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Eh, the depositors aren’t totally blameless here. On Thursday they conspired to perform a huge bank run on SVB, on Friday they succeeded, and on Saturday they w

by fwlr 4y ago

Eh, the depositors aren’t totally blameless here. On Thursday they conspired to perform a huge bank run on SVB, on Friday they succeeded, and on Saturday they were demanding the government and taxpayers make them whole by Monday. They deserve to get their money back and they eventually will once SVB’s assets are liquidated. But that’s not good enough, they want it now, and they won’t hesitate to make you pay for the expedience. I don’t like that.

obventio56 4y ago
I don't think it's fair to blame the SVB depositors for the bank run. Perhaps you can blame public figures (VCs etc) who catalyzed it. Once a run starts, though, it's in your interest to run too. If you had >250k in SVB and you managed to get it out before it was shut down, you'd be pretty happy with yourself right now. If you run a business and have an obligation to share-holders, it would be negligent not to try this at least.
- fwlr 4y ago
  Yeah, I can’t blame them at all for joining an ongoing bank run. I can kinda blame them for starting one because they did it so aggressively, but only a bit, because that’s just how internet banking works these days. I can definitely blame them for demanding the taxpayers make them whole by 9am next business day.
  - jzb 4y ago
    Who’s demanding? Pleading might be more appropriate for many businesses.
    - fwlr 4y ago
      Hey, good news btw. Great, actually. FDIC just announced all depositors to be made whole on Monday morning - and at no cost to the taxpayers either! The lag between the immediate payout to depositors and the eventual recovery of value from SVB’s remains seems like it will be covered by the Deposit Insurance Fund, i.e. the cost will be spread out to all banks.
LatteLazy 4y ago
Of course, the ones who ran the bank got their money. The ones who didn't are now going to be punished for NOT panicking...
randerson 4y ago
The depositors aren't a monolith. The ones you want to blame aren't the ones whose money went missing.
deleted 4y ago
[deleted]
daniel-thompson 4y ago
> they conspired to perform a huge bank run Individual depositors don't need to conspire to reach the conclusion that in a bank run scenario, it is virtually always in each depositor's own best interest to withdraw their money.
- fwlr 4y ago
  With the “conspiring”, I am referring to reports of VCs mass-emailing their investees to move everything out of SVB right now.
  - lambo4bkfast 4y ago
    The VC's obligation is to their startups... Its a completely rational decision to get your money out of SVB once you know others are thinking the exact same.
    - fwlr 4y ago
      I’m not trying to sentence them to the guillotine or anything. I appreciate the strong incentives driving their actions. Even the desire for the government to retroactively insure their deposits is understandable, although I disagree. In the OP I said they’re not completely blameless; I should emphasize I also think they’re not completely to blame. (Except for the shrill, nigh-hysterical tone of their demand, and the extraordinary timeline they demanded. That one’s all on them.)
      - lambo4bkfast 4y ago
        They are blameless is my point. The depositor has zero responsibility to evaluate the bank's balance sheet. Not ensuring the depositors are made whole will risk a run on all regional banks throughout the country starting tomorrow morning. We will then see a consolidation of deposits into the top 4, too big to fail banks; hardly a progressive outcome.
        fwlr 4y ago
chewbacha 4y ago
Bank runs aren’t a conspiracy they are emergent behavior. They are the reason FDIC insurance exists in the first place.
n0us 4y ago
This has to be the stupidest take in the entire comment chain.
tlonny 4y ago
Depositors aren't a monolith. In fact, the depositors that _didnt_ "conspire to perform a huge bank run" are the only depositors which would require government assistance to make them whole.
jzb 4y ago
Some of the depositors, not all. My employer didn’t conspire about anything. When and how much money is returned is going to make the difference between life and death for some of these companies. And the difference between having a job and healthcare or not for a lot of people. Don’t forget that this is happening to depositors / companies after weathering a pandemic and in a really shitty economies where things are already very challenging. Having additional cash flow problems and/or additional debt to service all the sudden may be the proverbial straw that sends companies and people into bankruptcy.
- fwlr 4y ago
  I’m sympathetic. I was in the hospitality industry during COVID, I watched a company that employs 60 people struggle to make payroll while 90% of their business was legally barred from operating for months on end with no clue when it would end. I saw managers and fellow employees giving each other loans, I paid for a coworker’s car repairs. I am not wishing this on you. By this evening you’ll know if a sale has gone through; if so, everything is back to normal. Otherwise, the FDIC has 250k waiting for your employer on Monday morning, guaranteed. Even if that’s not a week’s payroll, for all but the largest companies that’s enough to get employees by for a week. The money isn’t gone, just locked up in securities. By the end of the week some percentage of the account will be released - I’ve heard predictions of 80%, 60%, 50%, but even if it’s 20% that is still enough for almost any place to run close to full payroll and operating costs for a month. By the end of the month you’ll have 50-80% back, and you’re back to normality. Maybe the last 20% takes a year. It can wait. This isn’t the end! It’s scary, but it is not the end.
- lisasays 4y ago
  My employer didn’t conspire about anything. They didn't "conspire", per se. But they failed to do due diligence on the nature of the financial institution they were relying upon. Or even to think, for a minute, about fussy terminology like "FDIC insured" actually means.
closeparen 4y ago
Many commenters have argued that it is the personal responsibility of depositors to be on top of the health of any institution where they have more than $250k. An obvious consequence of that is that it's their duty to cause the largest possible bank run at the earliest possible moment.

