8 ms·

" It would be good for everyone to understand that in taking his own money out, and encouraging others to do the same, Thiel was protecting himself while active

" It would be good for everyone to understand that in taking his own money out, and encouraging others to do the same, Thiel was protecting himself while actively dooming hundreds of startups to failure. This was a choice to get his and screw everyone else." https://twitter.com/moorehn/status/1634973901230071809?t=RXVXptwhmLLvPMvahQ8lhA&s=19 https://twitter.com/moorehn/status/1634973901230071809?t=RXV...

twblalock 4y ago
What was he supposed to do, stay quiet about it and hope nobody else noticed?
testfoobar 4y ago
The bank was insolvent. Prisoner's dilemma applies. "The best response, ie. the dominant strategy, is to betray the other, which aligns with the sure-thing principle.[3] The prisoner's dilemma also illustrates that the decisions made under collective rationality may not necessarily be the same as those made under individual rationality. This conflict is also evident in a situation called the "Tragedy of the Commons".[3]". https://en.wikipedia.org/wiki/Prisoner%27s_dilemma https://en.wikipedia.org/wiki/Prisoner%27s_dilemma
- eganist 4y ago
  The bank became* insolvent as a consequence of the actions taken by a select few to encourage withdrawals; the asset-liability mismatch wouldn't have been consequential had the run not been spurred on. I'm not giving a tutorial about how no bank will survive a run. The bank became insolvent because of a run spurred on by people like Thiel regardless of their issues with realizing losses on their AFS securities. It became insolvent^ last Friday after 42 billion dollars walked out the door The bank doesn't deserve a bailout, sure. But depositors certainly do, and people like Thiel will hopefully be black marks for future lenders who know the risks they bring. Here's a good thread explaining where SVB went wrong - https://twitter.com/MacroAlf/status/1634626124260028419 https://twitter.com/MacroAlf/status/1634626124260028419 - but in the end, they only became both illiquid (unable to sell shares being the last straw after having exhausted AFS securities and cash/equivalents) and insolvent (unable to cover debt obligations) at the hands of the people who spurred on the bank run. ^edit to correct from "illiquid" to "insolvent"
  - testfoobar 4y ago
    No. The bank was insolvent due to an asset-liability mismatch. Regulators should have forced a capital raise last year. It became illiquid last Friday. Here is a good thread explaining it: https://twitter.com/MacroAlf/status/1634626124260028419?s=20 https://twitter.com/MacroAlf/status/1634626124260028419?s=20
    - hn_throwaway_99 4y ago
      Thanks very much for posting that link, very informative, especially from the perspective of understanding the "hold to maturity" vs "available for sale" classification and how banks can play tricks with those.
  - testfoobar 4y ago
    > It became illiquid last Friday after 42 billion dollars walked out the door. True. That was the precipitating event that forced it into the hands of the FDIC. But illiquidity is not insolvency. Insolvency means it could not pay back its depositors because it assets could not cover withdrawals. This hole did not appear last week due to the $42 billion withdrawals.
  - twelve40 4y ago
    It's not VCs or SMB owners obligation to keep propping up failing banks. Thiel here did his job properly by advising his companies to take care of their own fate.
    - eganist 4y ago
      > It's not VCs or SMB owners obligation to keep propping up failing banks. Thiel here did his job properly by advising his companies to take care of their own fate. He might've done his short term job properly, but there's a social contract he stepped on and the consequence of it is a lesser likelihood that ventures with his name on them (in any capacity. Advisor, investor, founder, whatever) will get favorable terms from lenders. He and others who pushed for rapid exits are now a high risk for lenders, especially any lenders already evaluating their exposure to startups and VCs.
