Peter Thiel Says $50M of His Own Money Was Temporarily Frozen When SVB Failed (axios.com) 52
Axios remembers that it was just nine days ago that there were "concerns" about Silicon Valley Bank at venture capital firm. And soon Founders Fund's top operations executives "were on the phone, quickly deciding to move firm capital to a number of bigger banks."
Firm founder Peter Thiel was not part of the conversation. One source says that the assumption was that they'd return the money to SVB after the crisis had ended....
Founders Fund wasn't the only venture capital firm giving this sort of warning to portfolio companies, nor necessarily the first, but word of its advice spread like wildfire (it also ended up in media reports, including one from Axios). Almost immediately, the firm came under withering criticism from some other venture capitalists, accusing Founders Fund (and Thiel personally) of sparking a bank run that ultimately led to $42 billion in withdrawals. Some even speculated that it was intentional, as payback for some unknown grudge between the two groups.
Earlier this week the Washington Examiner chronicled some of that criticism: "There should be more scrutiny of Peter Thiel and [hedge fund manager] Bill Ackman for yelling fire in a crowded theater in this SVB collapse," tweeted CNBC host Sara Eisen [on Monday]. Others turned their focus to Thiel's promotion and subsequent profiting off of crypto investments after the market crashed as a reason to be suspicious of his withdrawals. "You mean the guy who was touting crypto and trashing critics while he was selling crypto? That guy? Shocker!" tweeted tech journalist Kara Swisher.
But Peter Thiel says he actually left his own money in the bank, reports Business Insider: "I had $50 million of my own money stuck in SVB," he told the Financial Times.... Thiel told the Financial Times that he did not believe the SVB would fail last week.
Other venture capital firms — including Coatue Management, Union Square Ventures, and Founder Collective — had similarly advised startup clients to transfer money from SVB after the bank revealed a $1.8 billion loss and the bank's share price collapsed. These firms have pushed back against accusations that they were spreading panic, saying that they were giving financial advice they believed would be in the best interest of their clients....
Thiel told the Financial Times that his account was frozen on Friday when regulators stepped in and took control of the bank. However, it is once again accessible after the US government stepped in earlier this week and shored up all customer deposits in SVB.
Founders Fund wasn't the only venture capital firm giving this sort of warning to portfolio companies, nor necessarily the first, but word of its advice spread like wildfire (it also ended up in media reports, including one from Axios). Almost immediately, the firm came under withering criticism from some other venture capitalists, accusing Founders Fund (and Thiel personally) of sparking a bank run that ultimately led to $42 billion in withdrawals. Some even speculated that it was intentional, as payback for some unknown grudge between the two groups.
Earlier this week the Washington Examiner chronicled some of that criticism: "There should be more scrutiny of Peter Thiel and [hedge fund manager] Bill Ackman for yelling fire in a crowded theater in this SVB collapse," tweeted CNBC host Sara Eisen [on Monday]. Others turned their focus to Thiel's promotion and subsequent profiting off of crypto investments after the market crashed as a reason to be suspicious of his withdrawals. "You mean the guy who was touting crypto and trashing critics while he was selling crypto? That guy? Shocker!" tweeted tech journalist Kara Swisher.
But Peter Thiel says he actually left his own money in the bank, reports Business Insider: "I had $50 million of my own money stuck in SVB," he told the Financial Times.... Thiel told the Financial Times that he did not believe the SVB would fail last week.
Other venture capital firms — including Coatue Management, Union Square Ventures, and Founder Collective — had similarly advised startup clients to transfer money from SVB after the bank revealed a $1.8 billion loss and the bank's share price collapsed. These firms have pushed back against accusations that they were spreading panic, saying that they were giving financial advice they believed would be in the best interest of their clients....
Thiel told the Financial Times that his account was frozen on Friday when regulators stepped in and took control of the bank. However, it is once again accessible after the US government stepped in earlier this week and shored up all customer deposits in SVB.
That poor man! (Score:3)
How did he feed himself during this tragedy?
By pulling out his fund had from SVB first? (Score:5, Insightful)
His personal deposit in the bank is just him covering his ass.
Clearly, he was both aware of the issue, pulled his fund out AND advised others to pull their money out of the bank.
And yet he left 1.19% of his own personal net worth in the bank.
