skysight-inc/HackerNews huggingface dataset:
Garry I have a question (and this is not intended to be snarky).

Why should a company, perhaps a slower and more risk-averse company who intentionally chose a different, safer banking institution to do business with, do they not get to benefit from their discretion in choosing that banking partner? One could argue that choice put them at a disadvantage against their fast-moving competitors, who chose fast-moving “corporate infrastructure” like SVB.

If bailouts like this take place, how do those companies ever benefit from being prudent? Should nobody bother?

(FWIW, this is just a thought exercise, I am not opposed to the petition.)
> not because they made an arbitrary choice like which bank they started using

If the choice was "arbitrary" then you'd expect startup banking to be distributed arbitrarily among the various banking choices in the market. Clearly that's not the case.

No, this was "the startup bank". It was the startup bank because it operated in tandem with the startup funding ecosystem (an entity of which the startups themselves are really just a small part). That's not an efficient market. That's more or less a cartel.

The VC world, YC included, is a toxic mess at this point. I don't see why a bailout is a bad idea, but... yeah, the startup ecosystem needs a reboot. Bail out the startups if we must, but nothing for the dealmakers.
Who cares if it's 99% of GDP of that is going into the hands of venture capitalists?
You don't have to send the customer's name, etc. Perhaps can obfuscate some of the data before you send it, too, which might involve sending data to other models.
Banks should live or die based on their management of risk. If the business customers of bad banks are fully protected, then they never need to assess the quality of their bank. Where then will the competitive pressure for prudent risk management come from?
If SVB knew they would be punished for such risks, they wouldn’t have acted like they did. This needs to stop. Public shame for wrecking so many startups will deter future risk seeking. YC is extremely wealthy as it is, shameful for you to shill for more money
SVB did the mismanagement, didn‘t they?
Nope.

An industry so ideologically against government intervention in the free market should stick to their guns, even if the barrel is in their own mouth.

Live by absolute freedom, die by absolute freedom.

I'd be open to bailing them out if they allowed the US government to take significant equity positions.
You'd think if there was one place on earth where one would be wary of single points of failure would be the SV startup ecosystem ...
SVB was a major bank and most businesses in the USA only have one bank. Once you have an established relationship it’s just easier to do all of your banking with that bank.
Just to clarify, these depositors specifically exceeded the FDIC deposit insurance limit (250K), right? That isn't a new or unknown rule; either through ignorance or calculated risk, those depositors that exceeded the limit took a chance.

I don't disagree that something should be done in the future to prevent this, but when you gamble, sometime you lose.
"in the future"... I think that sums it up pretty well.
FYI, core team of the company developing Flipper Zero is located in Moscow, Russia. I wouldn't trust russian company with making my devices.
A competent CFO probably would have helped.
The crypto people would be getting a bailout through USDC - which is exactly why I don’t support this as a web3 developer. The ideal for crypto is a free marketplace and bad products that failed to do due diligence, were negligent, relied on false government promises, and lied to users must be allowed to fail.
No. Because that’s what they’re asking for but again, it shouldn’t sound like that.
Lol so they don’t want to take a loss, is that it? They invested and may go bankrupt.

Nothing bad will happen if these startups run into issues. The most solid will have revenue, they may have to get a loan. The less solid could layoff and raise more. Some might go bankrupt, but that’s part of the risk.

Sometimes people get fired, no back pay, and they have to make it work. In way of a different example, imagine a farmer losing his crop & tractor in a storm. They have to make it work.

Companies are really no different.
I think there's a lot of fervor for personal liability at the upper levels of companies that harm others through malfeasance. I agree in principle, though to have a regulatory agency step in and seize pay bank employees are owed without due process is not a power I would like the government to have.

Harsh civil penalties for the decision-makers do seem appropriate though.
I just think the "single mother with 3 kids" is being used as a strawman in this case.
So SVB owners should take losses.