walrus01 4y ago
[flagged]
- mrguyorama 4y ago
  Thiel is a literal tyrannical goon who wants to rent you your own body someday, but nothing he did here was wrong. SVB made terrible choices that put them in a bind, and it is not the responsibility of their depositors to keep them liquid. If I found out my bank was obviously and clearly broken, you bet I'm telling everyone I can. Propping up an institution that can't even do the basics of it's job would be stupid and bad for the economy as a whole. The companies getting fucked should probably have noticed that their giant hordes in the bank were uninsured and figured out better ways to manage that money, or at least diversify their accounts.
- anonymousiam 4y ago
  It's the duty of any corporate officer to act responsibly with regard to the fiduciary duty to the company and to the shareholders. If they get news that their assets are at risk, they must act. To do otherwise would create great legal risk.
  - FireBeyond 4y ago
    I'm not saying I agree either way with the law, but if you don't just take out your money, but encourage others to take out theirs as well, you are encouraging a bank run and there are specific federal laws against doing so... speaking of legal risk.
    - deleted 4y ago
      [deleted]
- refurb 4y ago
  No doubt you would have left your money and potentially lost it?
Aperocky 4y ago
The bank is insolvent, the assets are presently valued below deposits. This will happen eventually in that situation, to blame the catalyst is being disingenuous. The catalyst could've been anyone, and even in the current case it might not be Thiel - it could have been someone who did it first who then told Thiel. Water can stay liquid below freezing, but it need just one shake to fully freeze over, and it's not the shakes fault that the water is now frozen.
oarabbus_ 4y ago
It's odd that SVB's choice to forego short-dated securities keeps getting reframed as "they were a victim of a bank run" or "they were the victims of Fed raising rates too fast". Any normal, non-degnerate bond manager would would keep a significant amount of 1-3 year treasuries in their mix of bonds. Feel free to call your 401k provider to verify this. Thiel may be guilty of various things, but SVB's failure was due to overleveraged yield chasing.
- mcguire 4y ago
  It doesn't seem likely that SVB would have had to close their doors to depositors without the run on deposits from people like Thiel.
  - mrguyorama 4y ago
    Or they could have properly diversified like a functional financial institution they would have had diversified enough investments that they could fix a liquidity problem with minimal balance sheet losses or their depositors would be different enough people to not run on the bank from one rich guy on twitter pitching a fit. SVB bet it all on red and the ball landed on black. Everything after that point is not useful information.
- dragontamer 4y ago
  Note that Silicon Valley Bank had no Chief Risk Officer from April 2022 through January 2023.
  - Aperocky 4y ago
    Could've probably sold their low interest HTM for a far smaller hit but wound up holding the bag while feds absolutely spiked the rate. The previous CRO probably saw the writing on the wall, I wonder if she* got shut down and decided to quit and watch the fireworks from outside.
    - oaktowner 4y ago
ninjinxo 4y ago
I'll ask the dumb question - he'd already taken his money out, what financial advantage is he meant to have then gained by encouraging others to do the same?
- ajross 4y ago
  And once again, I can't believe I'm saying this in defense of Peter Thiel, but isn't the Occam's razor answer here just that... he was giving his friends good advice? Anyone with money in that bank should have gotten it out, that's not a controversial fact. Surely even Thiel has people he'd rather see not lose their shirts.
