chernevik

9 ms·

61.
by chernevik 4y ago
It's a bailout. They're putting the cost, presently unknown and probably not huge, on the other banks. But the message to depositors everywhere, of every size, is "don't worry about your bank's solvency, we'll
62.
by chernevik 4y ago
What people are missing is that the only way a Silicon Valley Bank can exist is if one such is allowed to fail. If the government is to back deposits 100%, then it should and will have authority to regulate assets purchased. Anything looki
63.
by chernevik 4y ago
And then the regulators have to approve EVERY asset and of course anything looking slightly weird (hint: a startup) will be "risky" and unloanable. The only way an SVB can exist is if banks are allowed to take risk.
64.
by chernevik 4y ago
I think the story of the relationships between SVB and the VCs would be fascinating. Less so the executives, who probably did largely as their investors advise. Their individual business probably isn't that important on its own. It&#x
65.
by chernevik 4y ago
In 2008 mortgage bonds were toxic waste looking for a bottom, today they're not nearly so bad. I doubt SVB had a team reading the tape on mortgages, so whatever they were buying must have been sufficiently standard as to be fairly liq
66.
by chernevik 4y ago
I think there are a variety of products reducing cash risk to zero. Something like t-bill positions for overdraft protection might be one such. But notice that it's not in the bank's interest to provide them or push them if they
67.
by chernevik 4y ago
Much of the "schadenfreude" is backlash at special pleading, distortion of facts and word games. If the tech community reaction was "wow, this sucks, we're going to have to manage a lot of crap" the general reaction
68.
by chernevik 4y ago
The point here is, those companies won't be helped by panicking.
69.
by chernevik 4y ago
Selling SVB deposits at this time is very likely a huge mistake. Anyone considering this should first research how bank failures are handled. Start with the FDIC statement for starters: https://www.fdic.gov/news/press-
70.
Uninsured Silicon Valley Bank depositors seek fire sale of assets(ft.com)
13 points by chernevik 4y ago|7 comments
71.
by chernevik 4y ago
This. I'm afraid that Garry and others are exaggerating the situation to make a case for their bailout. They're freaking people out rather than helping them work the problem. This has real consequences. The FT reported this mor
72.
by chernevik 4y ago
You've made no reply to the many comments pointing out the many ways to safely manage cash. Why aren't these companies, and the VCs advising them, responsible for neglecting Cash Management 101?
73.
by chernevik 4y ago
Put the money in a money market fund backed by T-bills. Zero credit risk and easy access to cash. > Was there any level of due diligence that could have warned people off of SVB? Really no. A small business manager doesn't have ti
74.
by chernevik 4y ago
The FDIC will pay off insured deposits from bank assets. Those deposits get first call on the assets. The FDIC only chips in if those assets aren't enough.
75.
by chernevik 4y ago
Your reasonable expectation is not and should not be underwritten by the government. You are in fact asking that your risk be socialized. It's bad enough to be asking for a bailout, at least be upfront that you're asking for a ba
76.
by chernevik 4y ago
> make sure that depositors have timely access to some meaningful portion of their deposits. The FDIC has said they will do exactly this, as expected by anyone familiar with prior bank failures. This will ultimately a hassle to manage an
77.
by chernevik 4y ago
Zero risk accounts already exist in the form of T-bill money market funds. There are many reasons why we should not have zero risk bank deposit accounts.
78.
by chernevik 4y ago
I expect there is a story to be told about SVB's relations with the VC community. Clearly it was providing financial services structured for the startup ecosystem, and there is great value in that. Wanting a relationship with SVB mak
79.
by chernevik 4y ago
They might not pay out on time. The Treasury will have incoming cash and will have discretion over which obligations it does and doesn't pay. T-bills might very well get priority but I don't know. If they don't pay there wi
80.
by chernevik 4y ago
But accessing the securities in that account might be delayed if the bank were in receivership -- the FDIC might freeze everything while it sorted out what's what. I don't know how that works. If the securities are in an account
81.
by chernevik 4y ago
There are LOTS of financial players looking for low credit risk long-term assets who can tolerate the associated interest rate risk. Pension funds and life insurance companies have highly predictable long-term cash outflows and often happi
82.
by chernevik 4y ago
This situation is not that bad and the solution is a mix of short-term belt-tightening followed by companies raising more equity. It really seems this is obvious, and that Gary is trying to avoid it. Companies will not "go extinct&qu
83.
by chernevik 4y ago
The whole point of a bank is maturity conversion, the transformation of short-term deposits into long-term loans. It generally works because while any one depositor's funds are short term, the pool of such deposits is generally stable.
84.
by chernevik 4y ago
I don't understand why anyone would park any sum larger than, say, $5mm in a bank deposit for more than a minute. It isn't hard to dump those funds into a money market fund backed by short-term commercial paper or even short-term
85.
by chernevik 4y ago
> "If your team looks like that, your team is horrible too, no matter how much you tell yourself it's not." Yes, it's true. There has never been a strong team of young, white nerdy men. Never happened. Technological
86.
by chernevik 4y ago
This is one of those things I wish I could write. Persuasive, funny, well-reasoned, learned -- absolutely amazing.
87.
by chernevik 4y ago
In the article, the professor says he noticed a decline in student attention a decade ago, and with the pandemic application "fell off a cliff". We have a general crisis in education. Students graduating high school without core
88.
by chernevik 4y ago
Per the article, he's been teaching this for decades, and his textbook is in its fifth edition. Frankly these students are lucky to have this guy for a professor. The article notes that he's seen a decline in student application f
89.
by chernevik 4y ago
Doctors don't get do-overs. Coming up in a culture of "get this right the first time" makes all kinds of sense for a medical training track.
90.
by chernevik 4y ago
When I was in college, in the 80s, some professors and courses had campus-wide reputations for difficulty. Of one the student course review said "if you take Professor X you'll learn more from your B- than you will from any other

More ›