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Comment by fancyfredbot | Hacker News Reader

There's clearly a lot of pent up anger directed at VCs and big tech. The collapse of SVB may not actually be their fault, but it still seems to have brought all of this frustration out into the open. I'm not really sure why there is so much anger - yes they were hypocritical here but I'm not sure people would be so keen to point that out if they didn't already have an axe to grind!

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I will say this and I am being absolutely honest.

I am surprised there is so little anger.

I can offer an explanation, but I am not sure how accurate that is. As I tried to explain to my friends in different industry what has, apparently, happened, their eyes quickly glazed over. There seems to be a lot of confusion floating around and no clear 'bad guy' to blame ( I have a pet theory about this, but this may be a bad time to introduce it ).

<< if they didn't already have an axe to grind!

Absolutely correct. Based on what I heard so far, adherents of each political spectrum in US went to their respective corners with their specific talking points. Super annoying as it only adds to the confusion ( its not like we have a systemic risk on our hands ).

These people pretend to be the stewards of innovation, bringing society forward by building great new technologies but in reality they are just rich gamblers who have no interest in building anything, and the last few years have devoted their efforts to pumping and dumping garbage companies on the public in the form of IPOs/SPACs.

And now their bank, which behaved recklessly, failed and they suffer no consequences, the costs of 100% deposit insurance offloaded onto every other sector of the economy.

How is it not their fault ? The Bank run was caused by VC's telling their portfolio companies to pull their funds based on a weak signal. Raising money shouldn't have been enough to cause this kind of panic.

Sure if they'd all left their money there then nothing would have happened, but on the other hand, if a company has a large uninsured deposit at an under-capitalised bank, leaving the money there is arguably irresponsible. I don't really blame them for moving their cash elsewhere.

all banks are under capitalized. no bank could stand that kind of bank run

There's a difference between being able to withstand a bank run and being fully capitalised. To be fully capitalised the value of your assets needs to be greater than the value of your liabilities. You are allowed to value your assets at fair prices when you work this out. SVB did not have enough money by this measure and that is very very unusual for a bank. Despite this, you are right that even well capitalised banks cannot survive a bank. To survive a run you need to find a buyer for all of your assets right away, and you quickly run out of buyers, forcing the price down.

again its debateable. VC's caused all their portfolio teams to pull their money. Had they all relaxed and just waited SVB to raise... is there even an issue ?

It's the prisoners dillema. Game theorists would expect them to act the way they did even though it's better for everyone if they just relax.

For all the articles posted on HN in the past 24hrs, none of them are the Business Insider piece. It explains the axe that's being ground rather eloquently, so avail yourself of that.

> I'm not really sure why there is so much anger

Because it's unfair to have millionaires bailed out. When the poor make bad decisions they don't get bailed out.

...if they are poor they would be under FDIC limits and would be the FIRST to be bailed out?

Non-rich people get bailed out constantly. What else is unemployment, Medicaid, welfare, social security, etc? Plus things like eviction moratoriums, foreclosure protection, FMLA, etc. The social safety net often protects those that made bad life decisions… or were just unlucky, but are we sure SVB isn’t in the latter category?

To be clear, I think it’s a good thing. Just let’s not pretend the government is only ever helping the rich.

The entire argument of the pro-business, pro-capitalist crowd is that they deserve massive profits because they are the ones taking on risk. Except when they take big hits because of the risk they themselves took on, they also want bailouts. They want all the profits with none of the consequences for risky behavior.

So the difference here is that individuals get the safety net because they are just trying to exist. They're not getting "bailouts", they're getting assistance for things like food and shelter and medical bills.

I don't like the idea of millionaires who make bad decisons being bailed out either, but it's not clear that is what is happening here.

Firstly not clear that this is really a bail-out in the usual sense. No tax-payer money is going to these millionaires, and any costs (if there are any, which isn't entirely clear) are going to go to other banks and their shareholders.

Secondly not clear that depositing money in SVB was a "bad decision" - doing this wasn't a risky thing VCs did to try and get rich.

Won't the remaining banks just pass on those extra costs onto the customers anyway? So at the end of the day, "the people" will end up paying for the bail-outs, just with a few extra steps.

Good question. In theory no - it's not supposed to work that way because competition between banks would prevent it. I've no idea how likely it is to happen in practice though. (Edit: But my unqualified guess is that at least some costs will indeed get passed on)

Being angry is easy. Understanding is hard. Manipulating angry people is easy.

"I'm not really sure why there is so much anger"

Maybe because you are one of the beneficiaries?

To be clear I wasn't trying to say people shouldn't be angry with VCs. I'm expressing some doubt that the reason for the anger is SVB's collapse or their hypocrisy around it. Whether you like VC or not, they aren't responsible for the SVB's investment choices or its undercapitalization and so the outflow of anger following SVB collapse feels misplaced. (Edited for clarity)

Yes, the hypocrisy is part of it, so I have no doubt hypocrisy was the trigger for the expression of the anger. People are angry everyday because we are being kicked out of housing and looking at rising process of everything else and we get zero bailouts.

I think that being angry with bailouts for people who don't need them is a lot more understandable than anger at hypocrisy. I don't think any taxpayer money will go to rich VCs though, and I hope the losses on SVB's assets will be absorbed entirely by equity/bond holders.

equity/bondholders are completely wiped out by this process I'm pretty sure

Never ask a man to question the source of his paycheck

"Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith."

https://news.ycombinator.com/newsguidelines.html

Edit: you've been breaking the site guidelines a great deal and we've already warned you a bunch of times. If this keeps up, we're going to have to ban you.

Probably because VCs and big tech are one of the largest democratic donation bases and thus, the issue is politicized, because, from the outside, it looks like a democratic administration taking unprecedented steps towards ensuring the financial health of their own donation base. One wonders if the action would be as swift if this were a farming bank in Ohio, for example.

As an aside, I wonder when making allegations without proof based on speculation and partisan hate will fall out of fashion? I speculate that it continues to happen because people don't have a killfile anymore, and so trolls always have a new audience to lie to.

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