by fwlr 4y ago

obventio56 4y ago

I don't think it's fair to blame the SVB depositors for the bank run. Perhaps you can blame public figures (VCs etc) who catalyzed it. Once a run starts, though, it's in your interest to run too. If you had >250k in SVB and you managed to get it out before it was shut down, you'd be pretty happy with yourself right now. If you run a business and have an obligation to share-holders, it would be negligent not to try this at least.

fwlr 4y ago
Yeah, I can’t blame them at all for joining an ongoing bank run. I can kinda blame them for starting one because they did it so aggressively, but only a bit, because that’s just how internet banking works these days. I can definitely blame them for demanding the taxpayers make them whole by 9am next business day.
- jzb 4y ago
  Who’s demanding? Pleading might be more appropriate for many businesses.
  - fwlr 4y ago
    Hey, good news btw. Great, actually. FDIC just announced all depositors to be made whole on Monday morning - and at no cost to the taxpayers either! The lag between the immediate payout to depositors and the eventual recovery of value from SVB’s remains seems like it will be covered by the Deposit Insurance Fund, i.e. the cost will be spread out to all banks.

LatteLazy 4y ago

Of course, the ones who ran the bank got their money. The ones who didn't are now going to be punished for NOT panicking...

randerson 4y ago

The depositors aren't a monolith. The ones you want to blame aren't the ones whose money went missing.

deleted 4y ago

[deleted]

daniel-thompson 4y ago

> they conspired to perform a huge bank run Individual depositors don't need to conspire to reach the conclusion that in a bank run scenario, it is virtually always in each depositor's own best interest to withdraw their money.

fwlr 4y ago
With the “conspiring”, I am referring to reports of VCs mass-emailing their investees to move everything out of SVB right now.
- lambo4bkfast 4y ago
  The VC's obligation is to their startups... Its a completely rational decision to get your money out of SVB once you know others are thinking the exact same.
  - fwlr 4y ago
    I’m not trying to sentence them to the guillotine or anything. I appreciate the strong incentives driving their actions. Even the desire for the government to retroactively insure their deposits is understandable, although I disagree. In the OP I said they’re not completely blameless; I should emphasize I also think they’re not completely to blame. (Except for the shrill, nigh-hysterical tone of their demand, and the extraordinary timeline they demanded. That one’s all on them.)
    - lambo4bkfast 4y ago
      They are blameless is my point. The depositor has zero responsibility to evaluate the bank's balance sheet. Not ensuring the depositors are made whole will risk a run on all regional banks throughout the country starting tomorrow morning. We will then see a consolidation of deposits into the top 4, too big to fail banks; hardly a progressive outcome.
      - fwlr 4y ago

chewbacha 4y ago

Bank runs aren’t a conspiracy they are emergent behavior. They are the reason FDIC insurance exists in the first place.

n0us 4y ago

This has to be the stupidest take in the entire comment chain.

tlonny 4y ago

Depositors aren't a monolith. In fact, the depositors that _didnt_ "conspire to perform a huge bank run" are the only depositors which would require government assistance to make them whole.

jzb 4y ago

Some of the depositors, not all. My employer didn’t conspire about anything. When and how much money is returned is going to make the difference between life and death for some of these companies. And the difference between having a job and healthcare or not for a lot of people. Don’t forget that this is happening to depositors / companies after weathering a pandemic and in a really shitty economies where things are already very challenging. Having additional cash flow problems and/or additional debt to service all the sudden may be the proverbial straw that sends companies and people into bankruptcy.

fwlr 4y ago
I’m sympathetic. I was in the hospitality industry during COVID, I watched a company that employs 60 people struggle to make payroll while 90% of their business was legally barred from operating for months on end with no clue when it would end. I saw managers and fellow employees giving each other loans, I paid for a coworker’s car repairs. I am not wishing this on you. By this evening you’ll know if a sale has gone through; if so, everything is back to normal. Otherwise, the FDIC has 250k waiting for your employer on Monday morning, guaranteed. Even if that’s not a week’s payroll, for all but the largest companies that’s enough to get employees by for a week. The money isn’t gone, just locked up in securities. By the end of the week some percentage of the account will be released - I’ve heard predictions of 80%, 60%, 50%, but even if it’s 20% that is still enough for almost any place to run close to full payroll and operating costs for a month. By the end of the month you’ll have 50-80% back, and you’re back to normality. Maybe the last 20% takes a year. It can wait. This isn’t the end! It’s scary, but it is not the end.
lisasays 4y ago
My employer didn’t conspire about anything. They didn't "conspire", per se. But they failed to do due diligence on the nature of the financial institution they were relying upon. Or even to think, for a minute, about fussy terminology like "FDIC insured" actually means.

closeparen 4y ago

Many commenters have argued that it is the personal responsibility of depositors to be on top of the health of any institution where they have more than $250k. An obvious consequence of that is that it's their duty to cause the largest possible bank run at the earliest possible moment.