Not those who had bank accounts there and literally did nothing wrong to cause this or even contribute to it.
Unpopular opinion: the government should try to make depositors of banks whole when their banks fail.
Yeah this is a fact lots of people don't want to accept

To be fair though, in the US we've long established an expectation that if you have funds in a bank account at a registered bank, the government would back those funds

It's stupid to have set that expectation, but it seems very destructive to suddenly remove that expectation
we have money in SVB and no fucking way i am signing or backing this.
It's our mess and we must deal with it like adults.
It's interesting how much of the fruit fry larva's brain is related to learning, when everyone talks about insect behavior in terms of instinct.
I mean, whatever the problem with proprietary AWS, it seems like it would be the case with GCP, Azure, Cloudflare.

I don't really see the benefits of putting eggs in multiple baskets. If one basket is down (e.g. images) the site is practically down in many cases. Plus you have to deal with fragmented billing, etc.
Tactical FAQ re: SVB for founders
You have no idea what a bank run is do you
>Are you suggesting tens of thousands of small business customers need to do due dilligence on the investment practices of their banks?

100% yes.
IndyMac's sale to OneWest was interesting, as OneWest was newly formed for the purpose of acquiring the leftovers of IndyMac.

> On March 19, 2009, a seven-member investor group, IMB Holdco, led by Steven Mnuchin—which included billionaire Christopher Flowers, John Paulson, Michael Dell, and George Soros—purchased Independent National Mortgage Corporation (IndyMac Bank) of Pasadena, California for $13.65 billion from the FDIC and created OneWest from the remains of IndyMac, which then had 33 branches and $32 billion in assets

> as of December 2014, the FDIC had already paid over $1 billion to OneWest Bank under the shared loss agreements it secured from the FDIC when it purchased IndyMac and La Jolla Banks, and that the FDIC expected it would pay another $1.4 billion.

https://en.wikipedia.org/wiki/OneWest_Bank
YC's made $70 billion dollars from them. YC asking for assistance on their behalf is socializing the loses.
https://twitter.com/Mayhem4Markets/status/163434702300352921...
Right there in the article. I guess not reading obvious text bolded is the hip new thing to do:

> Small business depositors at Silicon Valley Bank should be made whole. Regulators need to conduct a backstop of depositors. We are not asking for a bank bailout.

> Not interested in taking another spin on the “privatize gain, socialize loss” merry-go-round

Where are they asking for that?

Edit: And of course, downvoted. Lol.
“YC asking for bailout” was a much more honest title than “Urgent: sign the petition now”.
The sharks are in the water and there is a lot of disdain for wealthy tech CEOs. The current public perception is that all of Silicon Valley is either mustache twirling Peter Thiels or tech bros who collect millions trying to create the next Uber for dogs.

The vitriol for those archetypes will override any empathy for the victims from knock-on effects and lower level, poorer employees that will impacted by this. If that empathy was ever there to begin with, I guess. I personally believe that people want to hate the rich more than they want to empathize with the poor.

Personally, I can do without the DoorDashes of the world... but startups collectively employ A LOT of people and not all of them are wealthy, senior engineers. When the wealthy sneeze, the poor tend to catch pneumonia.
llama.cpp doesn't need nor use GPU. You can run on Linux, but you gonna need a CPU with AVX2 support.
YC has made a ton of money for itself already, why should the average taxpayer be responsible for helping them?

Most people will agree it's unfortunate that depositors might lose some of the money they deposited. It's also unfortunate if you get robbed or your business catches on fire. That doesn't mean the government is obligated to reimburse you for your losses. Next time, consider paying for more insurance.

Also, you're probably not losing all your money. You'll get back what the FDIC can recover, which they do for free, and most people guess it's going to be upwards of 80%. Much better than the result of robbery or fires that ordinary people put up with. You can also get a loan to deal with the short term, from your investors or from a bank. High interest? Deal with it.

Even in the worst case, people are working for startups knowing that they are high risk positions. You are much better off on than the average American, even in the worst case. Your personal finances are unaffected. Think before asking people poorer than you for money.
Also, people should pay attention when a bank is missing a Chief Risk Officer for 8 months during the most volatile period in fixed income history when Fed funds rate moved 400bps.

