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Especially for the startup end of things, where we are aiming to disrupt other businesses. Should we have a strong safety net, so that people who lose their jo

Especially for the startup end of things, where we are aiming to disrupt other businesses. Should we have a strong safety net, so that people who lose their jobs due to market disruptions or executive mismanagement do not suffer? Absolutely. And if it's currently inadequate, by all means let's improve it. But I think it's wrong to try to protect jobs through government subsidies to industries where execs made bad choices. Which is exactly what a lot of people are apparently asking for when they're asking for depositors to get retroactive free deposit insurance here.

shadowgovt 4y ago
It is possible that it'll make some kind of realpolitik sense to stabilize the startup scene, but I sort of doubt it. During the housing crisis, the federal government bought up sufficient stock to stabilize American auto manufacturing not because they particularly cared about the jobs that would be lost or the ecosystem of supporting industries that would be damaged as a result of loss of major manufacturing, but because auto manufacturing is one of America's national security concerns... The factories and skill sets that create trucks can create APCs, jeeps, and tanks if a hot war breaks out. I'm not exactly sure off the top of my head what the similar defense necessity story is for Silicon Valley.
- wpietri 4y ago
  Agreed. Especially for the bits of it that are at risk here, which are mainly small, unprofitable players.
- epvgwwqe 4y ago
  Are you for real? There is an AI arms race with China, for one. There is critical innovation across all segments happening in Silicon Valley, including defense.
  - shadowgovt 4y ago
    That would be a good argument for bailing out a Raytheon or a Microsoft, companies that have a record of success in delivering on complicated software technologies, but not the average Silicon Valley startup.
    - epvgwwqe 4y ago
      You can't throw the baby out with the bathwater. If the entire ecosystem is hurt it will affect the next Raytheon/Microsoft as well.
x0x0 4y ago
Framed another way, we're asking for the government to take some ownership of their stewardship of banks. The Treasury, the Fed, the CA gov, and the ratings agencies all gave svb passing grades. svb appears not to have done crypto speculation. The svb ceo asked congress to weaken Dodd-Frank. If that's a bad idea, then congress should say no; that's their job. Apparently banking over trivial amounts of money ($250k isn't even one month's cash use -- ie payroll and health insurance -- for a 15-ish person sfbay company) requiring significant work to make that cash unlikely to just disappear is no way to run a country.
- wpietri 4y ago
  The cash was always unlikely to disappear. It's just that even unlikely things happen sometimes. If doing decent treasury management is too darned hard for rich people to do, I don't think that's a problem for the government to manage. Beyond the obvious expedient of using two or three banks, which would have solved most problems for most companies here, there are a number of obvious market-driven solutions. E.g., https://www.difxs.com/ https://www.difxs.com/ or https://www.g2.com/categories/treasury-management https://www.g2.com/categories/treasury-management
  - x0x0 4y ago
    > too darned hard for rich people to do Yeah, this is some ideologically driven smearing of people who are literally like I want to stick my seed round in a checking account and not have that disappear. For what it's worth, I'm not rich; I'm like a hundred-thousandaire. (And not affected, though friends are.) Disappointing to see someone like you gloating that a bank screwed a bunch of small business customers. From reading your writing, I doubt you'd cosign "basic economic services like a checking account are use at your own risk" in almost any other area.
    - wpietri 4y ago
      Ah yes, my crazy ideology of "people should generally experience the consequences of their actions, especially when they're doing very well". I get that you want to be able to be handed millions of dollars and have somebody else take care of that for you. Who doesn't want that? I just don't understand why you think it's the job of poorer people to subsidize you if you take a risk with those millions and it doesn't pan out. > "basic economic services like a checking account are use at your own risk" I in fact don't cosign that; I've been very clear that I support mandatory FDIC insurance with its current very generous limit. I also support the FDIC's resolution process where they immediately pay out the $250k and then work hard to quickly pay a large portion of the remainder. That's a giant level of risk reduction. But if somebody is rich enough that they have millions in cash and haven't bothered to take basic precautions like "use two banks", I don't think that's a problem such that (much poorer) taxpayers should be obliged to make it all better. If it happened to a friend I would feel bad for them personally, of course. But not so much that I would be calling for a government bailout. Capitalism works because risks yield both gains and losses. People who don't like that should manage their risks.
closeparen 4y ago
We can absolutely be a society in which checking accounts are a pit of snakes which must be navigated by executive savvy and wit. It’s just going to be a much poorer one. The point is not to “protect jobs in Silicon Valley” per se, it is to maintain banking infrastructure as the sort of thing that just works (or gets urgently fixed) so that the entire economy can continue to rely on it, vs. entering a lower-trust regime where a checking account may as well be a stock portfolio.
- wpietri 4y ago
  The FDIC already exists to make sure checking accounts aren't a pit of snakes for 99% of the population. The entire economy can continue to rely on it just as it always has. Does this mean that rich people have to be more careful managing gobs of cash? Yes, but that has always been the case. Treasury management is a thing that exists both as a thing people do professionally and as a service you can buy. I understand that some people are young enough that they have either not heard about bank failures or did not feel like it applied to them due to being in a period that was very good for banks. But they are and they do: https://www.fdic.gov/bank/historical/bank/ https://www.fdic.gov/bank/historical/bank/
  - closeparen 4y ago
    You mean, personal savers and very small businesses can continue to rely on the banking system. That’s not 99% of the economy. Young people hear plenty about bank failures - specifically as a success story for big government, a problem we solved, such that depositors are secure these days. I recognize that startups are in a bit of a weird place where they might have a lot of money to manage before they are sophisticated enough to have a big finance team. If only there were some sort of entity specialized in dealing with their unique needs… oh wait.
    - wpietri 4y ago
      Yes, that's why I said "99% of the population", not "99% of the economy". But the economy's also going to be fine here. Most businesses with a lot of money understand that bank failure risk is just one of the many financial risks to manage. To the extent a startup wants to have millions of dollars but not hire somebody competent to manage that money, them's the breaks. The same thing would be true for startups that don't take security seriously, for example. I feel bad for the founders here, but no worse than I would for one who experienced hackers getting in and stealing the data. Even if they had hired "sort of entity specialized in dealing with their" security needs. Picking a bad vendor happens, and if you bet your company on a vendor choice in a vital area, well, sometimes those bets don't come out like you hoped.
dralley 4y ago
> Especially for the startup end of things, where we are aiming to disrupt other businesses. By lighting large piles of nearly-free Saudi money on fire to undercut sustainable businesses on price.

