more. Average Joe is swindled by con-men into bad deals and/or is subject to events outside his control: should have known better/worked more Huge company in the business of risk management fucks up: bad luck, the taxpayer will cover you, no civil or criminal responsibility will come to anyone regardless of the magnitude of the fallout
• ilrwbwrkhv 4y ago
  Silicon Valley Bank paid out bonuses hours before seizure. So ya they don't need a bailout lol.
  • mtmail 4y ago
    A discussion about the employee bonuses is at https://news.ycombinator.com/item?id=35112827 https://news.ycombinator.com/item?id=35112827 and those seem fine, despite the bad image and timing. The blog post here is more about bailing out bank's customers, not employees I think.
  • choppaface 4y ago
    Those bonuses were for 2022 so probably delayed: https://www.cnbc.com/amp/2023/03/11/silicon-valley-bank-employees-received-bonuses-hours-before-takeover.html https://www.cnbc.com/amp/2023/03/11/silicon-valley-bank-empl... While the fact that the bonuses were paid at the time does help underscore the level of malfeasance of the bank leadership, many of those receiving the bonuses probably didn’t know about the gaps.
• owlglass 4y ago
  They're asking to "be made whole," but are "not asking for a bailout." What exactly do they want, then?
  • doodlesdev 4y ago
    A bailout, but they want it to be called something else lol.
  • fshbbdssbbgdd 4y ago
    The most plausible idea would be some other bank buys SVB. Depending on the current state of SVB’s balance sheet (which is not publicly known), other banks may be willing to pay as little as $0 or there may be no takers.
    • fbdab103 4y ago
      What is the incentive for someone to buy SVB? Just to stop the spread of contagion or is there any scenario in which that was a profitable move?
      • Denvercoder9 4y ago
        If you're well-capitalized, so you can weather the bank run, and have time, you might be able to sell SVB's assets for more than their liabilities.
        • deleted 4y ago
          [deleted]
    • morelisp 4y ago
      Which is what the FDIC is going to try to achieve anyway, and doesn't need a bathetic orison to Yellen to happen. .... which is maybe a weak signal that nobody's biting yet and YC feels the need to escalate to actual government money ASAP.
• Overtonwindow 4y ago
  I don't get the sense there is a lot of sympathy from HN over this event. People lost money, payroll may be missed, that's a detrimental thing for a lot of people. If little sympathy, why?
  • nightmarish 4y ago
    There’s nothing more annoying than being prattled to by morons who think that money equates to intelligence. May they burn brightly.
  • morelisp 4y ago
    If any significant payroll gets missed I'm getting out the popcorn, regulators and courts will get that back.
  • OhSoHumble 4y ago
    The sharks are in the water and there is a lot of disdain for wealthy tech CEOs. The current public perception is that all of Silicon Valley is either mustache twirling Peter Thiels or tech bros who collect millions trying to create the next Uber for dogs. The vitriol for those archetypes will override any empathy for the victims from knock-on effects and lower level, poorer employees that will impacted by this. If that empathy was ever there to begin with, I guess. I personally believe that people want to hate the rich more than they want to empathize with the poor. Personally, I can do without the DoorDashes of the world... but startups collectively employ A LOT of people and not all of them are wealthy, senior engineers. When the wealthy sneeze, the poor tend to catch pneumonia.
  • monkeywork 4y ago
    There is a difference between having sympathy or empathy and agreeing with the idea of socializing the loss here. I don't think many will argue that this is a "good" thing or that they are "happy" to see ppl suffer (some might but they generally are a fringe group) but agreeing that a situation sucks doesn't mean you are willing to take a bullet to fix it. I get the sense that most people are more in the camp of: "Yeah that sucks, hope it works out for you and maybe think about the risks more next time"
• lapcat 4y ago
  I wonder how many of the petition signers are vehemently against the government's student loan forgiveness plan.
  • stanleydrew 4y ago
    I get the thrust of the comment, but it's not a particularly good analogy. The petition signers are asking for the FDIC to prioritize their debt (deposits at SVB) repayment. They aren't asking for debt forgiveness.
    • throwmeaway1212 4y ago
      I'm sorry, maybe I misunderstand, but they are asking for this 'Small business depositors at Silicon Valley Bank should be made whole', any good business should be aware of the max insured amount, so it sounds like they are asking for more than is specified by law (that they should have known about), and therefore asking the government to give them money that they knew was at risk. Currently given the regulations they would get back up to $250k, yet they are asking for more, from the government. So...they are asking the government for free money to help run their businesses....why is that different from students asking the government for free money to pay off their student debts?
      • AlchemistCamp 4y ago
        In the case of the depositors, they put their own money into an account and want to be able to spend that money to pay their employees. It might easily cost the government even more in lost tax revenue if the thousands of companies cannot make payroll due to a banking failure, thus forcing them out of business and their employees out of their jobs. In the case of students, they borrowed money that was not theirs, spent it and don’t want to have to repay it. IMO student debt forgiveness has a major problem of essentially punishing those who did repay their debts and the many, many more who didn’t go to college in order to help those who borrowed and did not repay their debts. There’s an additional problem in that college costs are spiraling out of control, largely due to easy loans that students can never escape. The solution I’d rather see is to let student debt be discharged via bankruptcy again. This would let people in a tough spot get a reset and it would also encourage lenders to be a bit more judicious and maybe even apply some downward pressure to tuition rates.
• downut 4y ago
  Hmmm. I was told a long time ago that I needed to (personally) diversify my individual risks to the financial system if I was not going to expect to be morally culpable. The longer this list gets, the more each is morally culpable.
• ramesh31 4y ago
  Shouldn't they have been paying for private insurance on those deposits? Or was this the plan all along.
  • tacticus 4y ago
    > the plan all along BINGO
• bosch_mind 4y ago
  Bailout these companies because YC entrusted all their eggs into a single basket?
• baq 4y ago
  Pathetic to be honest. Yes it’s bad. Yes it’ll get worse if no buyer at 100 cents to the dollar is found by Monday morning. And yet, literally everyone involved signed up for it! It isn’t like there aren’t other banks? The thing had a circus for its risk management office. The big mighty all-knowing VC firms shouldn’t go around crying like babies and signing petitions but be organizing bridge loans until FDIC, the most brutally efficient government organization known to man fixes this, which will be soon and for most, soon enough. Please don’t make VCs look worse than they are and socialize their losses. You’re in the risk business, do your job.
  • nightmarish 4y ago
    [flagged]
    • totalZero 4y ago
      Hope should be reserved for good things. I hope the ones who truly had no idea what they were risking come out better and wiser.
      • nightmarish 4y ago
        [flagged]
    • jackblemming 4y ago
      The rich want to have their cake and eat it too. If they keep pushing their luck the guillotines will be brought out eventually. It's probably about time they realize they don't get to always win.
    • garry 4y ago
      I grew up food insecure.
      • nightmarish 4y ago
        [flagged]
• toomuchtodo 4y ago
  Where was YC when SVB lobbied against stronger regulation so they could take more risk? Crickets. Edit: Sources in my other comment https://news.ycombinator.com/item?id=35114110 https://news.ycombinator.com/item?id=35114110
  • School-Cotton 4y ago
    Source for SVB lobbying against banking regulations?
    • crummy 4y ago
      https://www.theguardian.com/business/2023/mar/11/silicon-valley-bank-weaken-risk-regulations-svb https://www.theguardian.com/business/2023/mar/11/silicon-val...
      • School-Cotton 4y ago
        Thanks!
    • doh 4y ago
      “In 2015, SVB President Greg Becker submitted a statement [0] to a Senate panel pushing legislators to exempt more banks – including his own – from new regulations passed in the wake of the 2008 financial crisis.” [0] https://www.govinfo.gov/content/pkg/CHRG-114shrg94375/pdf/CHRG-114shrg94375.pdf?ref=the-lever https://www.govinfo.gov/content/pkg/CHRG-114shrg94375/pdf/CH...
      • School-Cotton 4y ago
        Thanks!
      • cgh 4y ago
        Oof, this is real shot/chaser stuff. For anyone interested, the relevant statement starts on page 115 of the linked document. It’s quite short and worth reading. Some real Big Short vibes here.
• sourcecodeplz 4y ago
  Might seem like an ahole but can't you guys making 100k+ per year ride it out? We are talking about startup a here, have we forgotten the risks and implications that come with this model?
