fairity

If I'm understanding this correctly, they're only devaluing points when you redeem them for cash or transfer them to another points system. In so doing, they're effectively creating lock-in for their own points redemption programs.

The cynical part of me wonders if they timed this change to coincide with the SVB debacle in the hopes that the negative PR would be drowned out.

As a public service, I would recommend you down vote into oblivion any comment/article spreading FUD like this one. Although the fears are valid, talking about it and spreading it is exactly what causes the vicious cycle that will lead to another unnecessary bank run. If you want to pull your money, do so silently. Stop telling other people about it.

> If Oaktree and others are offering folks 70%+ face value for their uninsured deposits

Does anyone know if the 70% offer from Oaktree applies to the remaining amount after FDIC pays out what they can on Monday/Tuesday? For example, if the FDIC releases 50% of uninsured deposits on Monday, can you sell the remaining 50% to Oaktree and recoup 85% (50% + 50% * 70%)?

It seems like people are so focused on class warfare and politics that they completely shut off the problem solving side of their brain. Assuming there’s no buyer found by Monday, the fed should just step in and guarantee deposits via a bridge loan at payday-loan interest rates. The interest will offset defaults and taxpayers will make money, which also means the fed can sell off this debt to the private sector. But, time is of the essence which is why govt assistance is needed. Depositors are mostly businesses that will be able to solve for the long term interest payment impacts. The problem for them is purely short term liquidity.

> Why are you all so mean to each other?

The "No, " at the beginning of my response probably triggered them. I was simply trying to make it clear to others that their information was misleading.

I’m saying that bailing out SVB depositors will prevent First Republic Bank (for example) from experiencing a similar bank run and going out of business. So, a bail out of SVB depositors is also, in effect, a bail out of FRB. And, that dynamic creates a long term incentive for risk taking.

But bailing out depositors here is essentially also a bail out of the next risk-taking bank that will go under sans a bailout. So, to some extent it does encourage long term risk taking by bank execs.

I wonder why he thinks it’s unlikely a buyer steps up by Monday. He says that 98% of deposits will be covered in liquidation. The FDIC can backstop any remaining amount. And, all that’s left is a rich client base and the infra of a previously successful top-20 bank. Aren’t the remaining parts an extremely attractive asset for another bank or PE?

> I don't understand why people are blowing this out of proportion

The media is blowing this out of proportion bc it generates clicks.

The investors are blowing this out of proportion bc in the slim chance that the FDIC doesn’t get this resolved over the next week, their companies are at risk. And, helping their companies avoid that albeit small risk is their job.

I agree with you though. The most likely outcome is that almost everyone gets access to most of their funds next week.

No, 30% is the percent of yc companies who reported having money trapped in SVB that can’t make payroll.

The question you’re responding to is asking what percent used svb. That is unknown.

Source?

All true, but they have a $60b debt facility to draw down on before they'd consider liquidating their HTM bond portfolio. Given that they have $120b in uninsured deposits diversified across a disparate client portfolio, it seems like they're truly in a much stronger position than SVB.

I feel like a very likely outcome on Monday is that the FDIC announces a buyer, SVB depositors realize they're going to be made whole, and all the panic subsides.

I wonder if Brex ACTUALLY has 3rd party capital lined up to fund these loans yet. It seems just as likely to me that they're getting out early with this message to drive account sign ups, while betting that they can piece together a lending partner on the backend over the next week.

Once again, my point is that your following statement is untrue: The cold, hard fact is that the bank doesn't have sufficient assets to pay back depositors.

It is not a cold, hard fact that they don't have sufficient assets. It's entirely possible that after liquidating their assets (on the time scale of months), they can make depositors whole even after factoring in the time cost of money.

> The cold, hard fact is that the bank doesn't have sufficient assets to pay back depositors.

That's not true. As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. Even if liquidating assets forced a 15% haircut, depositors will be made whole.

