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vogon
@vogon

During the chaos on Friday, David Z. Morris, CoinDesk’s chief columnist, tweeted that 'I don’t know what to say about venture-funded web and delivery startups having the exact same arc as crypto over the past three years. But that is what has happened. Down to their respective banks collapsing in the same week.' Well I do.


vogon
@vogon

people have been breathing a sigh of relief that the government only bailed out depositors (who, it is assumed, are deserving victims at risk of losing their hard-earned payroll money), not SVB shareholders (who, it is assumed, are SVB executives and VC/finance ghouls); this is pretty silly, given that almost none of the VCs tweeting up a storm were ever asking for a shareholder bailout. in fact, almost all of SVB's shares are owned by institutional investors. some of these, to be sure, are asset managers for rich people, but yahoo also lists Vanguard, JPMorgan Chase, Morgan Stanley, Franklin, and Fidelity as big losers, so a lot of the losses are going to accrue to random people with 401(k)s who were never aware that they owned any SVB stock.

people have also been breathing a sigh of relief that the bailout wasn't structured like the 2008 bailout, and lmao: it's actually worse. in 2008, the government bought troubled assets off the banks, in exchange for the banks issuing the government the right to acquire shares of them. after the dust settled and "the financial crisis" """ended""", the government ended up spending $426 billion to acquire assets that it was eventually able to sell for $441 billion, costing the public -$15 billion. this bailout, in contrast, is taking the form of the FDIC acquiring SVB, selling off what it can, and then assessing other FDIC-insured banks extra deposit insurance premiums to make up for any money it can't recover that way -- so it's likely going to cost the government more, and the costs will likely be passed through by banks to random depositors, rather than being paid by stock traders on the losing end of trades.

this was 100% a bailout for venture capitalists and the only ways it appears not to be are pure marketing.


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in reply to @vogon's post:

(speaking as someone employed at a company that had all its deposits at SVB)

  1. it is 100% a bailout, yes
  2. there are plenty of people who are saying "well actually it's NOT a bailout" because whatever depositor money they have to protect that they can't find from selling SVB assets is going to come out of the DIF, which is funded by depositor insurance premiums assessed banks, so it's ~technically~ not taxpayer money, it just affects literally everyone who touches the US banking system which is a lot more than just US taxpayers. lmao
  3. i will make the unfounded claim that, because VCs are the worst herd animals you have ever fucking seen and they will be loud on news networks if given the chance, if this bailout didn't happen the impact on taxpayers would be worse because confidence in banking would tank and banking is literally only propped up by confidence. the bailout is imo a good decision based on what had already happened but the fact that SVB was allowed to operate the way it did (not just the bond situation, but what i wrote about the other day) is a massive indictment of the VC industry, the tech industry, and finance in general honestly

yep, the VCs had shown that they had both the will and the means to make things way worse on everyone else if they didn't get their way on this. I'd feel better about them winning this one if there was any sign that anyone is going to learn a lesson from this, but given that it's only been 2 days and the VCs are already managing to sell this as an Unfortunate But Necessary Sacrifice in the media, I'm not sure that's going to happen.

otoh if you think these guys can pose a real threat to the national/global banking system by whining on TV a lot, what odds would you place on anyone fixing their incentives to do so now that that's been firmly established as the quick route to incredible amounts of money

legitimately now that this has happened I think the next big wave of Financial Innovation might be figuring out exciting new ways of laundering an investment bank through a retail banking business

and the fact that they got their bailout by melting down all weekend like toddlers screaming WE ARE THE BUILDERS and trying to create widespread panic to exaggerate their importance especially fuckin sucks