  • choppaface 4y ago
    The bailout would most likely benefit the VCs and their funds. It’s not about helping employees who might be living paycheck to paycheck.
    • sourcecodeplz 4y ago
      Regardless, there are people in this world living on 30 USD per month (or less). I don't care you chose to pay 8k rent per month. This is the wakeup call so many people needed.
      • somsak2 4y ago
        Why would this be the wakeup call, and why are you arguing for fucking over employees that are making what is a median salary for their region? I'm not pro-bailout either but regular employees are about the least-deserving of the fall-out from this.
  • KerrAvon 4y ago
    100k isn’t much money in Silicon Valley at this point, FWIW. You probably need multiple roommates if you’re going to save any of that salary level.
    • antibasilisk 4y ago
      I think it's moreso the case that people are unwilling to live within their means and would much prefer to massively overleverage their entire life. It is not other people's responsibility to bail you out when the inevitable consequences come around.
  • eastbound 4y ago
• JanSt 4y ago
  Regulation sucks until it does not. Less regulation equals more cases of failures like SVB. Striking a good balance is hard. It‘s certainly not zero regulation.
• RivieraKid 4y ago
  So Paul Graham, who is vehemently against taxing the rich, wants a bailout? Funny...
  • nightmarish 4y ago
    [flagged]
  • nickpeterson 4y ago
    People think they succeed because they’re smart, rugged individuals who never give up. They can’t recognize the survivorship bias in their own lives. The answer to a lot of our problems as a country is much stronger taxes on the rich. People who say otherwise are either wealthy themselves or under some delusion they eventually will be (lottery winner mentality). Luckily you can ignore them because they’re such a small fraction of actual people, they’re just loud online.
    • simple-thoughts 4y ago
      I disagree, because the other side of more taxes for the rich is more services for the rich eg bailouts. The reason these entitled folks feel they are justified in asking for a bailout is that the services they paid for (government oversight and guarantee of banking) was not the quality they expected. To them, it’s not a bailout, it’s a refund.
  • jjtheblunt 4y ago
    He doesn't seem to have signed it.
• Kyragem 4y ago
  Trump & republicans cut banking regulations and increased capital thresholds from 50 to 250 billion for banks to comply with an FDIC stress test as mandated by Dodd-Frank (which was enacted after the mortgage crisis). SVB would have not gone bankrupt had they been required to pass this stresstest. This change was widely supported by tech companies and banks and here we are again with a bank engaging in risky behavior holding out their hand for taxpayers to bail them out: NO.
  • thuridas 4y ago
    I was just asking myself what was the us bank regulator doing. But this explains a lot. Small government has its consequences
  • wankerrific 4y ago
    Socialism for the rich. Rugged capitalism for the poor.
  • westurner 4y ago
    Stress test (financial) > Bank stress test , Payment and settlement systems stress test https://en.wikipedia.org/wiki/Stress_test_(financial)#Bank_stress_test https://en.wikipedia.org/wiki/Stress_test_(financial)#Bank_s... List of bank stress tests > Americas https://en.wikipedia.org/wiki/List_of_bank_stress_tests#Americas https://en.wikipedia.org/wiki/List_of_bank_stress_tests#Amer... https://www.google.com/search?q=increased+capital+thresholds+from+50+to+250+billion+for+banks+to+comply+with+an+FDIC+stress+test https://www.google.com/search?q=increased+capital+thresholds... From "Transparency & Accountability - EGRRCPA (S. 2155) Rulemakings" https://www.fdic.gov/transparency/egrrcpa.html https://www.fdic.gov/transparency/egrrcpa.html : > The FDIC is responsible for a number of rulemakings under the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). This page provides links to proposed and final rules and related documents. "FDIC Releases Economic Scenarios for 2022 Stress Testing" (2022) https://www.fdic.gov/news/press-releases/2022/pr22019.html https://www.fdic.gov/news/press-releases/2022/pr22019.html How can the scenarios and policies be improved?
• jimrandomh 4y ago
  Statement by the FDIC: https://www.fdic.gov/news/press-releases/2023/pr23016.html https://www.fdic.gov/news/press-releases/2023/pr23016.html Key paragraph: > "All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors." The advance dividend presumably should protect most of the small-business account holders from imminently missing payroll. Presumably after that, there will be a secondary market in receivership certificates, and the question will be how much of a discount these trade at relative to the original account balances. It's still a bad situation to be in, but it shouldn't be as thoroughly catastrophic as many seem to think.
  • nuclearnice3 4y ago
    We will make payroll, but valuations will suffer and upset our limited partners just didn't have the same ring to it.
  • PragmaticPulp 4y ago
    The FDIC’s statement, which is very short and to the point, should be required reading for anyone wanting to discuss the situation. The FDIC’s handling of the situation appears to be geared toward urgency and keeping depositors up and running. The advance dividend provides significant access to funds beyond the $250K limit. The number of comments, Tweets, and even opinion pieces I’m reading from people who assume that all money beyond $250K has disappeared is concerning. The FDIC is rushing to provide access on Monday to substantial funds for a takeover that happened on Friday. Depositors might take a haircut, yes, but the commentary about this being an “extinction level event” is just fear mongering. I’m sure VCs and investors would love if the government stepped in and covered the remaining X% of missing funds when the dust settles, but the way they’re playing off of public panic to exaggerate the situation is starting to feel distasteful.
    • gigitrix 4y ago
• nwienert 4y ago
  For posterity, the chefs kiss title of this submission as of now is: “YC Is Asking for a Bailout”
  • netsec_burn 4y ago
    It was changed to "Urgent: Sign the petition now".
    • muyuu 4y ago
      the archive.is 1st snapshot saved it for posterity
    • voganmother42 4y ago
      Old title was better
    • hyperhopper 4y ago
      Which may be the most click-baity post-edit title I've ever seen on HN. Not a good look when there is a conflict of interest here.
  • version_five 4y ago
    I posted it, I'm aware of the rules about titles, but honestly I thought my title was way more clear about what the story was. In retrospect I should have called it "Tell HN: YC is asking for a bailout", think that would have been fair. The fact that it's been edited here is not cool with me, especially as the story is unfavorable to YC (though I certainly believe readers are smart enough to draw their own conclusions)
    • nwienert 4y ago
      I think it was maybe the fastest rising post I’ve ever seen. That was solely because of the title.
      • user982 4y ago
• Y_Y 4y ago
  Can we get the Fed to bail out dang? Life will go on if some VCs go under, but this website must survive.
  • theGnuMe 4y ago
    Lol.. "hey bail us out or we will shut Hacker News down".
• School-Cotton 4y ago
  When you’re talking to people outside your own community, it’s beneficial to communicate in the standard language, rather than in community-specific jargon. For example: “We have a simple request” instead of “We have a simple ask”.
  • EFreethought 4y ago
    Off topic: I really hate this trend of using verbs as nouns. "Ask", "Spend", "Solve". It makes people sound stupid.
• dahdum 4y ago
  Despite the attempt it’s going to be called a bailout by the public and press even if the FDIC turns a profit down the road.
  • optimalsolver 4y ago
    That's because what they're asking for is literally a bailout, and no amount of SV jargon is going to disguise that.
  • pdq 4y ago
    How is the FDIC going to turn a profit? Every company who has deposits there are going to wire it out once reopens. You can't make money if you have no deposits.
    • dahdum 4y ago
      I believe FDIC can sell SVB or equity to another bank once it stabilizes (with their help). With the current executive team gone and some adult supervision, it could return to being a valuable company. SVB doesn’t have to die just because the shareholders get wiped out and management booted. It’s probably better for customers that it doesn’t.
  • somsak2 4y ago
    It's going to be called a bailout because that's what it is.
• Ekaros 4y ago
  Wasn't more unemployment a goal to combat inflation? So wouldn't it be good thing for bigger economy that some jobs were now lost. Thus push inflation pressure lower? Meaning that any sort of action really shouldn't be taken for greater good of economy.
  • lotsofpulp 4y ago
    But not these jobs, because these jobs belong to people in networks adjacent to Y Combinator leadership, so they might be negatively affected.
• runnerup 4y ago
  Private bridge loans seems like the answer here. Private bank, private risk. Long term maybe just establish a “federal deposit bank” with no private profits but guaranteed unlimited FDIC protection.
