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Comment by lambo4bkfast | Hacker News Reader

The VC's obligation is to their startups... Its a completely rational decision to get your money out of SVB once you know others are thinking the exact same.

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I’m not trying to sentence them to the guillotine or anything. I appreciate the strong incentives driving their actions. Even the desire for the government to retroactively insure their deposits is understandable, although I disagree. In the OP I said they’re not completely blameless; I should emphasize I also think they’re not completely to blame. (Except for the shrill, nigh-hysterical tone of their demand, and the extraordinary timeline they demanded. That one’s all on them.)

They are blameless is my point. The depositor has zero responsibility to evaluate the bank's balance sheet. Not ensuring the depositors are made whole will risk a run on all regional banks throughout the country starting tomorrow morning. We will then see a consolidation of deposits into the top 4, too big to fail banks; hardly a progressive outcome.

I understand your perspective, but I also want to impress on you that the way you stated it is going to hurt your chances of being heard with a lot of people.

The outside view on this situation is: shit happens to blameless people all the time and they mostly just have to cope, no matter how validly they insist on zero responsibility. The depositors are going to be made whole - starting with a lump sum Monday morning, some decent percentage by the end of the week, and almost all within a month. That’s what’s going to happen. “Make the depositors whole on Monday morning or the whole banking system goes under” is profoundly off-putting. It’s not because the outside view wants you to lose all your money, it’s because it looks like “getting a little back now, enough back soon, and most back eventually“ isn’t enough, you want to get it all back now. The outside view does not buy your claim of contagion because SVB looks like a weird and insular bank for a weird and insular group of buddy-companies, so it feels like you’re cynically doom-mongering to get what you want, and they already think what you want is too much (and especially too quick).

I’m not espousing these views, I’m trying to see all sides and get all sides seen. That’s how outsiders will see it, and they’ll probably be less polite about letting you know too.

So rational decisions get bailouts now? Can I bill the government for doing some problems in math workbook? What point are you making here exactly?

The government's responsibility is to ensure the integrity of our financial banks. It isn't the responsibility of the depositor, nor are they capable, to evaluate a regional bank's (the 18th largest bank in the USA) balance sheet. The FDIC is not without blame; there should be regulation that the bank's bonds should have been marked to the market.

This is akin to blaming a patient for medical malpractice — "why didn't the patient choose a better doctor".

>The government's responsibility is to ensure the integrity of our financial banks

Correct. Thats why they shut SVB down. It is not the government's responsibility to ensure the deposits of every individual depositor.

>This is akin to blaming

There is no blame. The depostors money is lost*. That is a fact, an event that already occurred.

>why didn't the patient choose a better doctor

Just like with a hospital, they can sue SVB (well, not anymore). Some things just aren't fair. But "thing not being fair" does not mean "and now the government shall make it fair."

The law has always been $250K (or some other limit) since the FDIC was created, hundreds (thousands?) of banks have failed since, and sometimes the depositors were burned. Somehow VCs think they are special because they are "disruptive" or whatever but they are not. The other times depositors were burned it wasn't because it was their "fault" or not, that isn't part of the consideration.

*or some amount of it.

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