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Comment by jlmorton | Hacker News Reader

Sorry, I'm not sure if you're confused, but these are simple bank accounts. There was no high interest yield. The average interest yield was a fraction of a percent.

No one was chasing any yield. No one was taking any risks. It's a bank account.

Are you suggesting tens of thousands of small business customers need to do due dilligence on the investment practices of their banks?

And what about all the other regional banks? Based on your comment, do you think the prudent thing would be for every single small business in America to transfer their funds out of regional banks into a large bank?

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They were definitely doing high interest yield:

> ## Up to 4.50% annual percentage yield

> Help make your money last longer with our Startup Money Market Account. Like with a savings account, you’ll earn up to 4.50% APY on deposits — so you gain a longer runway. Certain restrictions apply.

https://www.svb.com/startup-banking

Bingo. Anyone who has dealt with SVB knows that. And that's just the public part.

Funny how this not mentioned in the petition or any of the posts

You can find similar rates from some other banks today. It is not so hard to do when 1mo treasury bills are yielding 4.80 and 3m over 5.0%

It's about 1% higher than most solid/large high-yield online banks right now (Capital One 360 at 3.4%, Discover Savings is at 3.5%, Ally Bank is at 3.6%).

So I wouldn't say that you could get 4.5% from a reputable bank at the moment.

If your amount is under 250K, its insured. If not, take 1/4 (or 1/8th) of funds and place in 4 or 8 week t-bills every week for 4 (or 8) weeks with automatic roll over. On Wed those rates were 4.80% and 4.88%.

The 4.5% rate linked above is in a money market account. It's the exact same rate available from Vanguard today.

>No one was chasing any yield. No one was taking any risks. It's a bank account.

It is by definition a risk for a corporation (or individual) to keep over $250k at a single institution ($750k if including SIPC-protected accounts). Reports are stating 97% of SVB's customers kept more than FDIC guaranteed limits. How can you claim this is not risky?

There is also additional insurance clients can purchase or the financial institution can themselves provide a statement they've purchased excess insurance for their clients.

>Are you suggesting tens of thousands of small business customers need to do due dilligence on the investment practices of their banks?

If they're keeping more than $250k in a single account, absolutely, yes, I cannot be sure this is even a serious question.

>Are you suggesting tens of thousands of small business customers need to do due dilligence on the investment practices of their banks?

100% yes.

You are misled regarding the kind of offers SVB was running. They were offering above market returns specifically aimed at startups. I believe the documentation has been offered in another comment, and anybody who has been in touch with SVB knows what their sell pitch is, so I will not copy/paste it there. Most of it is undocumented publicly anyway, but even the public part should inform you enough.

> Are you suggesting tens of thousands of small business customers need to do due dilligence on the investment practices of their banks?

Honestly yes. All it takes is one financial analyst's time. I do it with my retirement plan for example, and I'm only a "small business" of one family. If there was demand for such info, I'm sure there would be a small community/industry for evaluating bank books like there is for financial planners (if that might not even be something a financial planner could already do).

And particularly with Y Combinator advising so many companies, I think it's on the side of negligence that they didn't evaluate the bank they were steering their companies towards. They were steering them there because they knew that tended to be the only bank that would deal with their high-risk companies - and it's too hard to believe that professional VCs didn't recognize that such a bank could have a lot of risk in some dark corner to compensate.

> "Are you suggesting tens of thousands of small business customers need to do due dilligence on the investment practices of their banks?"

Golly, some of us even chose non-banks, and use local credit unions. There are millions of us!

> Are you suggesting tens of thousands of small business customers need to do due dilligence on the investment practices of their banks

Yes? I do it with my personal after 2008

> "Are you suggesting tens of thousands of small business customers need to do due dilligence on the investment practices of their banks?"

Yes, this exactly why millions of people, not just businesses, avoid banks like Bank of America and Wells Fargo. They review how they have historically operated and what risks they passed on to their customers.

Interesting take — I imagine these banks will be getting net inflows as a result of this fiasco because people will assume (perhaps correctly) that they are too big to fail.

I’m saying banks should not be able to lend without tracing and specific consent from the individuals whose money is being loaned out.

When a bank promises to keep your money, then converts it for their own use and purchases investments and lends it to others… that’s fraud.

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