  • Ekaros 4y ago
    Could we use CBDC for this? If the central bank has the money, there is no need to loan it out and the operational fees could be covered by tax payers. Then those who want their money lend for profit could use banks.
• ChicagoBoy11 4y ago
  Not too sure about the move of putting this out in the open so transparently. Surely if I'm a customer of one of these startups with any sort of serious reliance on them, surely seeing their name on this list will make me ask even tougher questions of them? (who, I fully recognize, are unfortunately just caught in the middle of all of this)
• JumpinJack_Cash 4y ago
  Can I ask why everybody banked with SVB? Are Wells Fargo or Bank of America not hip enough? A bank should be like a gas station, you go to the nearest one given that the pruduct being sold is essentially all the same. I think that what happened is that founders weren't the one opening the accounts, the VC industry took it upon themselves to streamline the process in order to free the founders of the 'burden' of having to provide the documents etc. So it was the legal office of VCs doing the opening and they were opening with SVB because VC funds are incestous and they have zero geographic and ideologic diversification in their non-portfolio business relationships. So they all end up using the same law firms, banks, consultants etc. Same reason why they all sits on each other's boards.
  • somewhereoutth 4y ago
    Apparently being a startup, with large chunks of money being deposited and unclear/non-existent operating revenue on a dubious business proposition raises lots of red flags for mainstream banks.
    • JumpinJack_Cash 4y ago
      I don't buy it, while it's true that startups are hundreds of thousands in the US, it's also true that VC funds are about 2000, the ones that invest on a recurrent basis must be less than 1000. Every big bank surely has the receipts by now and they can check the sender as well as the cause for the wire (which should always be added) . A 2.5M wire with sender being 'Founder Fund' and cause being 'Equity investment' will get the green flag even if the account is 3 months old or less.
• deleted 4y ago
  [deleted]
• tiedieconderoga 4y ago
  It's too bad there was nobody who was supposed to be mentoring these startups, maybe giving them advice about business concepts like the benefits of diversification.
  • simple-thoughts 4y ago
    Yeah what if we create a network of competent, business savvy investors who are familiar with technology startups? That would be a great way to prevent this type of thing from happening, because they would know about proper risk management.
    • muzz 4y ago
      And compensated them handsomely for that service. If only we had done that...
• astrea 4y ago
  Is this the end of an era?
• nightmarish 4y ago
  [flagged]
• nu11ptr 4y ago
  Why would you deposit more than the insured amount in a bank? Could it not be split over multiple accounts and/or banks? Or pursue an institution that has additional insurance? (my brokerage, for example, uses Lloyd's of London for coverage beyond SIPC)
  • hellcow 4y ago
    If you’re going to get a line of credit against your cash, the bank requires you to have the cash with them.
• syuil 4y ago
  April 1 isn't for another 21 days...
• afavour 4y ago
  [deleted]
  • sammalloy 4y ago
    > Silicon Valley has a real problem with groupthink This problem is found everywhere where humanity organizes and cooperates in groups. It’s in no way unique to SV, tech, or any other field. It’s also the dominant style in the corporate world, such as "Go along, to get along".
  • simonw 4y ago
    Groupthink on this kind of decision is usually a feature, not a bug. When you're a startup founder, you have to focus your efforts on the unique problem you are trying to solve. For generic problems like "which bank should I use" taking a shortcut like "the one my peers are using already" is generally a great idea - saves you from having to waste your time investigating options that usually don't make a material difference to your business.
    • hyperpape 4y ago
      I think this is debatable. Let P = group makes better decisions than individual Q = there’s no downside to everyone making the same decision P && Q => yay groupthink ~P && Q => could go either way P && ~Q => could go either way ~P && ~Q => groupthink is bad I think we have pretty good evidence of ~Q though, and P isn’t obvious. Was SVB better than throwing a dart at a picture of major banks? I can believe it, but I haven’t heard a substantive reason. P.S I mean for “not obvious” to be load bearing. Upthread, someone says SVB is much easier to work with for founders. If so, maybe it was a reasonable decision. But if so, that’s on the merits (aka P && ~Q).
      • simonw 4y ago
        I'm not saying SVB was better than a major bank (it looks like it wasn't). I'm saying that, had this situation not happened, defaulting to "what bank do other companies like us use?" would have been a perfectly reasonable strategy.
• cfcf14 4y ago
  Absolutely not.
• gjvc 4y ago
  Let it burn.
• Kukumber 4y ago
  Lol, i can't believe what i just read, this leaves me speechless, the audacity
• _9hey 4y ago
  Should have started with “ We are not asking for a bank bailout. ” Edit: my opinion reversed. I actually with the replies here. It is effectively what YC is asking for. It’s a matter of choosing who suffers: investors or private home buyers? Because Mortgage Backed Securities have been screwing individual home buyers for years.
  • muyuu 4y ago
    it would make it even more apparent that it is
  • grugagag 4y ago
    No. Because that’s what they’re asking for but again, it shouldn’t sound like that.
  • somsak2 4y ago
    What? How have MBSs been screwing individual home buyers?
    • _9hey 4y ago
      MSBs fund Wall Street to compete with families for houses. Phoenix is a good case study.
• hyperpape 4y ago
  I saw a claim go by on Twitter that (some?) VCs required their companies to bank with SVB. Frankly, the thread it’s in feels a little histrionic, and I hesitate to believe it. But surely someone here on HN can confirm/deny? Source: https://twitter.com/bhargreaves/status/1634245405205471245 https://twitter.com/bhargreaves/status/1634245405205471245
  • Animats 4y ago
    Not sure about "required", but definitely recommended.[1] "11 of 15 YC startups with IPOs bank with SVB. And 7 of those began with SVB Startup Banking." "Silicon Valley Bank: The choice of YC game changers" (The SVB web site is still up, for now. But logins are disabled.) [1] https://www.svb.com/account/y-combinator https://www.svb.com/account/y-combinator
• blagie 4y ago
  I'm 100% in support of a bailout... ...with the federal government taking equity in return, at the last valuation, diluting existing owners. That would let the businesses keep running, without the "privatize gain / socialize loss" merry-go-around.
  • drexlspivey 4y ago
    What equity are you talking about? It’s already wiped out, anyone can buy SVB for $1
    • blagie 4y ago
      Equity in startups which had deposits there. If you need $100k next month to meet payroll, and you had it deposited in SVB, the Fed will cut you a cheque for $100k, and in return, receive $100k in equity at the more advantagous (to the Fed) of your last valuation and your next valuation.
    • malermeister 4y ago
      Equity in the startups in question.
  • ec109685 4y ago
    They are upside down, so there isn’t anything to take.
• lisasays 4y ago
  We have a simple ask: Regulators need to step in and implement a backstop for depositors. This is not a bank bailout. What kind of double-speak is this? How is "implement a backstop for depositors" anything other a "bank bailout?"
  • el_nahual 4y ago
    A bailout protects the equity and debt holders of a bank. This has nothing to do with that--it's about making sure the depositors of a bank get the cash they were holding there.
    • lisasays 4y ago
      I'll go with the Wikipedia definition of the term, which seems quite straightforward: A bailout is the provision of financial help to a corporation or country which otherwise would be on the brink of bankruptcy. I'm not aware of a commonly accepted definition of the term that is restricted to protection for the company's investors.
    • theGnuMe 4y ago
      Yeah that is not what it means. I'm sorry to inform you of that.
• berkle4455 4y ago
  There's plenty of ramen to be had for $250,000. Come on YC, just hustle!
• zozbot234 4y ago
  Do note, the letter is not asking for a bailout for SVB "equity holders or managers". In the worst case, they can still have their stake be wiped out completely (so a whole lot stricter than what happened in the 2008 crisis). They're just saying that the FDIC's $250k limit is not enough. The FDIC has insured larger sums than their previously stated limits before, that's how the $250k limit reached its value in the first place.
  • none_to_remain 4y ago
    They were aware of the FDIC's terms
• j3s 4y ago
  tfw venture capitalists want socialism
  • grugagag 4y ago
    Just a one time shot of it, and a quick infusion. By Monday!