- eganist 4y ago
  > what financial advantage is he meant to have then gained by encouraging others to do the same? Assuming the FDIC doesn't make everyone whole, then all of his portfolio companies using SVB will see themselves with valuations lessened by whatever amount of money was lost. i.e his investments would burn. That said, we may very well see an outcome where everyone's just fine and instead his investments see a more difficult lending environment. There was once a california law about encouraging bank runs, but it was struck down in 2012 apparently. So not sure what else might apply in criminal or civil code.
- neuronexmachina 4y ago
  https://www.cnbc.com/2023/03/10/fintech-brex-got-billions-of-dollars-in-silicon-valley-bank-deposits-thursday.html https://www.cnbc.com/2023/03/10/fintech-brex-got-billions-of... > Fintech startup Brex received billions of dollars in deposits from Silicon Valley Bank customers on Thursday, CNBC has learned. >The company, itself a high-flying startup, has benefited after venture capital firms advised their portfolio companies to withdraw funds from Silicon Valley Bank this week.
refurb 4y ago
"What have I told you since the first day you stepped into my office? There are three ways to make a living in this business: be first; be smarter; or cheat. Now, I don't cheat. And although I like to think we have some pretty smart people in this building, it sure is a hell of a lot easier to just be first."
ajross 4y ago
I'm the last person who wants to defend Peter Thiel. But... he was right. That's not "dooming" anyone, that's... giving good financial advice. The bank was unsound! People should have gotten their money out. It's true that there's a game theoretic problem here where it's not possible for everyone to take that advice. But... what's the solution being offered? Demand silence on the part of everyone who sees bad financial status?
deleted 4y ago
[deleted]
1vuio0pswjnm7 4y ago
Isn't Thiel a hero role model whatever to "tech startup founders". Honestly, just looking at random facts about what he gets up to, this person sounds like the Devil incarnate. Paying kids to drop out of school. A foundation to understand the world through mimetic theory. Promises to invest in the economy of a small country, gets complimentary citizenship then pulls investment. It goes on and on. Not suprising he would leave people high and dry. Classic. https://www.vanityfair.com/news/2016/08/peter-thiel-wants-to-inject-himself-with-young-peoples-blood https://www.vanityfair.com/news/2016/08/peter-thiel-wants-to...
- nullc 4y ago
  Anti-aging?? This guy wants people to not suffer from their bodies getting old and failing, leaving them to suffer and eventually causing them an unavoidable death? What a freeking monster!
  - ImHereToVote 4y ago
    Absolutely disgusting. People growing old is the best. Especially when they fall and brake their hip. So good, so wholesome, so natural.
  - phatfish 4y ago
    people* *includes only super-rich with money to drop on two $50,000 treatments yearly, or a gold plated medical insurance policy.
    - msm_ 4y ago
      Correct me if I'm wrong, but planes, cars and books also started as something very expensive and only affordable for the 0.1%, but are now enjoyed by everyone.
      - nullc 4y ago
        > but planes, cars and books And glass, and aluminum... It's hard to imagine a bio-related technology that can't eventually be made inexpensive.
ahepp 4y ago
Maybe I’m missing something, but is the suggestion that people leave their money in insolvent banks because it would be mean to withdraw it?
benjaminwootton 4y ago
Twitter at it's most ridiculous. If you are worrying about the bank it is perfectly reasonable to take your money and to advise your portfolio companies to do the same.

