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so let's get this straight: VCs/startups are bad because they didn't scrutinize the bank's finances before putting money in it (how many businesses actually do
by _dain_ 4y ago
so let's get this straight: VCs/startups are bad because they didn't scrutinize the bank's finances before putting money in it (how many businesses actually do this for their bank?). and they were somehow supposed to know that the bank was dodgy months or years before it actually became dodgy.
and they're also bad because one VC looked into the bank's finances, noticed a real problem, told people about it, and those people did the rational thing and pulled their money out.
- rmilk 4y agoManaging that risk is what the customer CFOs were supposed to do. Your average retiree or semi wealthy person knows the FDIC limits and manages their portfolio around them. This is not a new risk for businesses in any industry and financial services exist to help manage that risk for companies with cash on hand. I would instead ask why the SVB customers didn’t manage this risk. Others on HN said that banking with SVB was a requirement placed by many VC companies, which does tie the customer’s hands.
- _dain_ 4y agoAre you really expected to spread out all your day-to-day business cash around tons of different accounts just to stay under the FDIC limit? How is that meant to work, logistically? Let's say you're a company with like 50 well-paid devs, they make 200 grand each on average, so monthly payroll for them is 50 x 200,000 / 12 = ~830,000, so you'd need accounts with four different banks to stay under the FDIC limit just to manage payroll for engineering. What about everything else?