• lordfrito 4y ago
  Wait I thought we all embraced disruption. Move fast and break things. Am I right? Note sure what happened but I don't recognize these whiny young techies. They're a fundamentally different than they kinds of tech people I grew up/old with. Apparently everyone expects life to be all upside no downside. SMH
• DaniFong 4y ago
  What is with the headline here. In the doc: "Small business depositors at Silicon Valley Bank should be made whole. Regulators need to conduct a backstop of depositors. We are not asking for a bank bailout."
• deleted 4y ago
  [deleted]
• rickreynoldssf 4y ago
  Its not like SVB has tons of toxic assets on their balance sheet. They have $13B in balance sheet equity (not marking to market HTM assets). There's $40B in cash and AFS bonds which are marked to market. This can be saved by another entity or a coalition of entities like Sandhill Road. I don't think this is something the government should get involved in any further than they already are. Brex (as far as I know) is offering short term loans to SVB depositors so that should lighten the overall impact; those that get the loans will make payroll. Meanwhile I'm sure there's a few camps frantically running due diligence right now and a white knight could arise by Monday morning to shore up the balance sheet and let the bank reopen. The problem is who/what ever does that needs to ooze with trustability and confidence to keep the remaining depositors from bailing.
• chirau 4y ago
  This is YC trying to protect itself and the VC community from massive losses on their investment.
• PLenz 4y ago
  This will suck for a lot of people but YC - and no VC - is not big enough to fail.
• softwaredoug 4y ago
  I would recommend people familiarize themselves with what happens historically when bank failures happen unchecked. It’s catastrophic. Good luck to you if any of these companies employs you or owes you money. A good book with a first person blow by blow is “The Great Depression: a diary”
  • lapcat 4y ago
    Everyone is aware of the Great Depression. This ain't it.
    • softwaredoug 4y ago
      I don’t think it is either. It’s just an important reminder the end state of letting banks fail.
      • lapcat 4y ago
        The FDIC isn't letting the bank fail. Quite the opposite. The FDIC stepped in and stopped the bank from failing. Otherwise, the bank's deposits would have been completely wiped out the other day.
  • JohnFen 4y ago
    This isn't going unchecked.
• burlesona 4y ago
  I mean YC and all the VCs killed SVB by causing a run on the bank. This is not the only business that VCs have harmed by spreading FUD (in many cases unfounded or even fabricated with dubious motives), and then acting as a herd. I have tremendous sympathy for the many small startups who had nothing to do with this, but a lot less for the VCs in this case. SVB was well capitalized and while there could be losses here they should be small, especially given the FDIC shut down the bank pretty quickly. I do think the government needs to resolve the deposits fast so every involved company can figure out whether and exactly how much haircut they’ll get and get on with their business ASAP. The big mistake I think the government could easily make is to let this take months to unwind, which would unnecessarily kill businesses that could be fine even with small losses as long as they get access to their capital restored immediately.
  • fsckboy 4y ago
    upvoted because you're raising an important issue, but not personally sure whether you're going too far; maybe you have more info than I. SVB's customers did start/maintain a run on the bank which caused the bank failure, so when SVB's customers are asking to be made whole beyond the well known and generous FDIC limits, it's a little sus.
  • nv22 4y ago
    Exactly. SVB is well capitalized just by looking at their balance sheet. It doesn't have risky assets-all treasuries. Only problem is liquidity. It wouldn't fail if these VCs don't spread fears in the first place. Now they want their companies get their money back. They killed SVB and now want to act as victim.
• prepend 4y ago
  What would I gain as a taxpayer in return for this bailout? Would the taxpayer receive 10% equity in YC? It seems like YC could have insured these funds, but didn’t. They saved money and accepted the risk. This risk is now realized. Seems bizarre that YC would be made whole. Certainly it saves jobs, but it benefits YC more than anyone else.
  • andrepd 4y ago
    > Would the taxpayer receive 10% equity in YC? Make that 30–50 and we'd have a deal. Fucked up and want the state to rescue you? Fine, but your business is now mine, future profits and dividends (evabled by the bailout) will be distributed to all Americans, not just the handful of owners of "your" business. It's how the 2008 bailouts should have been handled, instead we got the biggest transfer of wealth from poor to rich in history.
    • vorpalhex 4y ago
      The US government made $15B from the 2008 bailouts. That's 0.6% return on investment which is kinda poor but overall the bailout was profitable for US taxpayers.
      • Laaas 4y ago
        > 9. Did all the companies bailed out by taxpayers pay the money back? > Pretty much. The Treasury Department injected $412 billion into banks, carmakers and other struggling companies through the Troubled Asset Relief Program, or TARP. As of the end of last year, it had collected everything it had paid out in bailout funds and then some, leaving the government with a profit of $12 billion. https://www.washingtonpost.com/business/economy/a-guide-to-the-financial-crisis--10-years-later/2018/09/10/114b76ba-af10-11e8-a20b-5f4f84429666_story.html https://www.washingtonpost.com/business/economy/a-guide-to-t... (2018)
        • andrepd 4y ago
          12/700 over 10 years is absolutely shit profit. If I go unemployed for a few months and can't pay my house [1], unfortunately there's nobody to bail me out. I'll lose the house and go homeless, notwithstanding the fact that I'd be willing to pay that 1.5% interest over 10 years for a liquidity bailout for myself during those times. Unfortunately I'm not too-big-to-fail. [1] Ironically, in the downturn caused by those very same companies we're talking about.
• novalis78 4y ago
  So… capitalism yay when it benefits us and nay when we made a mistake and put all our eggs in one basket? Risk is everywhere.
• somewhereoutth 4y ago
  "there are no atheists in a foxhole, no libertarians in a bank run"
  • anigbrowl 4y ago
    Underrated comment ^^^
• deleted 4y ago
  [deleted]
• rmason 4y ago
  This headline is atrocious. They are not asking for a bail out, they're asking for the rescue of a single bank. If this bank failure touches off something similar to what happened in 2000 for the online economy the results will be colamatious. The average person doesn't realize how much bigger the Valley is in the entire American economy than it was back then. FWIW I have no money in Silicon Valley Bank.
• Animats 4y ago
  No bailout. Where's the sense of responsibility here? YC told their funded companies to use Silicon Valley Bank. It's YC's responsibility to find a market for SVB's assets. It's YC's responsibility to create a secondary market for SVB's receivership certificates.
  • muzz 4y ago
    There is ZERO contrition in any of their communications. Their messages are "we are special because we are the job creators" and "it will end up hurting small guys more" and other forms of self-gratification and bullying.
• fdsfsad 4y ago
  FDIC resolution transactions division is doing it's job. They aren't fucking around. Monday - $250k unfrozen Wednesday or Thursday a huge amount of funds will be unfrozen from proceeds from FDIC big selloff of SVB assets yesterday. Balance should be available in 2-3 months but will require a process. This isn't going to be the big catastrophic event YC are pushing. Although I do understand the fear.
• deleted 4y ago
  [deleted]
• mindcrime 4y ago
  Yeah, no. Sorry folks, you have my sympathy, but bailouts are not - IMO - an appropriate role for government to play. Sometimes the breaks are just the breaks. But take heart, maybe this is a sign that it's time for a new business - insurance against bank failures.
• greatpostman 4y ago
  Rich fat cats all over Silicon Valley looking for society to socialize their losses. YC has an incredible amount of wealth as it is.
  • Ekaros 4y ago
    Shouldn't they have enough capital to well recapitalise the startups they funded? At least if they fully believe that they are great and will make the money back multipletimes?
    • grugagag 4y ago
      Why would they if somebody else does it for them?
• Overtonwindow 4y ago
  So… Is this a list of financially unstable start ups ???
  • Ekaros 4y ago
    Hmm, so this is a list of those entities you should take special care to deal with. Maybe ask upfront payment, not extend any type of credit. Just to be safe in general when dealing with them.
• mberning 4y ago
  This is just brazen. These people play all kinds of financial games, run business right at the margin of what is legal, decry regulation or legislation that “hurts their competitiveness” (abusing 1099 employees anybody?) and then cry out immediately for a bail out as soon as they feel an ounce of pain. Maybe these CEOs and VCs can fund payroll for a few pay periods. Edit: I fully expect the YC sycophants to flag this story to hell and get it off the front page, and the censors here will come along with their canned finger wagging and admonishments of anybody taking them to task.
  • _dain_ 4y ago
    do you understand the difference between a depositor and an shareholder?
