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Comment by trogdor | Hacker News Reader

I understand that a C corp is its own legal entity, but from a risk management perspective, the bank’s approach makes perfect sense.

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How? I'm no banker, but to me their financial picture reads: married couple, both currently have nice salary working at companies X and Y, together have proven ability to raise millions in capital. I would say yes please take our refi loan, and do come back if you need anything else.

Why would a proven ability to raise millions in business capital (and, apparently, to subsequently hemorrhage it) make someone a better credit risk for their home mortgage?

Their financial history includes borrowing lots of money, taking a big risk, and losing a lot of that money. Not necessarily bad, but it’s reality. Just because that activity happened under a different legal entity doesn’t make it irrelevant. The mortgage applicants own nearly all of the company that is losing tons of cash. It is an important part of their financial history.

Raising capital and then burning it all is what most startups do. Investors put in money knowing this was the most likely outcome. The whole point of the C corp is to keep the investor money isolated from personal money.

I'm disappointed that we failed but I think it shouldn't affect our personal credit one way or the other.

Which bank? There are two different banks here with very different risk management approaches.

One is still standing, the other seems to be insolvent.

Indeed, SVB is still standing while JP Morgan Chase got a $25 billion dollar bailout in 2008.

https://money.cnn.com/news/specials/storysupplement/bankbail...

And they are also so good at due diligence that they got scammed for $175 million: https://www.forbes.com/sites/alexandralevine/2023/01/11/jp-m...

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