Also, it is not a good look with SVB's CEO personally lobbied to be excluded from stress tests that more than likely would have prevented SVB from YOLO'ing on 10 yr duration MBS.
It was changed to "Urgent: Sign the petition now".
you're essentially asking for SVB, and whatever other bank in the same position, to take the entirety of the risk beyond per-contract insurance at no cost for you

sounds kinda rich tbh
> How often do you casually dispense medical advice to strangers?

Semi-regularly, as I work in palliative healthcare.

I'm just not sure why that would be relevant to "medical advice" like "If you experience too intense sympthoms, try lowering the dose" and explaining the differences between instant and prolonged-release drugs?

Some might consider that common sense, which shouldn't need to be pointed out.

But life is hectic and complicated, leading to a lot of overthinking, sometimes we just need a reminder of the simpler and straight forward solutions.
YC is not asking for a bailout. YC is asking for the FDIC to ensure depositors beyond the $250,000 guarantee. One hand I see why the FDIC would not (EG wealthy individuals), but on the other hand I could see why the FDIC must ensure that accounts over $250,000 remain solvent: companies of all sizes generally have balances well over $250,000.

I think this is probably a unique case that hasn't happened much, because most banks that have failed where the smaller ones in 2008.

I vote that the FDIC insure and require insurance for accounts up to $5,000,000. But after you exceed that amount, you can no longer deposit money at that bank. Like the $250,000 limit on insurance should mean that you are capped at $250,000 in balance.
Which is what the FDIC is going to try to achieve anyway, and doesn't need a bathetic orison to Yellen to happen.

.... which is maybe a weak signal that nobody's biting yet and YC feels the need to escalate to actual government money ASAP.
The rich want to have their cake and eat it too. If they keep pushing their luck the guillotines will be brought out eventually. It's probably about time they realize they don't get to always win.
When I was a teenager I once got into my parent's Mini, started it up and pulled it out when I realised "we don't have a radio" .... pulled it back in, got into the other yellow Mini parked behind it and went home. What are the odds two identical yellow minis in the same town had the same key?
Losing your business is a powerful way to learn a lesson.

Don't ask taxpayers to fix your mistakes for you.
Everyone here seems pretty negative about the petition based on the title that says "YC Is Asking for a Bailout", when actually the content of the post is quite different:

> Small business depositors at Silicon Valley Bank should be made whole. Regulators need to conduct a backstop of depositors. We are not asking for a bank bailout.

With emphasis on that "We are not asking for a bank bailout". They are also asking for more regulation.

Taking rapid action to make sure this does not cause a domino effect seems like a pretty good idea if you ask me.
Pocketbase and go is a nice compromise. You just rsync the compiled binary.
Why did startups choose a bank so heavily invested in long duration assets while having long duration liabilities and 0 (zero) interest rate hedges? If VCs told them to open accounts there, what were they thinking? You do due diligence on your founders but skip it on the banks? Guys please.
Is remote only possible from the US?
>I know that 250k cash is not a lot for a company with a few folks on payroll. But why wouldn’t you distribute cash across multiple banks as a business?

On the topic of FDIC insurance and startups...
I'll put in a shameless plug for a startup I helped launch 20yrs ago:
*Promontory Interfinancial Network"
https://www.intrafi.com/solutions/depositors/

It was a startup them (now acquired), and created a bank deposit product "CDARS" which took customer deposits and distributed it across (k = N/<FDIC Limit) banks and kept the relationship as a single bank with a single account.

Even cooler, as k other people did it at k other banks, the service would just swap deposits across all the banks. It was a super-cool and valuable product, and i'm proud to say I helped write the matching engine for it back in 2002.

I realize this doesnt help startups with locked funds at SVB, but I'm pointing out -- there are options out there to have 100% FDIC insured safety for both individuals and startups.
My feeling is that this request is premature and will ultimately be unnecessary. Unless the conditions inside SVB were far worse than what even the most negative naysayer believed, the advance dividend paid next week will be more than enough to meet payroll for the coming month.