    • snickerbockers 4y ago
      do you understand the difference between a taxpayer and a shareholder?
  • snickerbockers 4y ago
    >Edit: I fully expect the YC sycophants to flag this story to hell and get it off the front page, and the censors here will come along with their canned finger wagging and admonishments of anybody taking them to task. i have news for you lol.
    • mberning 4y ago
      It took all of 10 minutes lol
      • snickerbockers 4y ago
        If YC thinks this comment section is bad, they're really going to LOVE congress.
  • simple-thoughts 4y ago
• engineer_22 4y ago
  No
• cirrus3 4y ago
  Hah, nope.
• rvz 4y ago
  No. Save yourself and the VC pyramid scheme that collapsed in front of you.
• lancewiggs 4y ago
  I’m disappointed that so many YC companies had all their cash with one bank. It’s boring stuff, but good governance includes things like risk management policies, and treasury policies. Too late the lesson is re-learned - spread your banking risk, especially if holding large amounts of cash. Meanwhile it’s not too late to think about how to lower client, counterparty and supply risk through diversification, including into other locations and countries.
• DrBenCarson 4y ago
  Nope. An industry so ideologically against government intervention in the free market should stick to their guns, even if the barrel is in their own mouth. Live by absolute freedom, die by absolute freedom. I'd be open to bailing them out if they allowed the US government to take significant equity positions.
  • moshegramovsky 4y ago
    ++
• ur-whale 4y ago
  You'd think if there was one place on earth where one would be wary of single points of failure would be the SV startup ecosystem ...
• lettergram 4y ago
  Lol so they don’t want to take a loss, is that it? They invested and may go bankrupt. Nothing bad will happen if these startups run into issues. The most solid will have revenue, they may have to get a loan. The less solid could layoff and raise more. Some might go bankrupt, but that’s part of the risk. Sometimes people get fired, no back pay, and they have to make it work. In way of a different example, imagine a farmer losing his crop & tractor in a storm. They have to make it work. Companies are really no different.
• nosefrog 4y ago
  Unpopular opinion: the government should try to make depositors of banks whole when their banks fail.
  • Denvercoder9 4y ago
    That's literally what FDIC does it. It guarantees the first $250K, and sells the failed bank's assets to cover as much as possible above that amount. It's not as if all deposits are completely gone now, most commentary I read expects that at least 80% or so will be recovered, it might just take a while.
  • Clubber 4y ago
    They do, but there is a limit of $250K that the FDIC (taxpayers) guarantee. It's been $250K since 2008, but they should allow it to keep up with inflation, which would be approximately $355K now. The rest needs to come from the sale of the bank's assets, but that takes a while. I believe the petition is asking that the government cover the difference by paying out now and assume the risk of the bank's assets not covering the difference.
  • dehrmann 4y ago
    I have no idea why this idea is suddenly so unpopular. People see putting money in banks as a de-facto safe decision. $250k might be a reasonable cutoff for individuals, but it's clearly way too low for businesses. If that threshold had been more like $10M, SVB might have even survived since depositors would have had faith they could access enough of their funds within a day of a bank failure. Instead, there was a bank run.
    • somsak2 4y ago
      Is it suddenly so unpopular? Can you link me to think pieces / opinions that have been published in the last few years that are arguing for increased deposit insurance for businesses? I don't recall hearing about this ever before. If you wanted such a high cap, you'd need to increase the deposit insurance premiums much further to cover for it. The banks were already unhappy about the most recent 2 basis point increase earlier this year -- https://www.fdic.gov/news/financial-institution-letters/2022/fil22048.html https://www.fdic.gov/news/financial-institution-letters/2022...
• wellthisisgreat 4y ago
  we have money in SVB and no fucking way i am signing or backing this. It's our mess and we must deal with it like adults.
• tinbad 4y ago
  “YC asking for bailout” was a much more honest title than “Urgent: sign the petition now”.
  • muyuu 4y ago
    they're both pan-in-hand, over-the-top begging tbh
• Kon-Peki 4y ago
  My feeling is that this request is premature and will ultimately be unnecessary. Unless the conditions inside SVB were far worse than what even the most negative naysayer believed, the advance dividend paid next week will be more than enough to meet payroll for the coming month. I hope I’m not wrong…
• davidgerard 4y ago
  The FDIC will be releasing cash on Monday so businesses can make payroll and so on. The eventual return on uninsured deposits will likely be around 80-90c on the dollar. How can we stop this happening again? Simple: we put back the Basel III rule that SVB lobbied to have not apply to them, the absence of which let them do the dumb things that got them into this position: https://archive.is/gmJxU https://archive.is/gmJxU
• gustaf 4y ago
  I work as a group partner at Y Combinator. Over the last 48 hours I've talked to numerous founders of YC companies who told me they can't make payroll to their employees next week. In many cases they had raised millions of dollars which is currently locked into their SvB accounts. Even if they get access to the insured $250k on Monday that won't last long and in many cases not even cover the payroll they are planning to run. YC wrote this petition with these founders in mind who in good faith trusted that their money would be safe in Silicon Valley Bank.
  • Toine 4y ago
    What does the government have to do with that ?
  • shkkmo 4y ago
    The 250k isn't enough to hold them over for a week until the uninsured partial dividends get paid out? I don't get how any of these companies are at risk of immediate failure. What I do see happening is these startups may lose some smallish percent of their account balance. These startups banked at a bank that actively lobbied for less regulation of risk and had over the FDIC insurance limit in their account so that seems entirely fair and reasonable. To make matters worse, this petition is being put forward by a VC company that actively helped cause the crisis by encouraging a bank run. However, instead of taking any of that responsibility, I see more fearmongering to get people on-board with socializing the losses.
  • j_crick 4y ago
    Question from a foreigner: if this bank is so important for your ecosystem, why don’t y’all interested parties chip into some fund or something and buy it out yourself?
    • anigbrowl 4y ago
      I am also wondering this. The capital definitely exists to do it. Perhaps it is even being asked for, but out of public view.
• rytill 4y ago
  Why not get a loan? Can someone explain what fundamental difficulty there is in taking out a temporary loan to make payroll until the FDIC sorts things out and you make X% of your money back?
  • Ekaros 4y ago
    Or have a quick funding round. VCs are involved. So they should be happy to provide more funds to great businesses that they surely make massive profits from in future.
    • grugagag 4y ago
      Of course they’re not happy. They’re in the business of profit not welfare. If they can convince the government to help out instead they’ll surely do so.
• Nifty3929 4y ago
  I love how they’re using language like “small business” because they know how little sympathy AI powered dog washing apps will get among the rest of the country. Sorry, a small business is a machine shop or hair studio. They don’t bank with SVB. These are startups that get millions in funding for often very dubious purposes. There are a few gems among them - but let them stand on their own. Or course, the real culprit is years of low rates and QE that has justified all of this. Time to stop.
  • muzz 4y ago
    The wording "small business" draws more favor than "Silicon Valley tech startup"
• deleted 4y ago
  [deleted]
• ah765 4y ago
  YC has made a ton of money for itself already, why should the average taxpayer be responsible for helping them? Most people will agree it's unfortunate that depositors might lose some of the money they deposited. It's also unfortunate if you get robbed or your business catches on fire. That doesn't mean the government is obligated to reimburse you for your losses. Next time, consider paying for more insurance. Also, you're probably not losing all your money. You'll get back what the FDIC can recover, which they do for free, and most people guess it's going to be upwards of 80%. Much better than the result of robbery or fires that ordinary people put up with. You can also get a loan to deal with the short term, from your investors or from a bank. High interest? Deal with it. Even in the worst case, people are working for startups knowing that they are high risk positions. You are much better off on than the average American, even in the worst case. Your personal finances are unaffected. Think before asking people poorer than you for money.
  • muzz 4y ago
    Because absolute greed. Note the complete lack of ANY contrition, accountability, etc in their communications on this.
• snow_mac 4y ago
  YC is not asking for a bailout. YC is asking for the FDIC to ensure depositors beyond the $250,000 guarantee. One hand I see why the FDIC would not (EG wealthy individuals), but on the other hand I could see why the FDIC must ensure that accounts over $250,000 remain solvent: companies of all sizes generally have balances well over $250,000. I think this is probably a unique case that hasn't happened much, because most banks that have failed where the smaller ones in 2008. I vote that the FDIC insure and require insurance for accounts up to $5,000,000. But after you exceed that amount, you can no longer deposit money at that bank. Like the $250,000 limit on insurance should mean that you are capped at $250,000 in balance.
