> We’re talking about the startups here. The government “disrupted” the bank. And through no fault of their own, the startups get “disrupted” as a second order effect.
Same thing. It's still disruption even when it's indirect. Perhaps they should have chosen to minimize their exposure to that risk. For whatever reason, they didn't. Now these are the consequences.
I don't want to hear that they're getting any government help whatsoever. By all means liquidate the bank and then distribute the money. If that's not enough to pay them back... Tough luck.
> My main point and the reason that I felt I should respond is this sense that I get from your comment that somehow startups deserved to lose their money because they kept it at the bank. As if that was the morally just conclusion.
Let me make it clear then: that's exactly what I belive.
Banks are not the "risk free safe haven" people make them out to be. People treating banks like that are a huge problem that I wish would be fixed. One way to fix it is by destroying the illusion that you're "safe" despite all the risks the banks are exposing you to. The easiest way to destroy that illusion is to have people actually lose their money when their bank fails.
Therefore, that's what I wish would happen.
> I’m positive that you didn’t know that specifically SVB would go under in such fashion.
I know with absolute certainty that any given bank could literally flop at any given moment if enough people tried to withdraw their cash at the same time. The only reason why it doesn't happen often in practice is the government will literally print money and "inject liquidity" into them to stop a total economic meltdown from happening. I'd rather they didn't and just allowed banks to fail.
> Without using hindsight bias, what should a startup have done with this knowledge that “stuff like this” would happen?
Not keeping money at the bank would be a start. At least use many independent banks so you're not exposed to the stupidity of any one bank.
> And I mean, yes it is the real issue at play? It’s what caused them to go under?
If we're talking about the bank's failure, yes. It's not relevant at all if we're talking about the startup that relied on the bank to hold their money for them.
> And was absolutely not something that any reasonable person would expect to know about their financial institution…
Well, I sure as hell do expect to know everything my bank is doing. After all, I'm putting my money in there and they're "managing" it. One of my banks sends all clients a detailed written report about their accounts and investments every year. Others don't so I ask the manager what they're doing with my money instead. I will literally pull my money out if I don't like the answer. I've done it more than once.
> Missing nuance that they invested in something that is seen as about the most safe thing you can invest in
That's intentional on my part. What they "thought" or "intended" to happen doesn't matter at all. "Everybody thought" mortgage backed securities were a safe investment back then too and that common sense doesn't count for shit when everyone is getting wiped out.
> no reasonable(non-financial industry) person could have seen coming
> but the people that kept their money there could not have reasonably seen the risk
Sure they could. Literally every bank exposes you to the risk of their fractional reserve banking. The problem is they don't because they don't understand the nature of banks and what they do. People think it's just "their money at the bank".
That's ultimately what I want: for people to start seeing government and bank screwups coming. Telling them does nothing so maybe losing money will.
I think this is the sort of stuff that should be taught to everyone in schools.
> what should a startup have done with $10million?
> Invest it in something more risky than treasuries?
What do you think banks do when you deposit $10M in them?
> You’re comparing losing your money by gambling on something with no intrinsic value, in an unregulated market, that was built primarily as a means of subverting oversight, with keeping your money in a highly respected, highly regulated, FDIC insured bank.
Those two things are pretty much the same scam to me. One is "respected and government backed", the other isn't. Maybe the government should start backing the proto-banks we call exchanges too. Wouldn't that be funny?
> That said, I hope people weren’t HAPPY that crypto HOLDERS lost their money.
Sorry to disappoint you. If you think this comments section is bad, you should see how gleefully the HN folks cheer when the "crypto bros" get fucked by some whale dumping on the market or something.
Same thing. It's still disruption even when it's indirect. Perhaps they should have chosen to minimize their exposure to that risk. For whatever reason, they didn't. Now these are the consequences.
I don't want to hear that they're getting any government help whatsoever. By all means liquidate the bank and then distribute the money. If that's not enough to pay them back... Tough luck.
> My main point and the reason that I felt I should respond is this sense that I get from your comment that somehow startups deserved to lose their money because they kept it at the bank. As if that was the morally just conclusion.
Let me make it clear then: that's exactly what I belive.
Banks are not the "risk free safe haven" people make them out to be. People treating banks like that are a huge problem that I wish would be fixed. One way to fix it is by destroying the illusion that you're "safe" despite all the risks the banks are exposing you to. The easiest way to destroy that illusion is to have people actually lose their money when their bank fails.
Therefore, that's what I wish would happen.
> I’m positive that you didn’t know that specifically SVB would go under in such fashion.
I know with absolute certainty that any given bank could literally flop at any given moment if enough people tried to withdraw their cash at the same time. The only reason why it doesn't happen often in practice is the government will literally print money and "inject liquidity" into them to stop a total economic meltdown from happening. I'd rather they didn't and just allowed banks to fail.
> Without using hindsight bias, what should a startup have done with this knowledge that “stuff like this” would happen?
Not keeping money at the bank would be a start. At least use many independent banks so you're not exposed to the stupidity of any one bank.
> And I mean, yes it is the real issue at play? It’s what caused them to go under?
If we're talking about the bank's failure, yes. It's not relevant at all if we're talking about the startup that relied on the bank to hold their money for them.
> And was absolutely not something that any reasonable person would expect to know about their financial institution…
Well, I sure as hell do expect to know everything my bank is doing. After all, I'm putting my money in there and they're "managing" it. One of my banks sends all clients a detailed written report about their accounts and investments every year. Others don't so I ask the manager what they're doing with my money instead. I will literally pull my money out if I don't like the answer. I've done it more than once.
> Missing nuance that they invested in something that is seen as about the most safe thing you can invest in
That's intentional on my part. What they "thought" or "intended" to happen doesn't matter at all. "Everybody thought" mortgage backed securities were a safe investment back then too and that common sense doesn't count for shit when everyone is getting wiped out.
> no reasonable(non-financial industry) person could have seen coming
> but the people that kept their money there could not have reasonably seen the risk
Sure they could. Literally every bank exposes you to the risk of their fractional reserve banking. The problem is they don't because they don't understand the nature of banks and what they do. People think it's just "their money at the bank".
That's ultimately what I want: for people to start seeing government and bank screwups coming. Telling them does nothing so maybe losing money will.
I think this is the sort of stuff that should be taught to everyone in schools.
> what should a startup have done with $10million?
> Invest it in something more risky than treasuries?
What do you think banks do when you deposit $10M in them?
> You’re comparing losing your money by gambling on something with no intrinsic value, in an unregulated market, that was built primarily as a means of subverting oversight, with keeping your money in a highly respected, highly regulated, FDIC insured bank.
Those two things are pretty much the same scam to me. One is "respected and government backed", the other isn't. Maybe the government should start backing the proto-banks we call exchanges too. Wouldn't that be funny?
> That said, I hope people weren’t HAPPY that crypto HOLDERS lost their money.
Sorry to disappoint you. If you think this comments section is bad, you should see how gleefully the HN folks cheer when the "crypto bros" get fucked by some whale dumping on the market or something.