3 ms·

> Are we supposed to blame people for putting money in a bank that had a solid track record since the 1980s YES! The $250K limit was literally in 100pt font (h

by breck 4y ago

> Are we supposed to blame people for putting money in a bank that had a solid track record since the 1980s YES! The $250K limit was literally in 100pt font (https://twitter.com/breckyunits/status/1635356025175027712 https://twitter.com/breckyunits/status/1635356025175027712). Amounts above that were at risk! Instead the government just ignored that, on a whim. This wasn't even in the fine print! Can you explain to me now what rules I can and cannot pay attention to? I can't.

twblalock 4y ago
Only 60% of deposits in the US are insured and many other businesses are doing the same thing in many other banks right now! Would people be screaming about VCs if a different regional bank that serves a different business community failed for the same reason (which could totally still happen this week)? If the government didn't step it they would be ignoring the purpose of the FDIC. The purpose of the FDIC is to protect the banking system from runs and systemic risk. Deposit insurance happens to be the normal mechanism for doing that. When the FDIC realizes that $250k insurance is not enough to stem systemic risk, should they just forget about their mission and let the world burn?
kristjansson 4y ago
FDICs remit is maximal recovery for depositors and stability for the system, not just 250k and a pat on the back. 250k is the absolute least a large depositor can recover in the event of a failure. Holding more than that is not some moral failure we should be crucifying businesses.
- breck 4y ago
  Right. And it would have been awesome if they were able to recover 100% for depositors (even over 250K)—the honest way. Instead we had whiners and panic peddlers get their 100% the dishonest way. I would much rather have everyone take a couple % haircut than reward that kind of behavior.

3 ms·

> Are we supposed to blame people for putting money in a bank that had a solid track record since the 1980s YES! The $250K limit was literally in 100pt font (h

by breck 4y ago

twblalock 4y ago
Only 60% of deposits in the US are insured and many other businesses are doing the same thing in many other banks right now! Would people be screaming about VCs if a different regional bank that serves a different business community failed for the same reason (which could totally still happen this week)? If the government didn't step it they would be ignoring the purpose of the FDIC. The purpose of the FDIC is to protect the banking system from runs and systemic risk. Deposit insurance happens to be the normal mechanism for doing that. When the FDIC realizes that $250k insurance is not enough to stem systemic risk, should they just forget about their mission and let the world burn?
kristjansson 4y ago
FDICs remit is maximal recovery for depositors and stability for the system, not just 250k and a pat on the back. 250k is the absolute least a large depositor can recover in the event of a failure. Holding more than that is not some moral failure we should be crucifying businesses.
- breck 4y ago
  Right. And it would have been awesome if they were able to recover 100% for depositors (even over 250K)—the honest way. Instead we had whiners and panic peddlers get their 100% the dishonest way. I would much rather have everyone take a couple % haircut than reward that kind of behavior.