• josalhor 4y ago
  Everyone here seems pretty negative about the petition based on the title that says "YC Is Asking for a Bailout", when actually the content of the post is quite different: > Small business depositors at Silicon Valley Bank should be made whole. Regulators need to conduct a backstop of depositors. We are not asking for a bank bailout. With emphasis on that "We are not asking for a bank bailout". They are also asking for more regulation. Taking rapid action to make sure this does not cause a domino effect seems like a pretty good idea if you ask me.
  • CSSer 4y ago
    No, it’s not different. Y Combinator does want to be be bailed out. The old title wasn’t “Y Combinator wants Silicon Valley Bank to be bailed out.” Depositors aren’t going to get completely hosed by this anyway. And as for the domino effect, it’s scaremongering as a means to an end. Don’t piss down my back and call it rain.
  • JohnFen 4y ago
    If they aren't asking for a bailout, what are they asking for? Just saying "We are not asking for a bank bailout" doesn't make it so.
• hinata08 4y ago
  St00pid question : I don't understand what kind of accounts these start-ups have. Are they like the mandatory checking accounts for the day-to-day management ? That should indeed be bailed out immediately, to unfreeze their processes. Or is that investment? I don't care if investors loose money for once. And how can a bank 'loose' money from checking accounts, without anyone profiteering or getting the money for friends ? Banks shouldn't be supposed to invest with checking accounts. They should just hold the book, and charge you a yearly fee if they need.
  • peteforde 4y ago
    Not a stupid question. Good to ask what you don't know. Yes, we're talking about startups with their operating capital frozen and struggling. Many of the commenters here appear to be confusing bank depositors with bank investors. If you started a startup, it's very likely that your funds would be frozen. > And how can a bank 'loose' money from checking accounts As usual, it's complicated. Banks have always used the money in checking accounts to make investments. All of the service fees are just a tiny fraction of how a bank makes money. The real question is how - and to what degree - a bank should be able to invest that money without creating untenable risk. Essentially, they are allowed to loan a significant multiple of their actual cash holdings. Let's say that they can loan $5 for every $1 in trust. This works great so long as they don't have 21% of their customers show up and demand their holdings at the same time... which is a drastically simplified version of what happened late last week. Unfortunately, they don't teach this stuff in high school. They 100% should.
    • JohnFen 4y ago
      > Unfortunately, they don't teach this stuff in high school. They sure did when I was in high school. When did that change?
      • peteforde 4y ago
        I'm impressed. I went to high school in the 90s in Canada, at a shop/tech focused school. There's lots of things I think are super important (business, ethics, communications, financial literacy, civics, things like cooking and cleaning that used to be called "home ec") that were simply not on the menu for us. Sure, there might be the occasional teacher who could spend a few minutes on a good question, but it was not part of any curriculum, so far as I could tell.
• reb 4y ago
  I'm going to remember the comments I'm reading here for the rest of my life.
• simple-thoughts 4y ago
  Disgusting. Ycombinator’s network has consistently worked to disrupt the old systems of power to build a new technocracy under their control. Now that they fail to take basic steps to mitigate risks that any basic MBA education would teach, they want a bailout from the same systems they are supposedly disrupting. This is not the ycombinator I knew.
• blurbleblurble 4y ago
  What's up with all the trolls?
• CaptainNegative 4y ago
  I'd support the government doing what it can to help these companies sell equity to make up for cash shortfall, but I don't see why it is a taxpayer problem to bail them out with no guarantees going the other way.
• Mandatum 4y ago
  No.
• skwirl 4y ago
  People are misdirecting their (rightful) ire over 2008 bank bailouts at depositors, which apparently is because they don't like some of those depositors for unrelated reasons. Nobody is defending the bank, which already has been shut down and its shareholders rightfully wiped out. The idea that backstopping depositors is moral hazard is preposterous and honestly embarrassing on a platform where people should know better. This is a bank that was in compliance with state and federal regulations, and according to California's regulatory agency, was "in sound financial condition prior to March 9, 2023."[1] Bank deposit accounts are supposed to be boring financial infrastructure, not a source of risk. If you destroy faith in the US banking system among depositors, this particular bank failure will be the least of our problems. [1] https://dfpi.ca.gov/wp-content/uploads/sites/337/2023/03/DFPI-Orders-Silicon-Valley-Bank-03102023.pdf?emrc=bedc09 https://dfpi.ca.gov/wp-content/uploads/sites/337/2023/03/DFP...
  • molsongolden 4y ago
    I hope this is what’s going on because the comments in this thread are wild. People cheering for thousands of businesses to lose funds and potentially go under just because they chose the wrong top-20 bank to hold their cash??
  • somsak2 4y ago
    You can both hold the opinion that we should actually bail the depositors out but also regard the fact that they exhibited a serious lack of due diligence at the same time. They are not mutually exclusive. I think you're assuming that simply because people are critical of the lack of risk controls at these companies, they also necessarily mean to say that they all deserve to be wiped out.
    • skwirl 4y ago
      I don't think many people are qualified to assess the risk of a bank, and I don't think it's reasonable to expect founders to be able to do this. It's a bit like expecting people to inspect bridges before they drive over them (or companies to inspect the bridges that lead to their office buildings). We expect regulators to keep basic infrastructure working - be it financial or physical. As I said above, the State of California found this bank to be "in sound financial condition prior to March 9, 2023." The company was meeting its obligations with regulators. It then suffered a crisis of confidence which led to a bank run, which no bank can survive. We also learned in 2008 that the private credit rating agencies cannot effectively assess the risk of what banks are doing either, despite that ostensibly being their entire area of expertise. So paying a company to assess the risk is out as a realistic option. This was one of the 20 largest banks in the United States. If you can't trust the soundness of deposit accounts at top 20 banks that have been operating without issue for decades, your only rational choice is to move your deposits into the four "too big to fail" banks that you know the government will bail out in the event they collapse. Nothing else is safe.
• hyperhopper 4y ago
  Why was the title changed from "YC needs a bailout" to something that gives almost no information about the content. "Urgent: Sign the petition now" is easily the most click-baity post-edit headline that I've ever seen on hacker news.
  • grugagag 4y ago
    Damage control. Now the post has been flagged like anything that is critical in any way of YC.
• snihalani 4y ago
  What sucks is that YC did not bother to make a signup list for the opposite side of the debate. Such a "save our startups pls" post
• crmd 4y ago
  Nationalize
• icha 4y ago
  The idiotic corporate spiritual newspeak is the cherry on top of this whole ordeal. Can't you just plainly ask for a bailout without overblowing the importance of your little bubble club?
• tehsauce 4y ago
  Did an admin just edit the title from: "YC is asking for a bailout" to: "Urgent: Sign the petition now" ??
  • gus_massa 4y ago
    It's very common. The guidelines ask to use the original title https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html , and the mods usually enforce it. Someone even made a tracker https://hackernewstitles.netlify.app/ https://hackernewstitles.netlify.app/ I don't like neither title. If I has infinite power, I'd use the other part of the title, something like "Petition: Thousands of startups and hundreds of thousands of startup jobs are at risk"
• greenthrow 4y ago
  Where was YC's petition or other action in support of all the thousands tech workers who have been laid off in recent months? They don't care about the individuals affected. They care about their investments. That's it.
• UmYeahNo 4y ago
  Boy, this got pushed off the front page awfully quickly.
• statsstats 4y ago
  No bailout. Banks and VCs and Founders are risk managers. They all failed. So grow up and take responsibility (I'm a founder myself).
• cirrus3 4y ago
  If they were dumb enough to risk that much money uninsured, what does that say about their decision making competency in general? What other decisions are these companies making with my data? If a company got caught up in this, maybe they were never mature enough to exist in the first place, or got bad advice. Play stupid games, win stupid prizes.
• readonthegoapp 4y ago
  "we are asking you to save innovation in the American economy." lol. be nice if so much of this innovation wasn't about destroying american workers, spying on americans, exploiting developing world labor, and controlling the public mind in new ways.
• deleted 4y ago
  [deleted]
• hartator 4y ago
  Can't YC foot the bill instead of making a petition? It does seem like a "privatizing profits and socializing risks" scheme.
