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Shareholders are wiped out, so there will still be quite a bit of market scrutiny on banks. Edit: just to point out that I'm not claiming this is "not a bailou

Shareholders are wiped out, so there will still be quite a bit of market scrutiny on banks. Edit: just to point out that I'm not claiming this is "not a bailout because shareholders were wiped out". It's a bailout of course.

chernevik 4y ago
As we've seen this week, the scrutiny of depositors is far more powerful than that of shareholders.
- modeless 4y ago
  Shareholder scrutiny preceded and caused the depositor scrutiny. Edit: I guess the point is that without the threat of depositor scrutiny, shareholders would have no reason to care about SVB's poor investment decisions, since they were only a problem in a bank run scenario caused by depositors. Failing that, the only risk to shareholders would be regulators, and regulators weren't doing anything about this problem, they were enabling it. I think you're right about that.
- andrewjl 4y ago
  We've seen the opposite since it started with a failed capital raise and double digit stock price declines.
- opportune 4y ago
  Shareholders in SVB have already lost all their money, and approximately nobody is arguing for them to be made whole, so I’m not sure I understand this statement. The bailout is for depositors
dougmwne 4y ago
What about the VCs? Why were they made whole? They are the ones that owned all these businesses.
- modeless 4y ago
  Why not? They're depositors like any other. The bank is at fault for making risky investments. VCs didn't cause that any more than the other depositors did.
  - xdennis 4y ago
    > The bank is at fault for making risky investments. And the depositors (VC or not) are at fault for putting their money in a risky bank. The only people who are not at fault are the ones who are being forced to pay for the mistakes.
  - dougmwne 4y ago
    The VCs took a risk by choosing to use the same bank, not insuring the deposits beyond the FDIC minimum, then stamping toward the exit every man for themselves instead of looking after their own community. Privatized gains and socialized losses.
    - modeless 4y ago
      Blaming depositors for a bank run is stupid. The bad investments and the lack of diversity in depositors are squarely the bank's fault. The bank does not deserve charity from its depositors.
      - grahamstan 4y ago
        In this case, the 'depositors' are wealthy companies and individuals, by definition holding >$250k, who could afford to do due diligence. Obviously they were getting perks working with 'Silicon Valley Bank' that didn't exist at say, Wells Fargo. No farmer in America was banking there because, hey, that's obviously kind of a sketchy bank. There was a reward being given to the wealthy depositors, and none bothered to investigate the associated risk. Well, actually, Thiel did, noticed the risk, and pulled out his companies. Why should we bail out the people who missed this?
        4y ago

chernevik 4y ago

As we've seen this week, the scrutiny of depositors is far more powerful than that of shareholders.

modeless 4y ago
Shareholder scrutiny preceded and caused the depositor scrutiny. Edit: I guess the point is that without the threat of depositor scrutiny, shareholders would have no reason to care about SVB's poor investment decisions, since they were only a problem in a bank run scenario caused by depositors. Failing that, the only risk to shareholders would be regulators, and regulators weren't doing anything about this problem, they were enabling it. I think you're right about that.
andrewjl 4y ago
We've seen the opposite since it started with a failed capital raise and double digit stock price declines.
opportune 4y ago
Shareholders in SVB have already lost all their money, and approximately nobody is arguing for them to be made whole, so I’m not sure I understand this statement. The bailout is for depositors

dougmwne 4y ago

What about the VCs? Why were they made whole? They are the ones that owned all these businesses.

modeless 4y ago
Why not? They're depositors like any other. The bank is at fault for making risky investments. VCs didn't cause that any more than the other depositors did.
- xdennis 4y ago
  > The bank is at fault for making risky investments. And the depositors (VC or not) are at fault for putting their money in a risky bank. The only people who are not at fault are the ones who are being forced to pay for the mistakes.
- dougmwne 4y ago
  The VCs took a risk by choosing to use the same bank, not insuring the deposits beyond the FDIC minimum, then stamping toward the exit every man for themselves instead of looking after their own community. Privatized gains and socialized losses.
  - modeless 4y ago
    Blaming depositors for a bank run is stupid. The bad investments and the lack of diversity in depositors are squarely the bank's fault. The bank does not deserve charity from its depositors.
    - grahamstan 4y ago
      In this case, the 'depositors' are wealthy companies and individuals, by definition holding >$250k, who could afford to do due diligence. Obviously they were getting perks working with 'Silicon Valley Bank' that didn't exist at say, Wells Fargo. No farmer in America was banking there because, hey, that's obviously kind of a sketchy bank. There was a reward being given to the wealthy depositors, and none bothered to investigate the associated risk. Well, actually, Thiel did, noticed the risk, and pulled out his companies. Why should we bail out the people who missed this?
      - 4y ago