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> Perhaps they shouldn't keep money in the bank in the first place, but find other uses for them. If this is the position you want to take, that's fine, but y

> Perhaps they shouldn't keep money in the bank in the first place, but find other uses for them. If this is the position you want to take, that's fine, but you need to own the consequences of that position. The point of the FDIC is that you don't have to worry about the credit-worthiness of your bank before deciding to do business with them. If that's not true anymore, then I'm pulling every dollar out of my local bank and giving it all to Goldman Sachs. Everyone else will do the same, and now you've destroyed small regional banks and make the biggest ones even bigger and more powerful. Was that worth it to "own the techbros"?

dehrmann 4y ago
There's something the airline industry does where they don't compete on safety. They're all safe. You don't want banks to start competing on safety; they should all be safe.
- ekidd 4y ago
  No normal bank is safe without government backing. Banks are inherently vulnerable to bank runs, because they work with money across different time intervals. For example, a hypothetical small town bank might turn checking and savings accounts into mortgages. If everyone decides to withdraw their savings all at once, the bank can't call all the mortgages due. So if everyone panics all at once, banks will fail. So we try to regulate the risks taken by banks, and we provide government-backed insurance. To be honest, the last-ditch "insurance" behind most banks is sovereign power. It has been a long time since companies have lost money in bank failures. Everyone has gotten complacent. The failure of SVB means that a great many people are suddenly seeing new risks. Come Monday, I expect to see lots of companies moving funds. And lots of banks hold government bonds that have fallen substantially in value because of the rapid changes in interest rates. I will be very happy if we get out of this with few bank failures.

dehrmann 4y ago

There's something the airline industry does where they don't compete on safety. They're all safe. You don't want banks to start competing on safety; they should all be safe.

ekidd 4y ago
No normal bank is safe without government backing. Banks are inherently vulnerable to bank runs, because they work with money across different time intervals. For example, a hypothetical small town bank might turn checking and savings accounts into mortgages. If everyone decides to withdraw their savings all at once, the bank can't call all the mortgages due. So if everyone panics all at once, banks will fail. So we try to regulate the risks taken by banks, and we provide government-backed insurance. To be honest, the last-ditch "insurance" behind most banks is sovereign power. It has been a long time since companies have lost money in bank failures. Everyone has gotten complacent. The failure of SVB means that a great many people are suddenly seeing new risks. Come Monday, I expect to see lots of companies moving funds. And lots of banks hold government bonds that have fallen substantially in value because of the rapid changes in interest rates. I will be very happy if we get out of this with few bank failures.