One of the strangest misconceptions I've seen on HN and in general is some variation on the incorrect theme of "all the money is gone except the FDIC insurance"

One of the strangest misconceptions I've seen on HN and in general is some variation on the incorrect theme of "all the money is gone except the FDIC insurance". The last I saw from Moody's was they're expecting "eighty-something" percent recovery rate, assuming no bailout or rule flexibility and no last minute forced merger. This isn't like FTX where all the money is gone and ha ha you're not getting a penny of it back, ever. The SVB situation is a hyper regulated industry and the regulators flipped out when the asset ratio dropped below 95% or something like that, and as such, there will be inevitable expenses of a total shutdown, so figure everyone below $250K gets 100% back via insurance and everyone else gets $250K plus whatever was above $250K paid out at probably around eighty five percent when its all said and done (this is a guess although Moody's usually isn't all that wrong). Historically when smaller banks collapsed (my hometown bank for example back in '08) the regulators semi-forcibly merge the small bank into a large bank and there's zero loss, you're just magically now a customer of some out of town megabank. The big bank eats the loss in a wink-and-nod agreement where the big bank gets some future favorable regulatory treatment in exchange, semi-informally. The problem with SVB is it is, or was, huge. So finding a huger bank to merge with will be tricky to impossible. Which was kind of the point of regulation intended to keep competition higher by making lots of small banks instead of few large ones. The worst case outcome according to the last I saw from Moodys was big depositors will take maybe a fifteen percent haircut over $250K. The propaganda claims, of course, that all the money is gone and its 1933 again on Monday morning and the usual workers of the world unite stuff. But its not really THAT bad. Idle speculation I've seen in chats that the solution to SVB being way too f-ing huge to merge with anyone is a forcible separation followed by a forcible multi-merge. So each 1/4 of you will be new customers with 100% rate of return of JP, BoA, Citi, and WF respectively. (off the top of my head those are the four largest banks by assets, I could be wrong) This is just internet chat nonsense I wouldn't plan on it. Although it is an innovative solution to having a "too big to fail" bank failure.