[fshbbdssbbgdd]

The subtext here is David Sacks and his friends are investors in Silicon Valley companies. Lots of Silicon Valley companies are depositors of SVB and could lose money if there is a haircut on assets over $250k, or at least will lose temporary access to their cash. David Sacks wants SVB to be bailed out by a major bank so those deposits are made good. He’s talking about a wider economic impact because that’s an argument that such a bailout is necessary for the country, not just local VCs.

[ohashi]

So gambler wants house to cover his losses because his friends and him won't be able to continue gamble if they lose.

[cplusplusfellow]

I don’t understand the disgust I’m reading for VCs and startups. Bailing out the bank doesn’t mean we let the bank CEO get richer off this transaction (like we did in 2008). It means the startup companies making payroll are going to survive and continue building the future of technology and healthcare.

What am I missing?

[sseagull]

There’s disgust for a few reasons. One is that the wealthy (including VCs) have an undue influence on society and the economy just due to being wealthy. It’s always nice to see them take a hit sometimes.

Silicon Valley is “building the future”, but at the same time can be very disconnected from the lives of many people around the country. That leads to mistrust and lack of empathy when these kinds of things happen.

[snuxoll]

I'll add on an extra layer of disguist: cash management accounts exist. They've existed for a long time. They serve literally to hedge against the risks of bank failures by automatically sweeping funds in them between multiple FDIC member banks to:

1. Increase the amount of funds covered by FDIC insurance

2. Reduce the potential for loss of funds by a bank failure

I get that it's a pain in the ass to manage a bunch of accounts, but any business with >$1mm in cash reserves really should have everything but their operational float in a CMA or manually move it around themselves into multiple banks. When I see comments about a startup that had $x million in cash with SVB I have to wonder what the hell the founder and their investors were thinking keeping all of that in a single place.

[jacobolus]

I don’t think people are disgusted at “startups” in general, but David Sacks deserves any scorn that comes his way after his shameless and pathetic Musk sycophancy through the whole Twitter deal.

This guy who has spent years (decades?) constantly whining about how government regulations are excessive and federal agency should be curtailed and government should stop protecting various groups from harm etc. is now suddenly crying out for urgent government help once something is hurting him and his friend circle personally.

[gjvc]

BANG ON. The guy is sickening.

[JohnFen]

It means that the bank was gambling, lost, and wants to externalize those losses onto the rest of us who weren't gambling.

[drstewart]

Funny that in threads about crypto companies failing everyone cries about "this is why we have regulations and safety valves in the financial industry!" but now when these are in force people cry about the safety valves and regulations existing, and how the companies should just be allowed to fail

[JohnFen]

Who's doing that?

Part of the issue here is that SVB was able to get into trouble because important regulations and safeguards were removed years ago.

The ones that exist to minimize the wider impact of a bank failure are working, and I don't see anyone upset about that fact.

[cplusplusfellow]

They bought treasuries and triple A rated mortgages. what else do you expect a bank to do to when seeking yield?

They aren’t just a vault for your money - they would charge you handsomely if so.

[drstewart]

>Part of the issue here is that SVB was able to get into trouble because important regulations and safeguards were removed years ago.

Which important regulations and safeguards were removed?

[JohnFen]

I'm thinking of the Glass-Steagall Act that was put into place after the great depression. It prevented banks from engaging in both commercial and investment banking at the same time. You had to choose what sort of bank you wanted to be. The effect of this was to prevent banks from being able to take depositor's money and put it in risky investments.

It was effectively repealed in 1999 by the Gramm-Leach-Bliley Act. Its repeal is one of the things that allowed the 2008 crash to happen.

[worik]

Yes

An alternative is to bankrupt the partners, cancel the shares, then take action for depositors

That is what did not happen in 2008

[boeingUH60]

This is exactly what's happening here. Equity investors have lost their shirts. The government protection is only for depositors.

[worik]

I hope so. But we have not seen that yet.

Have the shares been canceled? Are the partners bankrupted?

Too soon to tell. Remember AIG

[iSnow]

It's just that VCs and their portfolio companies are part of the same plutocracy as the banksters of 2008. Those without gazillions in stock options are furious that all of a sudden, they cry for bail-outs. Just like 2008.

Let them crash and burn, they shouldn't have all their assets in one bank.

[yieldcrv]

you’re not missing anything

its not just government bailout versus nothing. private equity could have come together and tried to shore of the bank in its capital raise, but nobody (not enough) wanted to be first. their own collective risk aversion is their demise. And on the greed front, people totally plan to buy the carcass and firesold assets.

[satvikpendem]

Hacker News has not been pro-startup and VC for a long time, probably at least for 10 years. It's now mostly tech workers who are not the capital class or are startup founders.

[rightbyte]

The sentiment has just shifted among workers I think. People have understood that working for startups is a low estimated value gamble compared to non startups.

Dilution and share classes also are worse nowadays I believe.

[tome]

Yes, it's been eye-opening to witness this transformation!

[wpietri]

The especially funny thing to me is that some VCs were telling their portfolio companies to get their money out of SVP first thing this morning. So Sacks is a VC asking for a bailout on a bank run triggered by VCs. Cry me a river.

It's nice that he took time from his busy schedule decimating Twitter to share his views. But in my opinion VCs can't simultaneously claim to be such financial geniuses that they deserve lower taxes (via the carried interest loophole) but such babes in the woods that they need Uncle Sam to bail them out for a bad financial decision. Pick a lane, buddy.

[throwawayfky]

He and his buddies were talking about playing gambling and donating earnings.

I saw it as a promotion for gambling. Listening to them talk about it made me sick

Americans love for gamlbing and alcoholism is beyond my comprehension. Like all bad things it's very bad in the long run

[practice9]

> friends

Chamath?