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So much for moral hazard. Capitalism is supposed to be about profit and loss, you bail out the losers, there is no end to the loss. I guess we still haven't l

by Khaine 4y ago

So much for moral hazard. Capitalism is supposed to be about profit and loss, you bail out the losers, there is no end to the loss. I guess we still haven't learned the lessons from 2008. Effective regulation should have been put in place to oversee that banks are effectively managing their risks. Not bailing out companies whenever times get tough.

dehrmann 4y ago
> you bail out the losers, there is no end to the loss The difference here is that the "losers" made was supposed to be an incredibly safe bet. The people who made the actual bad bets are all losing their jobs. Shareholders are getting nothing (ish). It's the customer who's getting protected, here. > I guess we still haven't learned the lessons from 2008 Not my observation, but it's more like we were fighting the last crisis. Stress tests were focused more on bad assets, not safe assets in an environment with rapidly raising rates. Regulation and oversight only work for failure modes you're looking for. A handful of short sellers spotted this earlier in the year, but what happened is only obvious in hindsight.
- Mountain_Skies 4y ago
  There are thousands and thousands of banks to choose from. Why did they pick this particular bank? High rates? Connections to the right people? It's not like it's the only bank in the Valley, much less the country. They chose to be with that bank above all others. That was their freedom, their choice. Now everyone with a bank account anywhere will have to pick up part of the cost for that choice.
  - erik_seaberg 4y ago
    https://news.ycombinator.com/item?id=35112295 https://news.ycombinator.com/item?id=35112295 talked about how SVB was one of a very few banks whose staff understood startup problems. And they didn’t fail because of bad loans to customers! Instead they had too many deposits locked into long term bonds, interest rates spiked, and some customers panicked.
- Uvix 4y ago
  > The difference here is that the "losers" made was supposed to be an incredibly safe bet. It's not a bet if it's impossible to lose.
- Khaine 4y ago
  When a building company, building my house goes bust. The government doesn't step in to get someone to finish building it. When I order goods from a company and it goes bust, the government doesn't step in to ensure I get my goods. Engaging with any third party entails a level of risk.

by Khaine 4y ago

dehrmann 4y ago

> you bail out the losers, there is no end to the loss The difference here is that the "losers" made was supposed to be an incredibly safe bet. The people who made the actual bad bets are all losing their jobs. Shareholders are getting nothing (ish). It's the customer who's getting protected, here. > I guess we still haven't learned the lessons from 2008 Not my observation, but it's more like we were fighting the last crisis. Stress tests were focused more on bad assets, not safe assets in an environment with rapidly raising rates. Regulation and oversight only work for failure modes you're looking for. A handful of short sellers spotted this earlier in the year, but what happened is only obvious in hindsight.

Mountain_Skies 4y ago
There are thousands and thousands of banks to choose from. Why did they pick this particular bank? High rates? Connections to the right people? It's not like it's the only bank in the Valley, much less the country. They chose to be with that bank above all others. That was their freedom, their choice. Now everyone with a bank account anywhere will have to pick up part of the cost for that choice.
- erik_seaberg 4y ago
  https://news.ycombinator.com/item?id=35112295 https://news.ycombinator.com/item?id=35112295 talked about how SVB was one of a very few banks whose staff understood startup problems. And they didn’t fail because of bad loans to customers! Instead they had too many deposits locked into long term bonds, interest rates spiked, and some customers panicked.
Uvix 4y ago
> The difference here is that the "losers" made was supposed to be an incredibly safe bet. It's not a bet if it's impossible to lose.
Khaine 4y ago
When a building company, building my house goes bust. The government doesn't step in to get someone to finish building it. When I order goods from a company and it goes bust, the government doesn't step in to ensure I get my goods. Engaging with any third party entails a level of risk.