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I agree. It’s not even clear that banks need customer deposits to create credit and loans anyway [1]. Just let them continue with their commercial credit/loan

I agree. It’s not even clear that banks need customer deposits to create credit and loans anyway [1]. Just let them continue with their commercial credit/loan operations, and provide a postal savings system for zero-risk savings for the public. Seems like a much less calamity-prone system. [1]:https://www.youtube.com/watch?v=3N7oD5zrBnc https://www.youtube.com/watch?v=3N7oD5zrBnc

lend000 4y ago
If basic customers could be served by a federal deposit system and more "unique" customers might look for private options that cater to their needs (basically all of SVB's customers), nothing that played out in SVB's collapse would have changed.
- SkyMarshal 4y ago
  Probably true for SVB, but still useful for the banking system overall.
- dools 4y ago
  You reckon they would have been holding cash for payroll in SVB if they could have an account directly with the fed instead?
  - lend000 4y ago
    Consider the reasons why most of SVB's clients chose SVB instead of a larger, more traditional bank. The traditional banks work very slowly, are hyper-cautious with/outright deny businesses they don't understand, and if a startup did manage to get an account, its transaction maximums would be extremely limited relative to its growth. Now imagine the government is the custodian, and those problems presumably become 10x worse.
    - dools 4y ago
      I looked up "why would a startup choose svb" and found that the reasons are those which could be fulfilled in a myriad ways: https://au.finance.yahoo.com/news/silicon-valley-bank-served-tech-214849273.html https://au.finance.yahoo.com/news/silicon-valley-bank-served... There was nothing especially "startuppy" about their traditional banking services.
dools 4y ago
Yep, precisely, Wray says as much in this lecture: https://youtu.be/gI86w6bSmS0?t=445 https://youtu.be/gI86w6bSmS0?t=445

lend000 4y ago

If basic customers could be served by a federal deposit system and more "unique" customers might look for private options that cater to their needs (basically all of SVB's customers), nothing that played out in SVB's collapse would have changed.

SkyMarshal 4y ago
Probably true for SVB, but still useful for the banking system overall.
dools 4y ago
You reckon they would have been holding cash for payroll in SVB if they could have an account directly with the fed instead?
- lend000 4y ago
  Consider the reasons why most of SVB's clients chose SVB instead of a larger, more traditional bank. The traditional banks work very slowly, are hyper-cautious with/outright deny businesses they don't understand, and if a startup did manage to get an account, its transaction maximums would be extremely limited relative to its growth. Now imagine the government is the custodian, and those problems presumably become 10x worse.
  - dools 4y ago
    I looked up "why would a startup choose svb" and found that the reasons are those which could be fulfilled in a myriad ways: https://au.finance.yahoo.com/news/silicon-valley-bank-served-tech-214849273.html https://au.finance.yahoo.com/news/silicon-valley-bank-served... There was nothing especially "startuppy" about their traditional banking services.

dools 4y ago

Yep, precisely, Wray says as much in this lecture: https://youtu.be/gI86w6bSmS0?t=445 https://youtu.be/gI86w6bSmS0?t=445