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I have no idea why this idea is suddenly so unpopular. People see putting money in banks as a de-facto safe decision. $250k might be a reasonable cutoff for ind

I have no idea why this idea is suddenly so unpopular. People see putting money in banks as a de-facto safe decision. $250k might be a reasonable cutoff for individuals, but it's clearly way too low for businesses. If that threshold had been more like $10M, SVB might have even survived since depositors would have had faith they could access enough of their funds within a day of a bank failure. Instead, there was a bank run.

somsak2 4y ago
Is it suddenly so unpopular? Can you link me to think pieces / opinions that have been published in the last few years that are arguing for increased deposit insurance for businesses? I don't recall hearing about this ever before. If you wanted such a high cap, you'd need to increase the deposit insurance premiums much further to cover for it. The banks were already unhappy about the most recent 2 basis point increase earlier this year -- https://www.fdic.gov/news/financial-institution-letters/2022/fil22048.html https://www.fdic.gov/news/financial-institution-letters/2022...
- dehrmann 4y ago
  > I don't recall hearing about this ever before. That's like saying you don't remember hearing about CDOs as a potential problem in 2006. This is the second-largest bank failure in the US, and it disproportionately hits one industry. This just isn't a problem we're used to thinking about.
  - somsak2 4y ago
    Exactly. If there was no strong opinion previously, it can't have become "suddenly unpopular."
JohnFen 4y ago
> I have no idea why this idea is suddenly so unpopular. It's not suddenly unpopular. It's never been popular to ask people to rescue businesses just because the lost a bet. > it's clearly way too low for businesses. Right, but businesses have a number of ways to limit their risk that individuals don't have. FDIC is not the only protection available, it's just the one that doesn't cost you anything.
- dehrmann 4y ago
  > It's never been popular to ask people to rescue businesses just because the lost a bet. No one's asking for SVB or shareholders to be bailed out, they're asking for depositors to be bailed out. When you put money in the bank, you don't think of it as "making a bet."
  - JohnFen 4y ago
    > When you put money in the bank, you don't think of it as "making a bet." Up to the limits of your insurance, you're not. (Well, even then you technically are, but it's as close to a sure thing as you'll get). Beyond that, though, you are, always have been, and always will be. There is no risk-free place to park a bunch of money. Not even under your mattress. That's why you always need to be thinking about risk mitigation. Not just with money, by the way, but with everything your business does. If you're beyond the $250k, you should be fully aware that you're making a bet. There's literally signs inside of every bank telling you that.

somsak2 4y ago

Is it suddenly so unpopular? Can you link me to think pieces / opinions that have been published in the last few years that are arguing for increased deposit insurance for businesses? I don't recall hearing about this ever before. If you wanted such a high cap, you'd need to increase the deposit insurance premiums much further to cover for it. The banks were already unhappy about the most recent 2 basis point increase earlier this year -- https://www.fdic.gov/news/financial-institution-letters/2022/fil22048.html https://www.fdic.gov/news/financial-institution-letters/2022...

dehrmann 4y ago
> I don't recall hearing about this ever before. That's like saying you don't remember hearing about CDOs as a potential problem in 2006. This is the second-largest bank failure in the US, and it disproportionately hits one industry. This just isn't a problem we're used to thinking about.
- somsak2 4y ago
  Exactly. If there was no strong opinion previously, it can't have become "suddenly unpopular."

JohnFen 4y ago

> I have no idea why this idea is suddenly so unpopular. It's not suddenly unpopular. It's never been popular to ask people to rescue businesses just because the lost a bet. > it's clearly way too low for businesses. Right, but businesses have a number of ways to limit their risk that individuals don't have. FDIC is not the only protection available, it's just the one that doesn't cost you anything.

dehrmann 4y ago
> It's never been popular to ask people to rescue businesses just because the lost a bet. No one's asking for SVB or shareholders to be bailed out, they're asking for depositors to be bailed out. When you put money in the bank, you don't think of it as "making a bet."
- JohnFen 4y ago
  > When you put money in the bank, you don't think of it as "making a bet." Up to the limits of your insurance, you're not. (Well, even then you technically are, but it's as close to a sure thing as you'll get). Beyond that, though, you are, always have been, and always will be. There is no risk-free place to park a bunch of money. Not even under your mattress. That's why you always need to be thinking about risk mitigation. Not just with money, by the way, but with everything your business does. If you're beyond the $250k, you should be fully aware that you're making a bet. There's literally signs inside of every bank telling you that.