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It's pretty embarrassing how many people thought depositors should be on the hook for this. A banking system where companies or people would actually lose money
by cragfar 4y ago
It's pretty embarrassing how many people thought depositors should be on the hook for this. A banking system where companies or people would actually lose money due to bank failures (especially one caused by a run on the bank) would just lead to people only using BOA, JPM, and some merged WF/Citi/whoever else.
- lambic2 4y agoI have a feeling a lot of these people are Bitcoin maximalist. They want depositors to suffer so that they feel vindicated for their faith in Bitcoin.
- jnwatson 4y agoIn defense of Bitcoin, it would have taken a decade to process the $40 billion of withdrawals from SVB on the blockchain, so a bank run couldn't have happened.
- kragen 4y agohmm, i saw somewhere that svb had some 37000 depositors there's no relevant limit to the amount of money in a bitcoin transaction, so this could have been one transaction with 37000 outputs, or 37000 transactions one output, or 370 transactions with 100 outputs, or whatever the latest block in the bitcoin blockchain is block 780'537 https://www.blockchain.com/explorer/blocks/btc/780537 https://www.blockchain.com/explorer/blocks/btc/780537 containing 1788 transactions, totaling 4489.31 bitcoin, which is currently about 98 million dollars; the block weighs 1847 kilobytes most of these transactions had 2 outputs, though many had more (7, 8, 9, 20) and a few had only 1. if we estimate this block as containing 3700 outputs we wouldn't be far wrong. in that case it would take 10 blocks (a little under two hours) to process all 37000 withdrawals processing 200 billion dollars of transactions at the rate that money was being transferred in this block would take 2000 blocks, almost two weeks, because the average transaction size in this block was much smaller than svb's average account size; this is still less than a decade consider transaction a400f39693ab997c162156a09599557b26c7a6d1efa711c49f4ccf5b12505b66 https://btcscan.org/tx/a400f39693ab997c162156a09599557b26c7a6d1efa711c49f4ccf5b12505b66 https://btcscan.org/tx/a400f39693ab997c162156a09599557b26c7a... with 21 outputs. this transaction is 837 bytes, so it's a little smaller than average for this block despite its large number of outputs; an 1837-kilobyte block consisting only of such transactions would contain 2206 transactions, paying out to 46326 different addresses so in fact the bitcoin blockchain could have processed all of svb's withdrawals in a single block the price of bitcoin would have to go up quite a bit for that to happen; bitcoin's market cap is currently only 389 billion dollars, so this one piddly bank would have been more than half of it, and transferring such a large amount of bitcoin around at once would likely freak people out enough to blow the whole system up but there's no technical reason in the bitcoin blockchain that dissolving such a bank would be impossible or even difficult there have been any number of bank runs in bitcoin already, unfortunately
- huhneverthot 4y ago[flagged]
- postalrat 4y agoI for one just don't like to see the rules change every time the rich need a little help.
- cragfar 4y agoIf the treasury allowed a bank run to wipe out depositors, every single business would be transferring funds out of their regional bank Monday morning.
- postalrat 4y agoAnd now they won't?
- kragen 4y agono, they aren't at risk that their deposits will evaporate because they were late to the bank run any more
- postalrat 4y agoso why would they care if a bank run happens or not? seems like a pretty good time to make adjustments for the long term.
- kragen 4y agoexactly, the idea is for depositors not to care if a bank run happens or not, because the way that bank runs happen is that depositors worry that a bank run will happen
- postalrat 4y agowell we will see what happens over the next couple weeks. no prediction we make here is going to change it.
- spaceman_2020 4y agoFor the record, no Bitcoin maxi I'ever ever met has asked to be bailed out for anything.
- roflyear 4y agoNah they just don't want their taxes to pay for this stuff (tho it seems like they won't, I guess?!)
- astrostl 4y agoThe depositors could and should have been aware of the 250k FDIC limit and employed widely-available countermeasures including (manual or as-a-service) account spreading and/or private insurance.
- noitpmeder 4y agoI think they are not completely blameless. Companies deposited money in a riskier-bank because they got more favorable terms/perks/... compared to other options. Now they don't have to bear the results of that risk because the Govt has stepped in. Similar to the current US discussion around Student Loan repayment. Bailing students out of loans disadvantages everyone else who did not take those loans, or who paid them off already, because they had the foresight to choose a less-risky option.
- cragfar 4y ago> Companies deposited money in a riskier-bank It's a top 20 bank that had passed all regulatory compliance and has been around for 40 years.
- corbulo 4y agoThere are risk profiles between crypto/sv banks and JPM & co. lol What is this sentiment called? SVCentrism?