twblalock 4y ago

What was he supposed to do, stay quiet about it and hope nobody else noticed?

testfoobar 4y ago

The bank was insolvent. Prisoner's dilemma applies. "The best response, ie. the dominant strategy, is to betray the other, which aligns with the sure-thing principle.[3] The prisoner's dilemma also illustrates that the decisions made under collective rationality may not necessarily be the same as those made under individual rationality. This conflict is also evident in a situation called the "Tragedy of the Commons".[3]". https://en.wikipedia.org/wiki/Prisoner%27s_dilemma https://en.wikipedia.org/wiki/Prisoner%27s_dilemma

eganist 4y ago
The bank became* insolvent as a consequence of the actions taken by a select few to encourage withdrawals; the asset-liability mismatch wouldn't have been consequential had the run not been spurred on. I'm not giving a tutorial about how no bank will survive a run. The bank became insolvent because of a run spurred on by people like Thiel regardless of their issues with realizing losses on their AFS securities. It became insolvent^ last Friday after 42 billion dollars walked out the door The bank doesn't deserve a bailout, sure. But depositors certainly do, and people like Thiel will hopefully be black marks for future lenders who know the risks they bring. Here's a good thread explaining where SVB went wrong - https://twitter.com/MacroAlf/status/1634626124260028419 https://twitter.com/MacroAlf/status/1634626124260028419 - but in the end, they only became both illiquid (unable to sell shares being the last straw after having exhausted AFS securities and cash/equivalents) and insolvent (unable to cover debt obligations) at the hands of the people who spurred on the bank run. ^edit to correct from "illiquid" to "insolvent"
- testfoobar 4y ago
  No. The bank was insolvent due to an asset-liability mismatch. Regulators should have forced a capital raise last year. It became illiquid last Friday. Here is a good thread explaining it: https://twitter.com/MacroAlf/status/1634626124260028419?s=20 https://twitter.com/MacroAlf/status/1634626124260028419?s=20
  - hn_throwaway_99 4y ago
    Thanks very much for posting that link, very informative, especially from the perspective of understanding the "hold to maturity" vs "available for sale" classification and how banks can play tricks with those.
- testfoobar 4y ago
  > It became illiquid last Friday after 42 billion dollars walked out the door. True. That was the precipitating event that forced it into the hands of the FDIC. But illiquidity is not insolvency. Insolvency means it could not pay back its depositors because it assets could not cover withdrawals. This hole did not appear last week due to the $42 billion withdrawals.
- twelve40 4y ago
  It's not VCs or SMB owners obligation to keep propping up failing banks. Thiel here did his job properly by advising his companies to take care of their own fate.
  - eganist 4y ago
    > It's not VCs or SMB owners obligation to keep propping up failing banks. Thiel here did his job properly by advising his companies to take care of their own fate. He might've done his short term job properly, but there's a social contract he stepped on and the consequence of it is a lesser likelihood that ventures with his name on them (in any capacity. Advisor, investor, founder, whatever) will get favorable terms from lenders. He and others who pushed for rapid exits are now a high risk for lenders, especially any lenders already evaluating their exposure to startups and VCs.

walrus01 4y ago

[flagged]

mrguyorama 4y ago
Thiel is a literal tyrannical goon who wants to rent you your own body someday, but nothing he did here was wrong. SVB made terrible choices that put them in a bind, and it is not the responsibility of their depositors to keep them liquid. If I found out my bank was obviously and clearly broken, you bet I'm telling everyone I can. Propping up an institution that can't even do the basics of it's job would be stupid and bad for the economy as a whole. The companies getting fucked should probably have noticed that their giant hordes in the bank were uninsured and figured out better ways to manage that money, or at least diversify their accounts.
anonymousiam 4y ago
It's the duty of any corporate officer to act responsibly with regard to the fiduciary duty to the company and to the shareholders. If they get news that their assets are at risk, they must act. To do otherwise would create great legal risk.
- FireBeyond 4y ago
  I'm not saying I agree either way with the law, but if you don't just take out your money, but encourage others to take out theirs as well, you are encouraging a bank run and there are specific federal laws against doing so... speaking of legal risk.
  - deleted 4y ago
    [deleted]
refurb 4y ago
No doubt you would have left your money and potentially lost it?

Aperocky 4y ago

The bank is insolvent, the assets are presently valued below deposits. This will happen eventually in that situation, to blame the catalyst is being disingenuous. The catalyst could've been anyone, and even in the current case it might not be Thiel - it could have been someone who did it first who then told Thiel. Water can stay liquid below freezing, but it need just one shake to fully freeze over, and it's not the shakes fault that the water is now frozen.

oarabbus_ 4y ago

It's odd that SVB's choice to forego short-dated securities keeps getting reframed as "they were a victim of a bank run" or "they were the victims of Fed raising rates too fast". Any normal, non-degnerate bond manager would would keep a significant amount of 1-3 year treasuries in their mix of bonds. Feel free to call your 401k provider to verify this. Thiel may be guilty of various things, but SVB's failure was due to overleveraged yield chasing.

mcguire 4y ago
It doesn't seem likely that SVB would have had to close their doors to depositors without the run on deposits from people like Thiel.
- mrguyorama 4y ago
  Or they could have properly diversified like a functional financial institution they would have had diversified enough investments that they could fix a liquidity problem with minimal balance sheet losses or their depositors would be different enough people to not run on the bank from one rich guy on twitter pitching a fit. SVB bet it all on red and the ball landed on black. Everything after that point is not useful information.
dragontamer 4y ago
Note that Silicon Valley Bank had no Chief Risk Officer from April 2022 through January 2023.
- Aperocky 4y ago
  Could've probably sold their low interest HTM for a far smaller hit but wound up holding the bag while feds absolutely spiked the rate. The previous CRO probably saw the writing on the wall, I wonder if she* got shut down and decided to quit and watch the fireworks from outside.
  - oaktowner 4y ago

ninjinxo 4y ago

I'll ask the dumb question - he'd already taken his money out, what financial advantage is he meant to have then gained by encouraging others to do the same?

