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You're technically right, but people treat it as de-facto zero risk. You also need to look at second-order effects. If startups go out of business because of t

You're technically right, but people treat it as de-facto zero risk. You also need to look at second-order effects. If startups go out of business because of this, that's a drain on unemployment funds. Those are income taxes not getting paid. Then there are downstream job losses on top of it. It could set back the sector for years, giving other countries sudden advantage in tech. In addition, some LPs are pension funds, so taxpayers would have to make up pension shortfalls. Then there's the risk of contagion now that everyone will be looking at their bank closely. You really don't want to take that chance. Companies need to get some money very quickly, and you really want them to get at least 95 cents on the dollar back within a month. It's one thing to let tech suffer because of its own hubris, but because of a run on a traditional bank?

muzz 4y ago
> but people treat it as de-facto zero risk. FDIC guarantees deposits up to 250k and everyone should know this. I know grandmothers with better risk mitigation strategies than these startups. Your second paragraph is pure scare tactic. Companies that fail at the basics of managing their own money against simple obvious risks should face the result of their careless. They will be replaced by better-run companies.
- dehrmann 4y ago
  > Your second paragraph is pure scare tactic. This isn't the time to be a purist. What happened happened; now you have to look hard at possible outcomes and be pragmatic about the best response.
JumpCrisscross 4y ago
> people treat it as de-facto zero risk Silicon Valley was not an investment-grade bank. If you’re running a corporate treasury function, you should have sweep, have a back-up bank account and know how to pull deposits into Treasuries.