I hope I’m not wrong…
The FDIC will be releasing cash on Monday so businesses can make payroll and so on.

The eventual return on uninsured deposits will likely be around 80-90c on the dollar.

How can we stop this happening again? Simple: we put back the Basel III rule that SVB lobbied to have not apply to them, the absence of which let them do the dumb things that got them into this position: https://archive.is/gmJxU
I work as a group partner at Y Combinator. Over the last 48 hours I've talked to numerous founders of YC companies who told me they can't make payroll to their employees next week. In many cases they had raised millions of dollars which is currently locked into their SvB accounts. Even if they get access to the insured $250k on Monday that won't last long and in many cases not even cover the payroll they are planning to run. YC wrote this petition with these founders in mind who in good faith trusted that their money would be safe in Silicon Valley Bank.
That process takes a long time. Most startups would be out of business by then.
Why not get a loan? Can someone explain what fundamental difficulty there is in taking out a temporary loan to make payroll until the FDIC sorts things out and you make X% of your money back?
In the case of many founders, especially non-US citizens, those banks won’t open accounts for them.
It's amazing what isn't researched.

For example: it's colloquially known among RNs that intravenous drips work differently based on the maker and source of the tubing for the drip.

This is not officially discussed.
Groupthink on this kind of decision is usually a feature, not a bug.

When you're a startup founder, you have to focus your efforts on the unique problem you are trying to solve.

For generic problems like "which bank should I use" taking a shortcut like "the one my peers are using already" is generally a great idea - saves you from having to waste your time investigating options that usually don't make a material difference to your business.
> Startups should live or die because they create good products and solve real problems in real markets

What happens if the startup you're referring to is a bank itself?
More importantly, to the best of our knowledge, human thinking is not simply predicting the next word based on a past model.
Just a one time shot of it, and a quick infusion. By Monday!
I love how they’re using language like “small business” because they know how little sympathy AI powered dog washing apps will get among the rest of the country.

Sorry, a small business is a machine shop or hair studio. They don’t bank with SVB.

These are startups that get millions in funding for often very dubious purposes. There are a few gems among them - but let them stand on their own.

Or course, the real culprit is years of low rates and QE that has justified all of this. Time to stop.
> Was there something particularly incredible about SVB that led so many businesses to use it, and use it solely?

My general understanding is that with many banks, if you walked in and said "Ya a bunch of people gave us $10M, and we're basically going to be cash flow negative for the next decade, will run out of money unless people invest again, and we're 90% likely to be out of business in 5 years", they'd likely not want to work with you. They especially wouldn't be offering you additional lines of credit.

SVB on the other hand seemed to be understanding that the business model of SV start-ups was different than more traditional companies, and was a lot more willing to work with them and accept a level of risk.

It sure seems now that the risk associated there didn't necessarily work out (perhaps the biggest understatement I've made in a long time), but that's the reason that so many businesses in the tech start-up/bay-area used them.

As to why they used it solely, I can't answer,m but I've heard that raising debt from SVB required you to keep the majority of your account holdings with SVB (which really doesn't seem that unreasonable)
Paul has absolutely been a small government advocate.
FDIC should treat these guys the way hn funded firms coinbase[1] and airbnb[2] do.

[1] https://news.ycombinator.com/item?id=27468549
[2] https://news.ycombinator.com/item?id=27654940
I'm well aware, I've hiked the full circuit on Isle Royale.

The verse Euchre players are most likely to drunkenly sing along to names all five of the Lakes.
St00pid question : I don't understand what kind of accounts these start-ups have.

Are they like the mandatory checking accounts for the day-to-day management ?
That should indeed be bailed out immediately, to unfreeze their processes.

Or is that investment? I don't care if investors
loose money for once.