ajross 4y ago
And once again, I can't believe I'm saying this in defense of Peter Thiel, but isn't the Occam's razor answer here just that... he was giving his friends good advice? Anyone with money in that bank should have gotten it out, that's not a controversial fact. Surely even Thiel has people he'd rather see not lose their shirts.
eganist 4y ago
> what financial advantage is he meant to have then gained by encouraging others to do the same? Assuming the FDIC doesn't make everyone whole, then all of his portfolio companies using SVB will see themselves with valuations lessened by whatever amount of money was lost. i.e his investments would burn. That said, we may very well see an outcome where everyone's just fine and instead his investments see a more difficult lending environment. There was once a california law about encouraging bank runs, but it was struck down in 2012 apparently. So not sure what else might apply in criminal or civil code.
neuronexmachina 4y ago
https://www.cnbc.com/2023/03/10/fintech-brex-got-billions-of-dollars-in-silicon-valley-bank-deposits-thursday.html https://www.cnbc.com/2023/03/10/fintech-brex-got-billions-of... > Fintech startup Brex received billions of dollars in deposits from Silicon Valley Bank customers on Thursday, CNBC has learned. >The company, itself a high-flying startup, has benefited after venture capital firms advised their portfolio companies to withdraw funds from Silicon Valley Bank this week.

refurb 4y ago

"What have I told you since the first day you stepped into my office? There are three ways to make a living in this business: be first; be smarter; or cheat. Now, I don't cheat. And although I like to think we have some pretty smart people in this building, it sure is a hell of a lot easier to just be first."

ajross 4y ago

I'm the last person who wants to defend Peter Thiel. But... he was right. That's not "dooming" anyone, that's... giving good financial advice. The bank was unsound! People should have gotten their money out. It's true that there's a game theoretic problem here where it's not possible for everyone to take that advice. But... what's the solution being offered? Demand silence on the part of everyone who sees bad financial status?

deleted 4y ago

[deleted]

1vuio0pswjnm7 4y ago

Isn't Thiel a hero role model whatever to "tech startup founders". Honestly, just looking at random facts about what he gets up to, this person sounds like the Devil incarnate. Paying kids to drop out of school. A foundation to understand the world through mimetic theory. Promises to invest in the economy of a small country, gets complimentary citizenship then pulls investment. It goes on and on. Not suprising he would leave people high and dry. Classic. https://www.vanityfair.com/news/2016/08/peter-thiel-wants-to-inject-himself-with-young-peoples-blood https://www.vanityfair.com/news/2016/08/peter-thiel-wants-to...

nullc 4y ago
Anti-aging?? This guy wants people to not suffer from their bodies getting old and failing, leaving them to suffer and eventually causing them an unavoidable death? What a freeking monster!
- ImHereToVote 4y ago
  Absolutely disgusting. People growing old is the best. Especially when they fall and brake their hip. So good, so wholesome, so natural.
- phatfish 4y ago
  people* *includes only super-rich with money to drop on two $50,000 treatments yearly, or a gold plated medical insurance policy.
  - msm_ 4y ago
    Correct me if I'm wrong, but planes, cars and books also started as something very expensive and only affordable for the 0.1%, but are now enjoyed by everyone.
    - nullc 4y ago
      > but planes, cars and books And glass, and aluminum... It's hard to imagine a bio-related technology that can't eventually be made inexpensive.

ahepp 4y ago

Maybe I’m missing something, but is the suggestion that people leave their money in insolvent banks because it would be mean to withdraw it?

benjaminwootton 4y ago

Twitter at it's most ridiculous. If you are worrying about the bank it is perfectly reasonable to take your money and to advise your portfolio companies to do the same.