6 ms·

I wish people would distinguish between "SVB does not deserve a bailout" as in "let it fail" vs as in "wipe out the shareholders and bond holders, but, sure, ba

by jefftk 4y ago

I wish people would distinguish between "SVB does not deserve a bailout" as in "let it fail" vs as in "wipe out the shareholders and bond holders, but, sure, bail out the depositors"

Ekaros 4y ago
The situation is that the depositors will eventually get some money. And that should be good enough. If they were so stupid they put all of their money in single bank account they deserve to fail.
- SkyPuncher 4y ago
  > The situation is that the depositors will eventually get some money. And that should be good enough. No, it's not "good enough". Far too many companies can no longer make payroll as a result of this.
  - nytesky 4y ago
    My expectations is they will liquidate all current holdings of SVB, and probably half their assets are down 20% because of interest rate pummeling of long dated bonds, so maybe everyone gets a check on Monday or Friday for 90% of their total assets at SVB. Payroll gets made, most companies will be fine, some runways are a wee bit shorter. I think fast is better than perfect in this scenario.
    - muzz 4y ago
      Looks like that's happening: https://www.bloomberg.com/news/articles/2023-03-11/fdic-races-to-start-returning-some-uninsured-svb-deposits-monday https://www.bloomberg.com/news/articles/2023-03-11/fdic-race...
    - name-form 4y ago
      That is what will happen, and the assets will be liquidated against some depositor holdings.
    - HWR_14 4y ago
      As I understand it, the FDIC normally steps in early enough that even non-insured accounts get made while.
  - theossuary 4y ago
    No, it is good enough. They knew the rules going in. No rrason to change them after the fact because it now personally affects them. FDIC will write checks up to 250k, and return any/all recovered funds to depositors. We can discuss changing that moving forward, but SVB is already done and dusted.
  - swatcoder 4y ago
    If you had a payroll to make this month and only had that much in cash on hand, you were already a marginal business and a gust of wind could have knocked you out. Your bank failing was that gust of wind. You’ll definitely get up to $250k back soon and probably more, and hopefully you can sort out the disruption and find a way to carry on. If, on the other hand, you had a lot more cash on hand but parked it all as uninsured deposits in one bank, you should be screaming at whatever mentor told you that was a reasonable thing to do. Either your mentor was a hack with little financial experience or they were conniving against taxpayers and believed bailouts would magically come to their rescue and remediate well-known tail risk. Somebody done you wrong, kid. Take it up with them, not the rest of us.
    - zarzavat 4y ago
      The root cause of all of this is that the US is so corrupt that a large bank was able to exempt itself from international banking standards. So it really is “the rest of us” who are to blame, by passively accepting corruption and feckless regulators. Taxpayers should pay the bill, it might incentivize them to get off their ass for once.
      - ClumsyPilot 4y ago
        > Taxpayers should pay the bill, it might incentivize them to get off their ass for once like they did in 2008? I would rather pay off student loans
        jayparth 4y ago
        What happened in 2008? I was very young then so I don’t know.
        paranoidrobot 4y ago
        The Global Financial Crisis. https://en.wikipedia.org/wiki/2007%E2%80%932008_financial_crisis https://en.wikipedia.org/wiki/2007%E2%80%932008_financial_cr...
  - antibasilisk 4y ago
    i guess they should have thought of that before they deposited their money into a business that plays games with money to scam wealth out of the economy
    - ericb 4y ago
      I guarantee that you have almost no understanding of whatever the bank you use is really doing. Feel free to point me to the balance sheet, and explain it. Of course, that won't matter because in the event that you can explain it, there's no guarantee you're not being unknowingly defrauded. Save your schadenfreude, it's gross.
      - antibasilisk 4y ago
        What I'm saying applies to all banks including the ones I use, not just SVB. I'm fully aware of the fact a significant portion of my money is in the hands of a bunch of coke addicts.
  - lovich 4y ago
    We already insure 250k in deposits through the FDIC. If you have more than 250k in cash, I don't think its unreasonable to expect that you need to start investing time/money in managing your reserves and not have the rest of society fund the risks you're taking. If companies want to lobby for some sort of tax like unemployment tax on wage labor, to fund a business version of unemployment, it might be a different story.
    - hiharryhere 4y ago
      250k is not a lot. A 15-20 person company could conceivably spend more than that month, especially with dev salaries, rent etc. How many of those have a treasury function?
      - nytesky 4y ago
        They have to “make payroll” but couldn’t they cut all employees down to minimum wage? And then promise a performance bonus when money is restored and they haven’t quit. Tech workers are usually at will, no union, so I think salary is completely discretionary. This would be for hours going forward, not the payrolls due for hours already worked.
        deleted 4y ago
        [deleted]
more_corn 4y ago
Exactly. SVB has ceased to exist. The bank is not being bailed out. The depositors are. You know, the normal people who’s only error keeping money in a bank.
- youngtaff 4y ago
  Except SVB’s customers aren’t “normal people”… they’re VCs, their funds and portfolio companies
  - erincandescent 4y ago
    ...portfolio companies which need to make payroll payments to normal people
    - youngtaff 4y ago
      Still doesn’t make the majority of SVB’s customers normal people
      - kreutz 4y ago
        With thousands of your "normal people" on payroll by proxy.
        youngtaff 4y ago
        Those normal people still aren't SVB customers… they don't decide where their employer banks or why they bank there Yes, they're exposed to SVB failing but as everything in life we're all exposed to failures we have no influence over VCs, founders etc had influence over where companies money was kept, and ultimately whether to start a run on the bank and kill it
- isitmadeofglass 4y ago
  [dead]

by jefftk 4y ago

I wish people would distinguish between "SVB does not deserve a bailout" as in "let it fail" vs as in "wipe out the shareholders and bond holders, but, sure, bail out the depositors"

Ekaros 4y ago

The situation is that the depositors will eventually get some money. And that should be good enough. If they were so stupid they put all of their money in single bank account they deserve to fail.