And how can a bank 'loose' money from checking accounts, without anyone profiteering or getting the money for friends ? Banks shouldn't be supposed to invest with checking accounts. They should just hold the book, and charge you a yearly fee if they need.
Not sure about "required", but definitely recommended.[1]

"11 of 15 YC startups with IPOs bank with SVB.
And 7 of those began with SVB Startup Banking."

"Silicon Valley Bank: The choice of YC game changers"

(The SVB web site is still up, for now. But logins are disabled.)

[1] https://www.svb.com/account/y-combinator
I think by "capitalism" you mean "free market" but yeah there is a massive difference between giving loans to massive banks, the larger of which were not going to fail anyway except Morgan Stanley, and giving money to small companies that can potentialy lose all of it (AKA the "start up" business model).
Do you have a source for that? It seems like it would generally be in Coinbase and Circle's best interest for people to arb USDC (at times when redemptions are live).
If you're actively paying attention to things like that as a matter of course then you're a much more effective person than I am.
I'm going to remember the comments I'm reading here for the rest of my life.
It honestly seems like the best solution here is for a large bank like JP Morgan or Goldman to acquire SVB over the weekend and guarantee their deposits. SVB isn’t insolvent if their debt assets can be held to term, but the duration mismatch in assets and liabilities, and declining value of some of those assets due to interest rate increases, caused a liquidity shortfall and panic. But of all the types of financial problems a bank can incur, that seems like the easiest to fix via acquisition. Guarantee the deposits, restore confidence, the panic goes away, and the asset portfolio can be restructured appropriately.

The benefit to the larger bank is that SVB’s customer base represents a large chunk of the most innovative sector of the US economy and beyond. And scientific and technological innovation is only going to increase in importance as a main driver of economic growth in the world, as the developing world becomes developed and their growth rates inevitably slow. Acquiring SVB at cost seems like a great deal in that regard, and stops a panic as nice side effect.
Nope. Line up 4 different brands of amphetamine salts and try them on different days. You will find that some make you feel geeked and strung out. Some make you feel calm and focused.
Disgusting. Ycombinator’s network has consistently worked to disrupt the old systems of power to build a new technocracy under their control. Now that they fail to take basic steps to mitigate risks that any basic MBA education would teach, they want a bailout from the same systems they are supposedly disrupting.

This is not the ycombinator I knew.
They can't all be unicorns. Some are going to fail.
Anonymizing risk is not a better system. Think a few consequences down the line...no one knows who theyre lending money to or from, its all figured out by AI/LLMs and as long as the incident rate is below a certain percent in a random sampling it doesn't matter what the errors are. WCGW?

Deleting discretion from the current system doesn't fix or improve it. Discretion is a really important part of the current system that prevents it from becoming more insane than it already is.
https://www.bloomberg.com/news/articles/2022-04-07/marc-lasr...
Good advice. I'm a voice actor, and my "IDE" is my digital audio workstation. I've customized it with a significant number of mouse actions, macros keyboard shortcuts and more to save time and increase my efficiency. Thinking through and iterating on your setup can lead to incrememtal efficiency gains so profound that when you don't have them the work feels impossibly slow.
Perhaps I would be more sympathetic had SVB themselves not recently successfully lobbied to have the exact regulations you are asking for to not apply to their bank.

[1] https://www.theguardian.com/business/2023/mar/11/silicon-val...
The FDIC’s statement, which is very short and to the point, should be required reading for anyone wanting to discuss the situation.

The FDIC’s handling of the situation appears to be geared toward urgency and keeping depositors up and running. The advance dividend provides significant access to funds beyond the $250K limit.

The number of comments, Tweets, and even opinion pieces I’m reading from people who assume that all money beyond $250K has disappeared is concerning. The FDIC is rushing to provide access on Monday to substantial funds for a takeover that happened on Friday.

Depositors might take a haircut, yes, but the commentary about this being an “extinction level event” is just fear mongering.

I’m sure VCs and investors would love if the government stepped in and covered the remaining X% of missing funds when the dust settles, but the way they’re playing off of public panic to exaggerate the situation is starting to feel distasteful.
What's up with all the trolls?