• jerrygenser 4y ago
  this was just on the front page now I can't find it. was it removed?
  • netsec_burn 4y ago
    Yes.
• effingwewt 4y ago
  Bet this never gets flagged off, even though every single person who isn't some insane CEO wants this to happen. Stop privatizing profit and socializing losses.
• Kyragem 4y ago
  See the bigger picture here: this is a white swan event that can finally raise unemployment, bring wages down and lower inflation and will cause the fed to finally stop raising interest rates. Yes it sucks for the VC/startup folks but the years have been good for many of these and they can afford a haircut more than anyone else in our society.
• deleted 4y ago
  [deleted]
• fwlr 4y ago
  Seems like most people are reacting to this SVB situation through the lens of knowledge they got from watching The Big Short. Maybe try explaining the situation using The Big Short as a metaphor. The strippers are the startups. The mortgage jocks who chuckle about getting strippers to sign for mortgages are Silicon Valley Bank. The CDOs themselves are treasury bonds: the fake AAA ratings are the treasury bond government-backed guarantee of 1.8% return, and the rot inside the CDOs that brings them tumbling down is the Federal Reserve rapidly hiking interest rates. The smarmy CDO seller is thus the Federal Government. There isn’t really a Mark Baum or a Michael Burry in this story as far as I can tell. If this idea sounds stupid to you, consider the empirical evidence that your current approach is exponentially more stupid - being roundly excoriated by the majority of Hacker News comments was not in your model, was it?
• antibasilisk 4y ago
  no i don't think i will :)
• Nifty3929 4y ago
  Actually this would a bailout for YCombinator and VCs! Those are the ones with all the money at stake. It’s the VCs money that is going up in smoke, and it’s their portfolios that are going to take a huge hit when all their bets go poof at once. Let it happen.
• fsckboy 4y ago
  SVB got pummelled by the market when it's portfolio of mortgaged backed securities declined in the face of soaring interest rates. I'm not sure I agree that banks should even be allowed to buy mortgage backed securities. Banks earn their keep by lending money and writing mortgages and selling the mortgages to securitizers. A bank buying mortgage backed securities is like Target announcing they will no longer focus on sales of goods, but rather, returns!
• esalman 4y ago
  A lot of the tech bros currently asking for bailout have a track record for being anti-bailout, anti-handout, anti-government control, anti-money printing, anti-taxation, anti-stimulus. Absolutely no sympathy for them.
• msteffen 4y ago
  Bill Ackman wrote a great tweet about this: https://mobile.twitter.com/BillAckman/status/1634564398919368704 https://mobile.twitter.com/BillAckman/status/163456439891936...
• jmull 4y ago
  Most startups fail. Propping these companies up now with government money (that is, our money) will just make the failures cost more, ultimately. What we're really talking about here is bailing out investors who, of course, knowingly took these high risk flyers. (BTW, the rising interest rates affects everything about this kind of investment. All kinds of things that made sense in the era of free money are going to stop working now. SVB is just one sad step in the process of this stuff grinding to a halt. It's not the the start of it, and it's certainly not going to be the end.)
  • somsak2 4y ago
    I really doubt that when these startups put money into a bank account they were "knowingly taking a high risk."
    • JohnFen 4y ago
      They weren't knowingly taking a high risk, because the risk wasn't high. But they were knowingly taking a risk, and this time the dice rolled up unfavorably. That's the nature of risk. Even low risk things go bad, just not as often.
    • jmull 4y ago
      We're talking here about bailing out startups. The VC investors, founders, and even employees (to a somewhat lesser extent) made a high-risk decision to invest their time and/or money into something that would probably fail. (Also, it's not like a tax-payer funded bailout is the only way these startups can stay afloat... take a bridge load... find an opportunistic investor. Of course the startup investors would much prefer a taxpayer funded bailout because other options will cost them more money and/or a share of the startup. As many are pointing out: they are seeking to socialize the risks and keep the rewards.)
• deleted 4y ago
  [deleted]
• appleaday1 4y ago
  I will sign this for the founders :)
• klipklop 4y ago
  Sorry, no bailout without ownership. Go borrow money against a percentage ownership of the companies. This is getting absurd at this point. SV arrogance finds a new high water mark.
• peteforde 4y ago
  YC has taken significant positions in their portfolio companies, which they rightfully boast are worth something like a collective $140B. They've also strongly encouraged their portfolio founders to use SVB, which made sense until the precise moment it didn't. What I don't understand is why YC itself doesn't allocate what appears to be a painful but survivable amount of its profits and bail out its own portfolio companies. This would cost a few billion dollars... but they have it. Indeed, a notable number of individuals closely associated with YC could do it without breaking a sweat. Indeed, there's a strong argument to be made that this would be an excellent investment in their future hero/GOAT status, never mind ensuring that their beloved startup ecosystem continues to return huge profits long into the future. I don't share the reductive views expressed in the comments. I strongly empathize with the founders and their employees who are not investors but depositors in a bank that they were told to use. The notion that startup founders could or should maintain a bank relationship for every $250k of operating capital isn't practical or helpful. However, I don't think that going to the US citizens is a good look, either. This petition's core ask frames it as a binary choice when the third option is that YC itself should 100% step up and take this hit.
  • somsak2 4y ago
    surely you're not suggesting that bailing out companies they've invested in should be considered part of the a giving pledge? how would that be at all philanthropic? that's just self-interest.
    • peteforde 4y ago
      You are correct to point out that a straight read of my comment sounds like madness. I am going to edit to decrease my dripping sarcasm. FWIW, my thought process (I should leave being a comedian to comedians) is that this is sort of like kids asking for their inheritance early.
  • subsistence234 4y ago
    Just splitting your assets over two different banks would cut the risk in half (almost). And entrepreneurs should have a very good sense for when something is "too good to be true" like APY far higher than what other banks can offer. The most likely explanation for higher returns is higher risk.
• smcl 4y ago
  Flagged!? Come on this is extremely topical, I cannot think of a more on-topic thing for HN. It brings together: - Silicon Valley - Startups - Y Combinator - Current Events Any one of those is an appropriate submission for Hacker News but altogether, it’s just … there is nothing more appropriate for HN. This belongs at the top of the front page where I encountered it.
  • itg 4y ago
    I imagine some people flagged it so it doesn't get more views. How pathetic of YCombinator itself begging for a bailout.
    • doodlesdev 4y ago
      I attempted to create a Tell HN thread talking about this but it almost instantly disappeared from new. I believe this is the moderation team, possibly they have been asked by someone higher up to not allow the discussion. Keep in mind the above is only speculation, but since the moderators haven't taken a public stance on this or clarified anything it's what I'll believe for now.
    • effingwewt 4y ago
      This was my reason for flagging it. The balls to even try this, I'm enraged and the last thing I want is them getting more eyes. This truly shows the disconnect we are now living in. They said the quiet part out loud.
      • smcl 4y ago
        Interesting, I thought it was the opposite - people attempting some kind of damage control since having a “Y Combinator is asking for a bailout” story on the front page is not a good look. But I guess the title was changed to be a little less incendiary
        • effingwewt 4y ago
          Not for me, personally. This wasn't an article or blog post talking about the out-of-touch CEO-bros having the lack of self-awareness to even attempt to have us bail them out. This was a direct link to their 'petition'. We've gone beyond moral hazard, we are now at the point where it's expected for tax-payers and poor people to bail out the rich when their greed finally catches up with them.
• dctoedt 4y ago
  Why is this suddenly flagged?
  • CyanBird 4y ago
    Keep moving citizen, nothing to see here
• l3mure 4y ago
  I'll sign it for $100.
• muzz 4y ago
  Someone should start a petition for letting the market work and having its participants be accountable for their decisions.
• reducesuffering 4y ago
  We, the undersigned, do not believe in free markets. If some of us said we did, it was a lie of convenience. If we preach their virtues in the future, we are hypocrites. We put our money, over FDIC limits, into a single bank. We accrued positive benefits by using a bank which was trying to make the profits elsewhere. How they were attempting to make these profits was public information, https://www.cnbc.com/quotes/SIVB?tab=financials https://www.cnbc.com/quotes/SIVB?tab=financials . We indirectly put our cash into mortgage-backed securities, those investments declined, and we're asking the public to make up the difference for our bet gone bad. It is up to you each of you Americans, to wire us $600 so that we can eventually be billionaires. Sincerely, us
• snow_mac 4y ago
  Why was this flagged?
