[axlee]

I don't even understand why he would even make that comment in good faith in the first place. They are not asking for risks to be socialized, but they are asking for their "deposits" to be safe and the depositors to be "whole". Well, sounds like a lot like socializing the losses, unless there is a magical way to make the depositors whole without burdening the taxpayer.

[muzz]

It absolutely IS burdening the taxpayer-- he just doesn't want to say it

"Regulatory backstop" sounds a lot better than "tax grandma to make sure out portfolio companies don't lose a penny of their deposits on this"

[xupybd]

There is a risk in using a bank. The risk should be low and it's normal to assume your money is safe in the bank. This incident proves it's not. The tax payer didn't take on this risk so why should they have to cover the losses?

[NonEUCitizen]

It is not normal to assume your money is safe in the bank beyond the FDIC insured amount. A lot of startups have highly compensated (higher salary and/or more stock options than engineers) CFOs -- what are they doing?

[Shish2k]

> A lot of startups have highly compensated CFOs -- what are they doing?

Cocaine, mostly :P

[jimnotgym]

Indeed I have read countless times on hn that it would be very risky to keep more than the insured amount in a bank.

Sounds like YC should invest more in mentoring their portfolio companies to manage their treasury correctly.

[ZachPruckowski]

Well and it's not just that they had money over the insured amount in a bank. It's that they had ALL of their money in ONE bank. If they had $500K in three different banks instead of $1.5M in one bank, there would still be a risk, but it would be that they'd lose $250K if any of those three banks failed, not that they'd lose $1.25M if one particular bank failed.

(And obviously actual losses are gonna be like 20% here, not 100%, but you get the picture).

[jimnotgym]

So why on earth was everyone using SVB?