shadowgovt 4y ago

It is possible that it'll make some kind of realpolitik sense to stabilize the startup scene, but I sort of doubt it. During the housing crisis, the federal government bought up sufficient stock to stabilize American auto manufacturing not because they particularly cared about the jobs that would be lost or the ecosystem of supporting industries that would be damaged as a result of loss of major manufacturing, but because auto manufacturing is one of America's national security concerns... The factories and skill sets that create trucks can create APCs, jeeps, and tanks if a hot war breaks out. I'm not exactly sure off the top of my head what the similar defense necessity story is for Silicon Valley.

wpietri 4y ago
Agreed. Especially for the bits of it that are at risk here, which are mainly small, unprofitable players.
epvgwwqe 4y ago
Are you for real? There is an AI arms race with China, for one. There is critical innovation across all segments happening in Silicon Valley, including defense.
- shadowgovt 4y ago
  That would be a good argument for bailing out a Raytheon or a Microsoft, companies that have a record of success in delivering on complicated software technologies, but not the average Silicon Valley startup.
  - epvgwwqe 4y ago
    You can't throw the baby out with the bathwater. If the entire ecosystem is hurt it will affect the next Raytheon/Microsoft as well.

x0x0 4y ago

Framed another way, we're asking for the government to take some ownership of their stewardship of banks. The Treasury, the Fed, the CA gov, and the ratings agencies all gave svb passing grades. svb appears not to have done crypto speculation. The svb ceo asked congress to weaken Dodd-Frank. If that's a bad idea, then congress should say no; that's their job. Apparently banking over trivial amounts of money ($250k isn't even one month's cash use -- ie payroll and health insurance -- for a 15-ish person sfbay company) requiring significant work to make that cash unlikely to just disappear is no way to run a country.