If a bail out is necessary, it's likely in the form of a short-term loan to make depositors whole sooner rather than later. And, such a bail out can/should be structured as a loan with significant interest in which case it's not really a cost to taxpayers.

The FDIC's statement shared that: As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits

The question is what haircut the FDIC will take on the $209b when they forcefully liquidate all securities. If the above data is still accurate, the FDIC can make depositors whole as long as they don't take more than a 16% haircut when liquidating.

SVB recently liquidated their AFS bond portfolio at ~90c on the dollar. And, this traunch of securities is very sensitive to interest rate changes.

Their HTM bond portfolio consists mostly of securities that could be sold today for ~80c on the dollar.

Given the above, it seems likely depositors will be made close to whole. Then again, who knows what's hidden from public eye.

https://www.fdic.gov/news/press-releases/2023/pr23016.html

Once its becomes more clear how much SVB assets can be sold for and along what time frame, there will be plenty of firms willing to either: 1) purchase receivership certificates at a discount to expected value 2) issue bridge loans to cover the expected value of receivership certificates.

It's not a bail out in the sense of free money. It's a bail out in the sense of a short term loan, just like after the GFC.

The facts are:

- All funds in SVB are frozen

- FDIC has implied that insured funds (up to $250K per account) will be released within 7 days.

- It's entirely unclear how long it will take to recoup uninsured funds (above $250K per account).

- It's also unclear how much of uninsured funds will be recouped (although most people believe the figure will be above 80%)

If given the above fact pattern, your company can't make payroll, then it will have to raise emergency cash to do so. Whether or not that's feasible isn't an answer anyone here can provide.

The bigger story here will probably be the follow-on effects, assuming it takes a long time for uninsured deposits to be recouped.

I wonder how many businesses will be forced into a fire sale due to inability to raise cash to cover short-term liabilities. I'm sure some private equity firms' mouths are watering right now.

> I suspect all depositors will be made whole.

Agreed. The FDIC report shows $209b in assets and $175b in deposits.

Even if they took the full $15b estimated loss to liquidate their HTM bond portfolio, they'd have $20b to spare before not being able to cover deposits.

Am I misunderstanding?

I wonder if a bank run (triggered by this news) could force them to liquidate that portfolio.

If I'm not mistaken, SVB has a huge venture debt portfolio that presumably includes warrants for companies whose valuations have plummeted. Does anyone know what portion of SVB's market cap is accounted for by these warrants?

My guess is that many startups are withdrawing their deposits due to this news. I wonder if SVB can cope with a significant bank run.

The idea being debunked is that there's no correlation between income and happiness past ~$75k/yr.

Whether or not this idea is wrong is actually besides my point.

My point is that one of the main reasons this idea spread so quickly is because it provides comfort to those who are not wealthy.

> It’s just that people are terrible at understanding curves that look vaguely logarithmic, combined with small sample sizes of people with very high incomes willing to take psychology surveys.

It’s also bc people gravitate towards beliefs that protect their ego, however false they may be. If you’re not wealthy, believing that wealth doesn’t make you happy is very comforting. It’s not so different from how religion is used to cope with life’s suffering.

For those curious in learning more about how SPAC's work and the associated costs & returns for various stakeholders, I found this paper to be pretty comprehensive: https://site.warrington.ufl.edu/ritter/files/SPACs.pdf

Sadly, the objective here isn’t to prevent this from happening in the future.

I'd suggest you take a look at their latest financials. They clearly have a viable, large, and soon-to-be profitable business (if so desired).

You're taking OP's claim too literally. Obviously babies don't pop out of the womb ready to competently manage a team of 30 engineers.

The claim is that people are born with different aptitudes for management that allow them to progress faster along the management skill curve per unit of effort.

This is one reason to start your own company. When you’re the boss, you can stop worrying about popularity or create a culture that re-defines popular.

I'd be super curious to get the entire list of studios that the author looked at for analysis. Max Levchin's studio HVF labs birthed Affirm, which isn't included.