• gnicholas 4y ago
  Why on earth would this be flagged? The SVB fiasco has been all over the front page for days, with an unprecedented number of stories allowed simultaneously. This particular link is especially relevant, since it's from YC itself. The strangest part is there's no 'vouch' button, which is typically/always available on flagged submissions.
  • tekla 4y ago
    Because it looks bad to the powers that be
  • falcolas 4y ago
    I flagged the submission, as it was titled “Urgent: Sign This Petition Now”. And fuck that, if I’m being blunt.
    • gnicholas 4y ago
      It appears the title was changed from the original submission: https://news.ycombinator.com/item?id=35114101 https://news.ycombinator.com/item?id=35114101 I agree the current title is not appropriate.
      • falcolas 4y ago
        Yeah, I’ve seen that from a few posts too, it’s why I felt it valuable to point out.
• chkaloon 4y ago
  "Small business depositors at Silicon Valley Bank should be made whole. Regulators need to conduct a backstop of depositors. We are not asking for a bank bailout. " Man, talk about cognitive dissonance. Depositors should get back what is available from sale of bank assets. No more
• analognoise 4y ago
  I love that this got flagged on HN itself.
• noodles_nomore 4y ago
  Lol, zerohedge called it. Shameless.
  • muzz 4y ago
    YC sounds a lot like ZH these days
• SkyMarshal 4y ago
  Uh, why does this need to be flagged? Agree or disagree, it’s a legit thing to discuss.
  • grugagag 4y ago
    Damage control. This risks turning into a megathread that would want to stay on the front page for a few days and that would make some people uncomfortable. It conveniently gets flagged or gets demoted to 100th page where fewer pairs of eyes reach.
• olliej 4y ago
  Don't ycombinator and the various VCs always complain about government regulation? Don't they always complain about taxes? The other day I saw the old quote "there's no atheists in a foxhole" extended with "and no libertarians in a bank run". If there's a tax payer bail out (and I don't believe there needs to be - this seems more a liquidity problem than total funding) then all of that money is just tax payers giving money to VCs. More over, this bank run is almost entirely a product of VCs telling all of the startups they funded to pull all of their money out of the same bank they told all of them to use - so they supported removing the regulations that make runs harder, and then they caused the run, and now they're asking for tax payers to take on all the losses.
  • muzz 4y ago
    Yes and this describes precisely their hypocrisy
• snickerbockers 4y ago
  I get that it's your site and you can delist whatever posts you want to, but one of the hot-button issues in politics right now is censorship and manipulation of social media so it's a really bad look for you to be doing this. Nobody is going to want to give you free money if you're going to use whatever power is at your disposal to censor discussion around whether or not you deserve free money. Again, it's certainly within your rights to flag this post but you're literally asking for an untold amount of money from the public while you're using what little power you have to stop the public from criticizing you. Just try to not be a fucking hypocritical asshole for once.
• antisthenes 4y ago
  Nice. A convenient list of grifters that I can avoid working for and with in the future.
• somsak2 4y ago
  Kind of crazy that the approach that's being taken here is a change.org-style petition. I would have expected that these people have connections much higher up and wouldn't have to publicly grovel like this.
• nickstinemates 4y ago
  Why is this now flagged?
• WirelessGigabit 4y ago
  Bullshit. There are no small businesses here. It's all VC funded. Let them fail. This way hopefully VC slows down. It's insane the amount of money that gets pumped into these disruptors. I don't need another subscription service for something that was not one for 100 years. Also, it's on them if they only used 1 bank, and worse, it's a bank whose clients are all the same as you. So if there is an industry wide event, you ALL are hosed. Guess those algorithms they've been building to push me 'relevant' information didn't push the 'diversify' notification to their CEOs. Let them burn.
• oarabbus_ 4y ago
  >Small business depositors at Silicon Valley Bank should be made whole. Regulators need to conduct a backstop of depositors. We are not asking for a bank bailout. From where would the money come from, US taxpayers? How is this different from asking for a bank bailout? > Longer term, Congress should work to restore stronger regulatory oversight and capital requirements for regional banks, and any malfeasance or mismanagement on the part of SVB executives leading to this failure should be investigated. SVB execs successfully lobbied congress to lighten banking regulations affecting them [0]. Their C sold millions of stock the week prior to insolvency (yes, these sales were scheduled in January, but execs would have been well aware of the impending liquidity crisis at the time) [1] They also paid bonuses to staff hours before the FDIC shut down the bank [2]. I cannot sign this petition in good faith knowing the above, at least without these questions being answered: what is the mechanism through which depositors can be backstopped without bailing out SVB? What would be the source of this money? How does the ask differ from a bank bailout? [0] https://www.theguardian.com/business/2023/mar/11/silicon-valley-bank-weaken-risk-regulations-svb https://www.theguardian.com/business/2023/mar/11/silicon-val... [1] https://twitter.com/unusual_whales/status/1634555021487480834 https://twitter.com/unusual_whales/status/163455502148748083... [2] https://www.cnbc.com/2023/03/11/silicon-valley-bank-employees-received-bonuses-hours-before-takeover.html https://www.cnbc.com/2023/03/11/silicon-valley-bank-employee...
• JackFr 4y ago
  To be clear to bail out the bank means to bail out the creditors. The creditors in this case are the depositors, which disproportionately are VC backed startups. This would be a bailout, not of employees and founders but of the wealthy investor class.
• EFreethought 4y ago
  You know how there are those sites like isitdownorjust.me? We need one for banks. DoesMyBankHaveAChiefRiskOfficerRightNow.com.
• somewhereoutth 4y ago
  Odd that the link to the latest blog post on ycombinator, indeed an urgent blog post, has been flagged on news.ycombinator itself. Things must be getting really bad somewhere.
• beezle 4y ago
  Ill advised for any company to keep funds above and beyond that necessary for day to day transactions all at one financial institution when it is quite easy to spread the excess funds across many banks/types of accounts. That is especially true when said funds far exceed those covered by standard deposit insurance. Many brokerages offer their clients the option to spread their free cash across a large number of banks to minimize risk. Excess cash could also be invested in 4-week Treasury bills, again held at more than one fiduciary agent.
• harry12345 4y ago
  Why the hell are non-interest bearing demand accounts even at risk? These are simple accounts used for operations like payroll. Shouldnt this just be a separate business altogether which charges fees to its customers for the work?
• 2-718-281-828 4y ago
  the nerve ...
• jubalfh 4y ago
  [dead]
• whodidntante 4y ago
  How about a petition to boycott all companies that sign this petition ?
• Gys 4y ago
  Where do I go to sign a petition for the opposite position?
• Invictus0 4y ago
  I signed it as "Carol Marks"
• offshoreguy101 4y ago
  How about the over 5,000 CEOs and founders who signed this petition pool THEIR money and bailout Silicon Valley Bank. How about the shareholders of Silicon Valley Bank pool Their resources and bailout Silicon Valley Bank. Taxpayers have zero responsibility to lift a finger to put one penny into this failing bank. You all should have understood that a bank can do foolish and stupid things with your money when it's too big to fail.
• chernevik 4y ago
  What people are missing is that the only way a Silicon Valley Bank can exist is if one such is allowed to fail. If the government is to back deposits 100%, then it should and will have authority to regulate assets purchased. Anything looking different or new or without a track record will be "risky" and unsuitable. Hello, that's what startups look like. Do you want some bureaucrat holding veto power over your bridge loan? Well, if the regulator is on the hook for the loss, then that's what you've got.
• fraying 4y ago
  And we all said in unison: cope.
  • moshegramovsky 4y ago
    They just need to stop buying lattes and avocado toast, right?
• mschoeffler 4y ago
  Startup Svb customer here. Big fan of yc. But this is just wrong. The vcs and startups (including yc) were gambling on the taxpayer dime. I’m ok helping on some of the uninsured deposits (say 80%). But rewarding people for gambling with taxpayer money? No thanks.
• hackrnusr 4y ago
  Recently cancelled cartoonist Scott Adams once compared women asking for equal pay to children asking for candy. I think comparing the depositors in Silicon Valley Bank to these children would have made a better analogy.