re: Bill Ackman: Government has 24 hours to fix Silicon Valley Bank debacle

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It isn’t like Roku was investing in speculative trades,

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And yet they were. Literally anything above 250k in a bank is a speculative trade, however poorly rewarded, i.e. mere bank interest rates for return on risk.

The insured amount is widely broadcast to the point where even the average depositor should be well aware of the number.

Why are we even thinking about bailing out a company that chose stewards of 500 million cash who apparently didn't bother to take this into account?

No, people have to fail.

You know what’s equity? The government not picking and choosing who gets saved.

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Finance 101 (1980's to current) - "greed is good" era Net profits (after taxes and expenses) 95% to top management only 5% to everybody else Stopped paying dividends Stopped investing in windows greater than 6 months

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Yeah I need you to show this is true.

I still get dividends regularly. But admittedly I don’t know everyone’s salaries at some of these companies, but 95% to management can’t be accurate.

The problem was when VC’s that used SVB and the startup companies that used SVB stopped lending VC and depositing capital at appropriate levels for SVB to operate, their normal MO was to sell other other, traditional investments to help cover their capital calls. Which were typically covered by the steady influx of VC cash into the new startups accounts which as we said were tapering off due to the economic headwinds in tech.

The traditional investments they had on the books were problematic. Not that they were bad investments. Just that the current rates of returns for customers on the street to purchase those investments are higher than when SVB purchased them.

Meaning that only were they a lower rate of return than what anyone can get on the street today, but when you sell them, you take a bath on the sale price because of it. So what you bought yesterday as a traditional hedge against your risk is now an insufficient hedge and-in a twist of fate-a risk in and of itself in a sense.

Meaning that SVB was going to take a bath no matter what due to their main business plan or approach, their lack of diversification from it and then…once larger players in tech got wind of it…the run was on.

I don’t think that a full depositor bailout should happen IMO. The depositors are not at fault. People can’t make payroll right now. This is a huge problem.

But this should force others to diversify their approach. Whether in the finance or banking space or as businesses who are overly reliant and aren’t account balancing as a hedge risk.

I think the market should self correct. If we see a larger run on regional institutions, then a market intervention is called for. We do not need banking consolidation and that’s what we should look for.

But I’m not a fan of knee jerk reactions in the markets. Take the medicine. Swallow the bitter pill.

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So if you were CFO at Roku, you'd be keeping track of accounts at literally thousands of banks across the country?

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If Roku needs to have 500 million cash on hand in a regular bank account, maybe their CFO should be camped out in the bank lobby.

Yeah, pretty sure I read that there were only a couple of bank failures between the end of the Great Depression and the early 80’s, while there have been hundreds since then.

frick ‘em. Maybe if this implodes it will help reset the ridiculous Silicon Valley/San Francisco economy.

We don’t want that.

I agree. This this bailout is pure evil. We need a free market system with consequences. We are the only country in the world that focuses its socialistic activities on the wealthiest of its citizens. Also, don't kid yourself. Both major political parties are screwing you.