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Arguably the only purpose of a bank is that you have access to your money at any time you wish, if they can't honor that, they're not doing a good job to say th
by za3faran 4y ago
Arguably the only purpose of a bank is that you have access to your money at any time you wish, if they can't honor that, they're not doing a good job to say the least.
- slg 4y agoThat shows a lack of understanding of the true nature of banks because most banks can't withstand a barrage of everyone asking for their money at once. The underlying criticism of Thiel here is that he saw a liquidity problem and made it a solvency problem by encouraging everyone to pull their money immediately. If he didn't do that, there were potentially solutions that could have fixed the bank's liquidity problem without jeopardizing their solvency.
- searealist 4y agoThey were already insolvent, the bank run did not cause that. They used accounting tricks to pretend they had more assets than they really did.
- panarky 4y agoI believe the point is the utter craven hypocrisy of ultrarich who savagely denounce government programs that help poor people and ordinary workers, who destroy and tear shit down for their own private profit, and then have the fucking audacity to scream and cry for other people to pay for their own investing mistakes. David O. Sacks I'm looking at you.
- searealist 4y agoBanks are not investing. They are commodities. The share holders and bond holders who were investing were wiped out. Do you want to live in a world where only Bofa/WF/Citi/Chase exist? Because that is what you are advocating for.
- jwestbury 4y ago> Banks are not investing. Yes, they are. How do you think they make profits? How do you think this happened to SVB? Their investments were illiquid and they were not able to convert them into cash fast enough to return deposits to their customers.
- mhuffman 4y agoThis is literally the opposite of how banks work. If they keep everyone's money they would never be able to make loans, let alone fractional reserve leveraged loans. They need you to keep your money in an account and not need to access it that often, or at least keep most of the money there.
- faeriechangling 4y agoI guess what the bank needed and what the customers needed were fundamentally at odds then. There was a run on USD coin due to this fiasco, it didn't have enough liquidity to pay all its customers, and yet people stopped their run on the asset because people figured that there was no way they weren't going to get something like 90+ cents on the dollar within 3 months so it was pointless to sell beyond that point, and because it became pointless to sell beyond that point it meant that the value was probably going to approach $1 so people pumped the price back up. When I look at something like that, I really wonder if it's really so structurally impossible to make a bank where nobody has an incentive to do a run on you in anything but the most extreme of cases.
- za3faran 4y agoMaybe they should change their business model then if they need predatory loans to survive.
- dagw 4y agoFirst of all, what about SVBs loan business do you consider "predatory"? The alternative business model would to charge customers to hold their deposits. I somehow doubt that would be very popular either.
- za3faran 4y agoAny usurious transaction is predatory by definition. Of course people don't want to talk about it. Someone submitted the wikipedia article about usury to HN about 12 hours ago but it got flagged apparently.