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The $250k limit is not stupid, it is deliberate. The point is to protect normal people and small companies. Not to provide federal coverage against irresponsibl

The $250k limit is not stupid, it is deliberate. The point is to protect normal people and small companies. Not to provide federal coverage against irresponsible behavior for corporations and billionaires.

amluto 4y ago
What irresponsible behavior are you talking about? Having $4M of operating cash held in an account at a medium-sized bank? A company that can comfortably get by with < $250k of cash reserves is small indeed. The actual irresponsible behavior here seems to have been on the part of SVB in treating T bonds and excessively correlated business loans as low-risk assets, and on the part of regulators for allowing this because SVB wasn’t quite big enough to have to follow the real rules. But there was no good way for SVB’s depositors to know any of this. Heck, SVB was older than a decent fraction of its depositors and their executives. It’s was an institution around here. You can wander around a few towns and find their branches. What were people and businesses supposed to do? Walk around, point to the SVB branch and say “nope, not those folks — they don’t understand interest rate risk”?
garyclarke27 4y ago
What is irresponsible about placing cash on deposit at a regulated bank? Capitalism will be much less efficient if businesses can’t trust banks to perform their most fundamental function of keeping their money safe.
- sangnoir 4y ago
  > What is irresponsible about placing cash on deposit at a regulated bank? What's irresponsible about under-insuring your business-critical equipment in an inspected building that meets code? Answer to both is regulations can only prevent some failures, and the solution to unexpected failures is insurance, which the Free Market(tm) is adept at providing - and businesses should be paying for to keep all of their money safe, not the bare minimum afforded by the FDIC

amluto 4y ago

What irresponsible behavior are you talking about? Having $4M of operating cash held in an account at a medium-sized bank? A company that can comfortably get by with < $250k of cash reserves is small indeed. The actual irresponsible behavior here seems to have been on the part of SVB in treating T bonds and excessively correlated business loans as low-risk assets, and on the part of regulators for allowing this because SVB wasn’t quite big enough to have to follow the real rules. But there was no good way for SVB’s depositors to know any of this. Heck, SVB was older than a decent fraction of its depositors and their executives. It’s was an institution around here. You can wander around a few towns and find their branches. What were people and businesses supposed to do? Walk around, point to the SVB branch and say “nope, not those folks — they don’t understand interest rate risk”?

garyclarke27 4y ago

What is irresponsible about placing cash on deposit at a regulated bank? Capitalism will be much less efficient if businesses can’t trust banks to perform their most fundamental function of keeping their money safe.

sangnoir 4y ago
> What is irresponsible about placing cash on deposit at a regulated bank? What's irresponsible about under-insuring your business-critical equipment in an inspected building that meets code? Answer to both is regulations can only prevent some failures, and the solution to unexpected failures is insurance, which the Free Market(tm) is adept at providing - and businesses should be paying for to keep all of their money safe, not the bare minimum afforded by the FDIC