wpietri 4y ago
The cash was always unlikely to disappear. It's just that even unlikely things happen sometimes. If doing decent treasury management is too darned hard for rich people to do, I don't think that's a problem for the government to manage. Beyond the obvious expedient of using two or three banks, which would have solved most problems for most companies here, there are a number of obvious market-driven solutions. E.g., https://www.difxs.com/ https://www.difxs.com/ or https://www.g2.com/categories/treasury-management https://www.g2.com/categories/treasury-management
- x0x0 4y ago
  > too darned hard for rich people to do Yeah, this is some ideologically driven smearing of people who are literally like I want to stick my seed round in a checking account and not have that disappear. For what it's worth, I'm not rich; I'm like a hundred-thousandaire. (And not affected, though friends are.) Disappointing to see someone like you gloating that a bank screwed a bunch of small business customers. From reading your writing, I doubt you'd cosign "basic economic services like a checking account are use at your own risk" in almost any other area.
  - wpietri 4y ago
    Ah yes, my crazy ideology of "people should generally experience the consequences of their actions, especially when they're doing very well". I get that you want to be able to be handed millions of dollars and have somebody else take care of that for you. Who doesn't want that? I just don't understand why you think it's the job of poorer people to subsidize you if you take a risk with those millions and it doesn't pan out. > "basic economic services like a checking account are use at your own risk" I in fact don't cosign that; I've been very clear that I support mandatory FDIC insurance with its current very generous limit. I also support the FDIC's resolution process where they immediately pay out the $250k and then work hard to quickly pay a large portion of the remainder. That's a giant level of risk reduction. But if somebody is rich enough that they have millions in cash and haven't bothered to take basic precautions like "use two banks", I don't think that's a problem such that (much poorer) taxpayers should be obliged to make it all better. If it happened to a friend I would feel bad for them personally, of course. But not so much that I would be calling for a government bailout. Capitalism works because risks yield both gains and losses. People who don't like that should manage their risks.

closeparen 4y ago

We can absolutely be a society in which checking accounts are a pit of snakes which must be navigated by executive savvy and wit. It’s just going to be a much poorer one. The point is not to “protect jobs in Silicon Valley” per se, it is to maintain banking infrastructure as the sort of thing that just works (or gets urgently fixed) so that the entire economy can continue to rely on it, vs. entering a lower-trust regime where a checking account may as well be a stock portfolio.

wpietri 4y ago
The FDIC already exists to make sure checking accounts aren't a pit of snakes for 99% of the population. The entire economy can continue to rely on it just as it always has. Does this mean that rich people have to be more careful managing gobs of cash? Yes, but that has always been the case. Treasury management is a thing that exists both as a thing people do professionally and as a service you can buy. I understand that some people are young enough that they have either not heard about bank failures or did not feel like it applied to them due to being in a period that was very good for banks. But they are and they do: https://www.fdic.gov/bank/historical/bank/ https://www.fdic.gov/bank/historical/bank/
- closeparen 4y ago
  You mean, personal savers and very small businesses can continue to rely on the banking system. That’s not 99% of the economy. Young people hear plenty about bank failures - specifically as a success story for big government, a problem we solved, such that depositors are secure these days. I recognize that startups are in a bit of a weird place where they might have a lot of money to manage before they are sophisticated enough to have a big finance team. If only there were some sort of entity specialized in dealing with their unique needs… oh wait.
  - wpietri 4y ago
    Yes, that's why I said "99% of the population", not "99% of the economy". But the economy's also going to be fine here. Most businesses with a lot of money understand that bank failure risk is just one of the many financial risks to manage. To the extent a startup wants to have millions of dollars but not hire somebody competent to manage that money, them's the breaks. The same thing would be true for startups that don't take security seriously, for example. I feel bad for the founders here, but no worse than I would for one who experienced hackers getting in and stealing the data. Even if they had hired "sort of entity specialized in dealing with their" security needs. Picking a bad vendor happens, and if you bet your company on a vendor choice in a vital area, well, sometimes those bets don't come out like you hoped.

dralley 4y ago

> Especially for the startup end of things, where we are aiming to disrupt other businesses. By lighting large piles of nearly-free Saudi money on fire to undercut sustainable businesses on price.