YC's previous recommendation was to use Silicon Valley Bank. That ended well.

What's the context here? When, where and for what did they recommend SVB?

(FWIW, it did end well, as going with a relatively large federally insured bank meant that no one lost any money during the crash)

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wmf 17 hours ago | parent | next [-]

SVB was considered the "standard" bank for all startups for decades so it's not surprising that YC would give the same advice. If you run a startup out of a normal bank sometimes you get weird glitches: https://mitchellh.com/writing/my-startup-banking-story

Of course today startups are probably using Mercury/Ramp/whatever.

	▲	blibble 13 hours ago \| parent [-]
		I don't see any weird glitches there chase did what they were asked for years up to the point they were told there had fraud going on, at which point the walls went up which is entirely as to be expected

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17 hours ago | parent | prev [-]

[deleted]

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mothballed 17 hours ago | parent | prev [-]

SVB depositors were mildly interrupted, no doubt, but there's little reason not to exercise extreme moral hazard in banking. OPM will bail you out via FDIC. Theoretically that has a limit but in practice FDIC usually will bail out the full balances even over the nominal limit.

If I had an FDIC account I would basically want a bank that invests my money in the most wildly hazardous ways with the most reckless financial controls to give the max returns and flexibility, then let everyone else bail me out if it went south.

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kasey_junk 6 hours ago | parent | next [-]

“in practice FDIC usually will bail out the full balances even over the nominal limit”

That’s not true. It takes the systematic risk exemption and agreement between the fdic/fed reserve board and the president to make that happen. I think it’s happened like 4 times out of the thousands of bank bailouts that have happened.

There are other cases where the acquiring bank took on uninsured funds (like jpmc did for first republic) but in that case your gamble is that the other depositors on the banks balance sheet are desireable to the acquirer. Which presumably isn’t the case for your hypothetical max risk run bank.

	▲	morpheuskafka an hour ago \| parent [-]
		But didn't it technically not even apply at the end of the day for SVB? They sold the bank to another bank, which is what usually happens, and that other bank assumed all its deposits and liabilities. The FDIC didn't have to pay out any deposits and thus the limit didn't come into play.

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toomuchtodo 13 hours ago | parent | prev | next [-]

Go back to the SVB failure threads here and observe the freak out before the decision was made to reimburse deposits above FDIC limits. Sometimes you’re lucky, but luck is not effective risk management.

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Animats 16 hours ago | parent | prev [-]

> OPM will bail you out via FDIC.

I'm waiting for the demands for a bailout when the next big stablecoin goes bust. Especially if it's Trump's.[1]

[1] https://finance.yahoo.com/news/trump-usd1-stablecoin-hits-5b...