Comment by kneebonian | Hacker News Reader

Comment by kneebonian | Hacker News Reader

> If you or your company are affected, I recommend that you reach out to your local congressman to get this on their radar TODAY.

No this is complete and utter bull hockey, this is 2008 all over again in every concievable way except this time instead of mortagages and housing it is tech that is begging for a bailout. This is nonsense, for years all the SV tech bros were bragging about "changing the world through arbitaging pizza delivery misinformation ML." getting paid ridiculous salaries, and playing foosball. I don't have sympathy for them, at all.

Most of the "startup" companies had the end goal of simply being bought out they never wanted to actually do anything they were just a get quick rich scheme.

Quite frankly this correction was long overdue and obvious to everyone who thought about it for even a moment. Now that the limitless capital has stopped (because of the fed rate hikes and because of the boomer retirement) it turns out it isn't profitable to have a buinsess model where you are loosing money on every transaction.

The curtain is pulled down, the emperor has no clothes, the chickens are coming home to roost. Deal with it.

EDIT:

As a followup I don't give a damn about the jobs lost, bailouts are the worst possible thing a government can do, all it does is screw the little people over while the owners keep the wealth and use it as an excuse to cut pay and lay people off.

My understanding may be incorrect (if so, someone please correct me), but I thought this was caused by SVB buying long-term bonds which fell in value after interest rates went up. I don't think this has anything having to do with unprofitable zombie startups being kept alive by "free" money (which roughly ended at the end of 2021). It seems you're angry at tech folks, but they didn't do anything wrong. They're just the victims of SVB's bad bet.

I'm not saying a bailout is justified either (I have no opinion on that), just pointing out who's responsible here.

>I thought this was caused by SVB buying long-term bonds which fell in value after interest rates went up

I heard the same thing, but they took a gamble and lost. That is free enterprise. People who when to SVB will loose too, again free enterprise.

It was no secret interest rates were going to go up, so 2 years ago they should have sold those bonds and took a small loss.

Also if the FDIC just buys these assets at non firesale prices, and eventually sells them to other banks, SVB depositors could easily come out of this whole, with no damage to anyone.

I think everyone is being way too hysterical. This isn’t a massive bank run.

I don't think this is really comparable to 2008. Grossly simplified 2008 for me is more about bad debt, while this is around bad risk management...svb bought too many long term bonds which was a bad bet given current rates and an industry "correction" as you put it.

They just didn't manage the risk of a market "correction" and high interest rates. The tech sector was/is due a correction, but this isn't 2008

I agree, but I didn't mention anything about 2008 in my comment. Did you reply to the wrong comment by accident?

Ah yeah, I was try to reply to op

Hear me out: shouldn't venture capital be providing backstop capital for it's ventures? The money is there, and will eventually be unfrozen; the individual startups only need access to make the next one or 2 payroll runs.

VC firms don't hold capital either - LPs do. They may be able to do a capital call, but it'll take time.

Many SVB startups with more than 20 - 30 employees can't make payroll on Monday.

Edit: It's also unclear today whether the assets held by SVB can cover all the missing deposits, since they will likely need to be sold under market rates to liquidate all of them in the near-term.

> VC firms don't hold capital either - LPs do. They may be able to do a capital call, but it'll take time.

Are you (and the YC boss) suggesting that the government is more nimble than VC machinery at deploying capital when shit hits the fan?

Re: your edit: how is it unclear? There are no allegations of fraud or other irregularities- the thesis that they put depositors funds in long-term bonds (with positive interest) and then had a run

> Are you (and the YC boss) suggesting that the government is more nimble than VC machinery at deploying capital when shit hits the fan?

I can't speak for YC. VC is almost certainly faster, but it's not built to wire money over the weekend. The issue happens when the FDIC insurance isn't enough make payroll on Monday. I don't think the government can bail anyone out in that time period either, but a lack of solutions doesn't make it any less of a problem.

> How is it unclear?

On paper, they have enough in assets (as of Dec), but there's no way to know if the market takes that price as the FDIC sells it off to cover the deposits in the coming months. Typically liquidating a position impacts the price of an asset.

> On paper, they have enough in assets

Maybe with 'mark to maturity' accounting which banks can use in some circumstances. But T-bonds aren't cash in hand. There is a loss to be realized when selling before maturity. This leads to using 'mark to market' accounting which helps to ensure more prudent reserves.

There are times when government intervention and bailouts are appropriate, in order to prevent some greater bad for society, or in order to ease the effects of some kind of large-scale economic change.

Bailing out startups is dead last on that list. That is absolutely not something the government should spend tax money on.

Bailing out uninsured accounts in a failed bank may not be, even if they happen to be startups, depending on the form of the bailout. Favorable term government bridge loans against the receivership certificates (perhaps limited to some reasonable expectation of what will eventually be realized on those) would not be unreasonable, and would mitigate the worst short-term impacts.

OTOH, the problem is that for it to work, you’d [EDIT: probably; maybe there is a means to do this under executive authority] need immediate legislative action, involving both the Republican-majority House and the Democratic-majority Senate, and that seems improbable.

This is nowhere NEAR 2008. The financial crisis affected pretty much every bank on Wall St. This is localized to a small network of regional banks. Absolutely nothing indicates contagion.

not sure why all the schadenfreude, a bank going crazy and collapsing has nothing to do with quality of startups

at any rate, at least in that thread he's not even talking about a bailout, but asking to speed up the usual FDIC process so that people can get at least a small part of their money back to make the ends meet:

> make the receivership as short as possible

doesn't seem like a great reason to gloat?

"this is 2008 all over again in every concievable way except this time instead of mortagages and housing it is tech that is begging for a bailout. "

not ironically, it is overpriced mortgages an interest rate increase that are at the heart of this catastrophe again.

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