SkyPuncher 4y ago
> The situation is that the depositors will eventually get some money. And that should be good enough. No, it's not "good enough". Far too many companies can no longer make payroll as a result of this.
- nytesky 4y ago
  My expectations is they will liquidate all current holdings of SVB, and probably half their assets are down 20% because of interest rate pummeling of long dated bonds, so maybe everyone gets a check on Monday or Friday for 90% of their total assets at SVB. Payroll gets made, most companies will be fine, some runways are a wee bit shorter. I think fast is better than perfect in this scenario.
  - muzz 4y ago
    Looks like that's happening: https://www.bloomberg.com/news/articles/2023-03-11/fdic-races-to-start-returning-some-uninsured-svb-deposits-monday https://www.bloomberg.com/news/articles/2023-03-11/fdic-race...
  - name-form 4y ago
    That is what will happen, and the assets will be liquidated against some depositor holdings.
  - HWR_14 4y ago
    As I understand it, the FDIC normally steps in early enough that even non-insured accounts get made while.
- theossuary 4y ago
  No, it is good enough. They knew the rules going in. No rrason to change them after the fact because it now personally affects them. FDIC will write checks up to 250k, and return any/all recovered funds to depositors. We can discuss changing that moving forward, but SVB is already done and dusted.
- swatcoder 4y ago
  If you had a payroll to make this month and only had that much in cash on hand, you were already a marginal business and a gust of wind could have knocked you out. Your bank failing was that gust of wind. You’ll definitely get up to $250k back soon and probably more, and hopefully you can sort out the disruption and find a way to carry on. If, on the other hand, you had a lot more cash on hand but parked it all as uninsured deposits in one bank, you should be screaming at whatever mentor told you that was a reasonable thing to do. Either your mentor was a hack with little financial experience or they were conniving against taxpayers and believed bailouts would magically come to their rescue and remediate well-known tail risk. Somebody done you wrong, kid. Take it up with them, not the rest of us.
  - zarzavat 4y ago
    The root cause of all of this is that the US is so corrupt that a large bank was able to exempt itself from international banking standards. So it really is “the rest of us” who are to blame, by passively accepting corruption and feckless regulators. Taxpayers should pay the bill, it might incentivize them to get off their ass for once.
    - ClumsyPilot 4y ago
      > Taxpayers should pay the bill, it might incentivize them to get off their ass for once like they did in 2008? I would rather pay off student loans
      - jayparth 4y ago
        What happened in 2008? I was very young then so I don’t know.
        paranoidrobot 4y ago
        The Global Financial Crisis. https://en.wikipedia.org/wiki/2007%E2%80%932008_financial_crisis https://en.wikipedia.org/wiki/2007%E2%80%932008_financial_cr...
- antibasilisk 4y ago
  i guess they should have thought of that before they deposited their money into a business that plays games with money to scam wealth out of the economy
  - ericb 4y ago
    I guarantee that you have almost no understanding of whatever the bank you use is really doing. Feel free to point me to the balance sheet, and explain it. Of course, that won't matter because in the event that you can explain it, there's no guarantee you're not being unknowingly defrauded. Save your schadenfreude, it's gross.
    - antibasilisk 4y ago
      What I'm saying applies to all banks including the ones I use, not just SVB. I'm fully aware of the fact a significant portion of my money is in the hands of a bunch of coke addicts.
- lovich 4y ago
  We already insure 250k in deposits through the FDIC. If you have more than 250k in cash, I don't think its unreasonable to expect that you need to start investing time/money in managing your reserves and not have the rest of society fund the risks you're taking. If companies want to lobby for some sort of tax like unemployment tax on wage labor, to fund a business version of unemployment, it might be a different story.
  - hiharryhere 4y ago
    250k is not a lot. A 15-20 person company could conceivably spend more than that month, especially with dev salaries, rent etc. How many of those have a treasury function?
    - nytesky 4y ago
      They have to “make payroll” but couldn’t they cut all employees down to minimum wage? And then promise a performance bonus when money is restored and they haven’t quit. Tech workers are usually at will, no union, so I think salary is completely discretionary. This would be for hours going forward, not the payrolls due for hours already worked.
      - deleted 4y ago
        [deleted]

more_corn 4y ago

Exactly. SVB has ceased to exist. The bank is not being bailed out. The depositors are. You know, the normal people who’s only error keeping money in a bank.

youngtaff 4y ago
Except SVB’s customers aren’t “normal people”… they’re VCs, their funds and portfolio companies
- erincandescent 4y ago
  ...portfolio companies which need to make payroll payments to normal people
  - youngtaff 4y ago
    Still doesn’t make the majority of SVB’s customers normal people
    - kreutz 4y ago
      With thousands of your "normal people" on payroll by proxy.
      - youngtaff 4y ago
        Those normal people still aren't SVB customers… they don't decide where their employer banks or why they bank there Yes, they're exposed to SVB failing but as everything in life we're all exposed to failures we have no influence over VCs, founders etc had influence over where companies money was kept, and ultimately whether to start a run on the bank and kill it
isitmadeofglass 4y ago
[dead]