I don't understand. You think the depositors should be punished for...trusting SVB? Do you expect every startup to run their own little hedge fund to manage their cash?
Agreed, in the abstract the system is better if people and businesses are more protected from events that are out of their control.
The argument that the system should punish people for not risk averse enough to protect themselves against bank failures is like saying that languages with type checking are bad because they make soft programmers who can't protect themselves, even though the safer system is easier to use, and allows its users to focus on different, more important/business relevant problems.
It's not punishment. You know that when you put your money in a bank there's a change you won't get it back. That's why you're supposed to pick a bank you're okay with.
That's how it is with everything. If a farmer plants some crops but it drops in price to the point it's completely unprofitable, is he being punished for growing food? Does the government bail him out?
That's not a great analogy. The farmer is the bank in our case, and yes, it is going under. It should. The question is, should all these local grocers go under too because they had exclusive relationships with that farmer? Some would say yes, they should have diversified their base of farmers. I've learned that "insured sweep accounts" are something that should be used by startups to insure them for more than 250k.
It is the most basic of business tenets to do risk assessment on strategic company decisions to reduce exposure to risk
I am sorry you are offended by the fact that I look down on you for your lack of business competence. I used to expect better of people managing hundreds of millions of usd in capital, but I guess not
It is due time for Silicon Valley to face some financial discipline
> Do you expect every startup to run their own little hedge fund to manage their cash?
Don’t startups already follow the standard model of whatever the VCs say is the right way to do it? As in—there’s a tremendous amount of cargo culting, no? Or perhaps that the banks specifically require an exclusive deal. In either case, not an unsolvable problem.