What happened? Was he too busy telling and signaling [businesstimes.com.sg] everyone else to pull out their part of the 42 billion dollars - he forgot to do it himself?
https://www.bloomberg.com/news... [bloomberg.com]
Peter Thiel's Founders Fund had no money with Silicon Valley Bank as of Thursday morning as the bank descended into chaos, according to a person familiar with the matter.
Founders Fund withdrew millions from SVB, said the person, who asked not to be identified discussing private information.
It joined other venture funds that took dramatic steps to limit exposure to the now-failed financial institution.
Founders Fund also advised its portfolio companies that there was no downside to moving their money away from SVB, even if the risk was low.
Founders Fund acted in other ways to move its business away from SVB.
On Thursday, as the bank was beginning to unravel, the firm started what's known as a capital call.
That's a run-of-the-mill activity in the venture capital world, in which a VC firm asks its investors, or limited partners, to send it money in order to make investments in startups - the core function of most VC firms.
It began by asking those backers to transfer the funds to accounts at SVB, as it has done for years, the person said.
But the firm learned that its limited partners were encountering issues using SVB services as they tried to transfer the funds - they weren't immediately going through as expected, the person said.
Quickly, Founders Fund asked its investors to transfer the money to other banks instead.
The fund acted to ensure that startup funding deals that were slated to close in the coming days were not delayed, the person said.
His fund pulled its money out of SVB on WEDNESDAY.
Then, on THURSDAY it told its investors to try to deposit money into SVB, knowing they will have issues, will call back his fund to report that - at which point he advised them to pull their money out as fast as possible.
Yelling fire in a crowded theater?
Dude was chaining up exits and setting the stage on fire while dancing on it and lip-syncing to Fire by Arthur Brown.
No wonder he "kinda forgot" to pull out his $50 million.
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Except the theater was known to be burning already.
SVB lit the fire, Moody told everyone there was fire, Thiel made sure him and those close to him got out before the stampede.
Cue the world's smallest violin (Score:3)
Playing a VERY sad song for the threat to Peter Thiel's couch cushion change.
Yes, obligatory joke.
But this is yet another part of how runaway negative bootstrapping may lead to human extinction. Have a nice day!
Someone needs to get the politics out of money! [sic]
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"No wonder he "kinda forgot" to pull out his $50 million." Or so he says. Why take anything he says at face value?
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One, "fire in a crowded theater" is bad law from an overturned case [reason.com].
Two, this is more like yelling "fire" in a burning theater. It had already been called out for being unable to produce depositor's cash months prior and the recent filing was sort of a tipping point because they had enough financially literate depositors such that they knew it was a race to get their money or else they might not be able to make payroll and would end up in a world of legal hurt, etc.
Re: By pulling out his fund had from SVB first? (Score:1)
Advising others to save themselves and knowingly taking in damage to yourself as a result is rather a sign of integrity.
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Yelling fire in a crowded theater?
Yes, it's something you should actually do if the theatre is in fact on fire.
The fact that it caused a stampede doesn't mean Thiel lit the fire. The bank did that themselves.
So the rich don't need to play by the rules. (Score:5, Insightful)
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Re: So the rich don't need to play by the rules. (Score:2)
The elites rules have been exposed for all to see.
And nothing will continue to be done about it.
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A bank and customers in a small rural community will not get treated the same.
Customers in a small rural community are likely fully covered by FDIC's $250k limit. Peter Thiel was having what are known as "champagne problems."
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Stop electing politicians who cater to the ultra rich.
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Thanks for the tip, let me know when there's a good one on the ballot.
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Thanks for the tip, let me know when there's a good one on the ballot.
Put your name down.
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Lets be real, I would cater to the ultra rich.
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Lets be real, I would cater to the ultra rich.
Honesty in politics?! You've no chance, mate :)
Re:So the rich don't need to play by the rules. (Score:4, Funny)
Stop electing politicians who cater to the ultra rich.
Turns out, catering to the poor(er) isn't as profitable.
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Stop electing politicians who cater to the ultra rich.
Which is all of them so how do you vote?
Doesn't matter if Democrats or Republicans are in control, either way the ultra-rich are catered to.
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Says the guy with the Biden meme in his sig. Biden was always the Senator from Mastercard.
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Re: So the rich don't need to play by the rules. (Score:2)
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After all, why buy deposit insurance when it costs less to own the government.
