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Pre-SVB: SV was full of some really smart people, many of whom didn't realize their skills and experience don't translate to other areas (eg pretty much anythin
by jmyeet 4y ago
Pre-SVB: SV was full of some really smart people, many of whom didn't realize their skills and experience don't translate to other areas (eg pretty much anything to do with crypto) combined with some salesmen, some of whom are snake oil salesmen. Together they are more and more resembling the rest of Corporate America with performative cultures, privatizing their own luck, often having unearned bravado and increasingly perverting government to rig the game.
Post-SVB: Not much has changed.
There is a ton of misunderstanding about SVB. Some think we're bailing out billionaires. We're not. There's a lot you can criticize the governemnt for. This isn't one of those situations. SVB didn't manage its risk and fell out of compliance with its debt ratios. The government stepped in, dissolved the bank, paid out the depositors and the shareholders are at the back of the line. And it cost the taxpayers nothing.
I've long been convinced Peter Thiel is awful in pretty much every way. I hope this gets investigated because there's a reasonable suspicion that Thiel created a run on SVB, either intentionally or just accidentally. Why? Who knows.
- roflyear 4y agoYou're basically also describing HN but yeah lots of overlap for obvious reasons.
- nightski 4y ago"Cost the taxpayers nothing" - well not in "taxes", but I'm not sure we can really say nothing. Clearly the banks paying for it won't just eat that cost.
- jmyeet 4y agoSVB had more assets than depositor liabilities. IIRC the last estimate I saw claimed there was ~$30B in excess assets to depositor liabilities. The problem that SVB faced was falling out of compliance with debt ratios. The modern banking system works on fractional reserves. The US requires IIRC 10%. A run of withdrawals still meant they were asset positive but didn't have enough cash on hand. That's what forced the sale of their liquid assets at a discount. So, no, this probably won't cost the taxpayers anything, directly or indirectly.
- nightski 4y agoSVB was not the only bank involved and was at a $25B deficit (from the latest I have heard) due to the fact it was having to sell those bonds at a loss to try and provide liquidity to depositors. Also, that completely ignores the time value of money. Even if those bonds will be worth enough at maturity, holding money for 10 years isn't free. They are getting 1.5%, but the risk free rate is much higher than that atm.