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There’s a theme of NEVER AGAIN comments in these SVB posts. Harkening back to 2008 financial crisis. Doing your best to make depositors whole (maybe not 100%,

There’s a theme of NEVER AGAIN comments in these SVB posts. Harkening back to 2008 financial crisis. Doing your best to make depositors whole (maybe not 100%, but as much as possible) is not a bailout ala 2008. It’s generally not very controversial financial policy that prevents a financial contagion like 1929. No 10 person company is going to split their 2.5 mil 10 ways to get insurance. And they’re not going to have the sophistication to manage that. Nor do we want to force small businesses to keep cash under mattresses or have to evaluate a banks balance sheet. If you want to think of a bank account in those terms, then you expect a radically different financial system. Which is fine, but don’t expect such a system to exist in our lifetimes, or during the current crisis.

baq 4y ago
> No 10 person company is going to split their 2.5 mil 10 ways to get insurance. This is a service banks provide transparently. Not sure how much paperwork is required, probably could be optimized to a couple of clicks.
bradleyjg 4y ago
It’s generally not very controversial financial policy that prevents a financial contagion like 1929. A law was put in place in 1933 with a limit. If it didn’t have a limit, we wouldn’t be having this discussion. Where were all these billionaires and VCs any time prior to this calling for uncapped FDIC insurance? This is special pleading.
- softwaredoug 4y ago
  It’s not about “billionaires” (who don’t keep billions of cash sitting in one bank) but the company with a few million that needs to make payroll and pay vendors. SVB is in receivership where depositors place very highly. Banking policy is not just about insurance. That’s just one tool.
  - bradleyjg 4y ago
    Billionaires and VCs are going on Twitter and demanding a make whole government bailout. Is this the first time they are hearing about how the FDIC works? I don’t think anyone is opposed to the system playing out like it’s supposed to. The FDIC pays out $250k on Monday plus pro rata whatever cash is on hand. Then it starts selling assets. The treasuries and MBSs they can probably sell within days, those have very liquid markets. That will allow them to make another pro rata distribution. The loan book will take longer. But as long as public money isn’t used, no one will call it bailout.

baq 4y ago

> No 10 person company is going to split their 2.5 mil 10 ways to get insurance. This is a service banks provide transparently. Not sure how much paperwork is required, probably could be optimized to a couple of clicks.

bradleyjg 4y ago

It’s generally not very controversial financial policy that prevents a financial contagion like 1929. A law was put in place in 1933 with a limit. If it didn’t have a limit, we wouldn’t be having this discussion. Where were all these billionaires and VCs any time prior to this calling for uncapped FDIC insurance? This is special pleading.

softwaredoug 4y ago
It’s not about “billionaires” (who don’t keep billions of cash sitting in one bank) but the company with a few million that needs to make payroll and pay vendors. SVB is in receivership where depositors place very highly. Banking policy is not just about insurance. That’s just one tool.
- bradleyjg 4y ago
  Billionaires and VCs are going on Twitter and demanding a make whole government bailout. Is this the first time they are hearing about how the FDIC works? I don’t think anyone is opposed to the system playing out like it’s supposed to. The FDIC pays out $250k on Monday plus pro rata whatever cash is on hand. Then it starts selling assets. The treasuries and MBSs they can probably sell within days, those have very liquid markets. That will allow them to make another pro rata distribution. The loan book will take longer. But as long as public money isn’t used, no one will call it bailout.