I'm sorry but WTF? Is deposit insurance an actual thing? If it is that is a huge fucking black mark on the banking sector.
So the rich don't need to play by the rules.
Thiel is playing by the same rules as everyone else. Everyone's deposits are fine, whether you have $1 or $50million. The only difference is if you had $1 the FDIC guarantees you are fine, whereas if you have $50million that was subject to some analysis and a planned response.
CNBC - the nerves (Score:2)
Laundering Consent (Score:3)
Firm founder Peter Thiel was not part of the conversation. **One source** says that the assumption was that they'd return the money to SVB after the crisis had ended
Why allow an anonymous source from within the firm to provide exculpatory information about the firm and Theil? If you are saying what your bosses want said, that is just PR and should be on the record.
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If it is an anonymous source that makes the boss look less evil, it is just PR. Could be orchestrated by the evil boss himself or some sycophant looking to score some brownosie points..
Rounding error (Score:5, Insightful)
To him a measly 50 mil is a rounding error.
boohoo (Score:2)
cry me a river :-)
Okay, he had $50M there when it collapsed (Score:4, Interesting)
That doesn't mean much in isolation. To give us some context - how much personal money did he have in SVB two weeks before it collapsed?
More scrutiny for people I dislike (Score:2)
He didn't short the stock/bonds and then twittered about their collapse, he gave some advice to people close to him ... could he know it would increase the speed of the snowball? Sure, but Moody's had set the snowball rolling already, it was good advice.
I’m no fan of (Score:2)
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That's actually the scariest part of the whole thing. Most of the bank's assets were apparently in T-bills, which are supposed to be one of the safest and "most real" forms of assets in today's economy.
It's almost as though some wise guys are laughing at us. All the way to the bank-ruptcy.
Re:I’m no fan of (Score:5, Interesting)
But the bottom line is that SVC had (and has) tons of real, hard honest-to-goodness assets just not quite the right form to withstand the bank run that hit them. Totally different than the crypto-ecosystem, which is built on old timey grift oops I mean a bunch of solutions to difficult-but-useless computer problems oops I mean the wonderful magic of cryptocurrency and Internet 9.0
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I know there are complexities, but the real problem is that gamesters gotta play and these days they are bribing the so-called referees, to boot. As regards SVB, bad timing was the critical mistake, but unlike Bullwinkle's tricks, bad timing always works badly.
Cry me a river (Score:2)
How will he afford another solid gold Humvee?
Hey Pete (Score:2)
Check your sofa cushions. You'll be OK.
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Checking the time stamps... Rats, you beat me to the obligatory joke.
Bill Ackman (Score:3, Insightful)
You mean Bill Ackman the socialist [marketwatch.com]? The socialist who wants the government (i.e. the taxpayer) to plunge billions of dollars into failed private companies? That Bill Ackman.
What will Bill think of next? Nationalizing the banking system so we don't have to go through this again and again?
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Both can be true... (Score:3)
> These firms have pushed back against accusations that they were spreading panic, saying that they were giving financial advice they believed would be in the best interest of their clients....
Telling the startups to get their money out could very well have been sound financial advice and an action that helped spread panic.
The thing is the whole "the bank became insolvent" meme just isn't true.
It's always a probabilistic state of every fractional reserve bank whether it's solvent or insolvent. Every one of those banks is both solvent and insolvent, depending on the actions of their depositors.
And, just to be clear, when you deposit in most retail bank accounts, you're lending that money to the bank, they have an absolute liability, but you don't have an absolute right to demand the money at any given time.
Yeah, so this is one of the things that Bitcoin evangelists like to remind people of, and how "be your own bank" works. The flip side is you have to secure your own funds just like a bank does. As a dumbass who didn't backup his first BTC wallet, the story is real. And the pain.
Crash ratings for banks. (Score:3)
Five stars would be something like Glass-Steagall compliant.
Four stars for pre 2018 Dodd-Frank.
Three stars for post 2018 Dodd-Frank
And so on.. Banks can voluntarily opt to comply with stricter laws. And they would get a break in FDIC deposit insurance premium and total amount covered.
The publicly traded companies should disclose where they park the money, so that we can price that risk into its stock price.
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Yes, they know he's gay. But they tolerate him in their circles because he's rich and on their side. This kind of event will make them run out of tolerance, however little they had.
Learn to comprehend entire sentences, dipshit.