This whole saga has exposed the shocking financial illiteracy in this industry. There are laws and procedures about how to handle the situation. Banks fail all the time and the FDIC disposes of them all the time.
Depositors will get their insured money on monday. The FDIC will then dispose of all the banks assets and return the proceeds to its creditors, that is depositors.
Calling for the government to guarantee all deposits unconditionally is exactly calling for a bailout. Calling for the government to follow it's own laws and procedures as usual is redundant.
I think there’s a shocking lack of political literacy at work here because any action that could be perceived as a bailout by a layperson will be an albatross around the neck of any politician that supports such measures. Several of the VCs who spent Q4 of last year gloating about layoffs are now saying the sky is falling - so they aren’t exactly a sympathetic group. You can belly-ache about populism or whatever but that’s why you’re seeing tepid responses from Washington.
For the record I hope SVB gets taken over and depositors are made whole quickly but I think as an industry we are overestimating our political capital.
Yep, the politics of this are terrible as well. Tech leaders like Sacks have spent years trolling people and making themselves as odious as possible and now they're crying for a bailout, while still being as odious as possible and blaming the government for this.
But apart from the politics, even something as simple as Garry Tan calling for the government to guarantee all deposits is simply calling for the government to break its own laws.
Normally HN has some of the best quality comments on the whole internet but the amount of FUD and just plain wrongness in this topic is surreal.
The truth is: the bank’s risk management was done by a couple pigeons: one to peck ‘buy long duration’ and the other to peck ‘approved’. There is no other bank like this. Spillover risk is zero. The folks who are shouting about systemic bank run are talking their books (Ackman please shut up now if you’re reading this)
Depositors will get their insured money on monday. The FDIC will then dispose of all the banks assets and return the proceeds to its creditors, that is depositors.
Calling for the government to guarantee all deposits unconditionally is exactly calling for a bailout. Calling for the government to follow it's own laws and procedures as usual is redundant.