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Comment by toomuchtodo | Hacker News Reader

This is a reasonable middle ground. Depositors are made whole and taxpayers aren’t on the hook directly (although this will filter down to them in aggregate in a de minimis manner).

To those with large amounts of fiat hanging around: please don’t fuck around again. Spend a few hours with your finance team to minimize risk. It is straightforward and well within the means of anyone with these cash or cash equivalents on hand (sweep accounts, short dated treasuries, etc). Build it into your runbook. Costs are minimal, consider them an insurance premium.

Edit: if you don’t have a finance team, you can get the same help from a contract finance professional. There is some responsibility that must be taken.

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Spend a few hours with your finance team to minimize risk.

That's great for people who have a finance team, but a startup with over $250k in the bank can easily be just one or two people who raised money and have no particular finance expertise.

Personally I think we should bump the limits - it should be reasonable for a startup that just raised $10m to be able to put that money somewhere safe, and pay rent, payroll, and an AWS bill with it, without having to hire a "finance team".

> it should be reasonable for a startup that just raised $10m to be able to put that money somewhere safe, and pay rent, payroll, and an AWS bill with it, without having to hire a "finance team"

Aren't VCs supposed to support their investments with expertise? This is eminently socializable expertise.

Nobody has made a real case substantiating why the entire economy does not need to insure upwards to protect startups that don't understand how to secure a giant sack with a dollar sign on it.

Why are VC giving money to a company who can't manage it?

Exactly. Having to split your money among multiple banks should be a mature/medium-sized company problem, not a mom-and-pop or 30 person startup.

This is setting a very low bar for entrepreneurs. What else should be only a "mature company" problem? Should startups also not have to care about doing a good job in other fields orthogonal to the product itself like recruiting, marketing, governance, accounting, security? These are all things that come with the territory of starting your own company. Managing your own finances is just one of them, and it absolutely should be the startup's responsibility. It can delegate if it wants to, but "I'm too small to address it at all" is just naivete or incompetence.

Few "mom-and-pop" companies get to the point where they have $250K in liquid business cash without hiring an accountant. A "30 person startup" is waving around the cash supplies of a much, much larger actual-business and if those very sage VCs cannot guide them to safeguard that investment I am at a loss as to why every other depositor should do so for them.

I completely agree with your point here, but I also don’t agree with this announced decision.

There should definitely be a place for a company to hold $10M without risk. Maybe $20M.

That doesn’t mean that it needs to be the same place for a company to dump $3B.

My point is that there is a lot of room between the (previous?) $250k “limit”, and the apparently new “infinity” limit.

> There should definitely be a place for a company to hold $10M without risk. Maybe $20M.

There is. It's called a T-bill. I know how to buy them, and I am not a hotshot startup CEO. I think it's okay to expect some level of maturity out of somebody handed That Kind Of Money.

Why bother? It seems all deposits are in fact insured regardless of what rules say.

The wheel will not always land on zero. Everyone got lucky there was will to bend the rules.

Everyone will now act as if all deposits are insured, because the authorities demonstrated that it's true. This in turn will make any other decision in the future even harder, it's kinda self fulfilling prophecy.

Seriously, you'd have to be stupid now to buy deposit insurance.

https://www.cnbc.com/2023/03/16/svb-signature-bank-failures-...

> To those with large amounts of fiat hanging around: please don’t fuck around again.

They are going to. The smuglord backpatting on social media has already begun.

But I admire your optimism.

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