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SVB blew up chasing yield with risky assets to juice corporate profits. I haven’t seen people calling it an exit scam, just terrible governance. Not entirely un

by dahdum 4y ago

SVB blew up chasing yield with risky assets to juice corporate profits. I haven’t seen people calling it an exit scam, just terrible governance. Not entirely unlike FTX. Not sure why anyone who withdrew should be subject to clawbacks. What law did the break? SVB caused the bank run, it wasn’t some meme driven panic or coordinated effort.

mindslight 4y ago
It's not that people are calling it an exit scam, rather they're talking about uninsured deposits as if they're completely gone. I feel that worry descends straight from cryptocurrency exchanges blowing up, where there is generally no assets left. (I agree I overspoke by calling FTX an "exit scam", when it seems more like gambler's ruin) AFAIK the FDIC doesn't look kindly on people who liquidate their accounts during a bank run [0]. This has two purposes. First it spreads a smaller amount of pain around to all depositors, rather than a larger amount of pain for some depositors. And second, it discourages bank runs in the first place. And honestly without the meme behavior SVB might not have collapsed. I don't think talking about holding the bonds to maturity is a great general appraisal of the situation. But on the other hand it seems SVB had lots of depositors that were actually content to park a lot of cash and not chase high yields, so it could have actually worked out if not for the run. [0] https://news.ycombinator.com/item?id=35097028 https://news.ycombinator.com/item?id=35097028
paxys 4y ago
FTX wasn't just "terrible governance" it was a straight-up scam. They were illegally using customer deposits in their sister company's trading account. SVB on the other hand had full rights to those funds.
FireBeyond 4y ago
I'm kinda curious what the FDIC will ask of Thiel. From what I understand, the message from him and his fund to their startups for Thursday was "you need to get your money out of SVB and it needs to happen TODAY" sounds "suspiciously specific"...

by dahdum 4y ago

mindslight 4y ago

It's not that people are calling it an exit scam, rather they're talking about uninsured deposits as if they're completely gone. I feel that worry descends straight from cryptocurrency exchanges blowing up, where there is generally no assets left. (I agree I overspoke by calling FTX an "exit scam", when it seems more like gambler's ruin) AFAIK the FDIC doesn't look kindly on people who liquidate their accounts during a bank run [0]. This has two purposes. First it spreads a smaller amount of pain around to all depositors, rather than a larger amount of pain for some depositors. And second, it discourages bank runs in the first place. And honestly without the meme behavior SVB might not have collapsed. I don't think talking about holding the bonds to maturity is a great general appraisal of the situation. But on the other hand it seems SVB had lots of depositors that were actually content to park a lot of cash and not chase high yields, so it could have actually worked out if not for the run. [0] https://news.ycombinator.com/item?id=35097028 https://news.ycombinator.com/item?id=35097028

paxys 4y ago

FTX wasn't just "terrible governance" it was a straight-up scam. They were illegally using customer deposits in their sister company's trading account. SVB on the other hand had full rights to those funds.

FireBeyond 4y ago

I'm kinda curious what the FDIC will ask of Thiel. From what I understand, the message from him and his fund to their startups for Thursday was "you need to get your money out of SVB and it needs to happen TODAY" sounds "suspiciously specific"...