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I am so confused haha. We just saw a large-but-not-that-large bank fail, and got a small glimpse of the chaos it might cause if the government had not stepped i

I am so confused haha. We just saw a large-but-not-that-large bank fail, and got a small glimpse of the chaos it might cause if the government had not stepped in to backstop deposits above and beyond the $250k FDIC limit -- missed payroll, companies going out of business, mass layoffs, etc. And you don't think the entire sector crashing would impact you? I guess I'd ask, do you recognize that's a tiny minority opinion, and if so what insight do you think you have that everyone else (including experts who are well aware of all the facts about how the industry has evolved that you laid out in your other comment) is missing?

gumby 4y ago
> small glimpse of the chaos it might cause if the government had not stepped in to backstop deposits above and beyond the $250k FDIC limit Yes, that's my point: the government now has a policy of backstopping all deposits, thus the primary function (for almost the entirety of the population) of retail banks is guaranteed to be safe no matter what banklike entity anyone chooses. And because of unbundling, that primary function is essentially the only function of retail banks any more, besides marketing other, unbundled, services. Thus if all the retail banks went bust tomorrow (except the money center ones, that are subject to much tighter regulation, many of whom have retail arms too) there might be a transient fear just because people don't like change, but actually life would go on essentially unchanged. Retail banking has essentially done a Wile E Coyote of the top of cliff, but hardly anyone is looking down yet. Most of the "experts" from Jim Cramer to David Sachs (and let's not forget all the people screaming about how SVB was "bailed out") don't appear to have even understood how banking works in the first place. Enough of people do understand it (and "look down off the cliff"), of course, which is why I don't expect retail bank stocks to recover, except as I said above, those too-big-to-fail entities which were already fully backstopped by the feds. Meanwhile I am happy to have my cash in First Republic -- even if they do collapse, which I doubt will happen any time soon, this episode has shown I won't lose access to my funds. I almost never go into the bank of course but if I want to it's nice and close, which is as good a reason to use them as any other.

gumby 4y ago

> small glimpse of the chaos it might cause if the government had not stepped in to backstop deposits above and beyond the $250k FDIC limit Yes, that's my point: the government now has a policy of backstopping all deposits, thus the primary function (for almost the entirety of the population) of retail banks is guaranteed to be safe no matter what banklike entity anyone chooses. And because of unbundling, that primary function is essentially the only function of retail banks any more, besides marketing other, unbundled, services. Thus if all the retail banks went bust tomorrow (except the money center ones, that are subject to much tighter regulation, many of whom have retail arms too) there might be a transient fear just because people don't like change, but actually life would go on essentially unchanged. Retail banking has essentially done a Wile E Coyote of the top of cliff, but hardly anyone is looking down yet. Most of the "experts" from Jim Cramer to David Sachs (and let's not forget all the people screaming about how SVB was "bailed out") don't appear to have even understood how banking works in the first place. Enough of people do understand it (and "look down off the cliff"), of course, which is why I don't expect retail bank stocks to recover, except as I said above, those too-big-to-fail entities which were already fully backstopped by the feds. Meanwhile I am happy to have my cash in First Republic -- even if they do collapse, which I doubt will happen any time soon, this episode has shown I won't lose access to my funds. I almost never go into the bank of course but if I want to it's nice and close, which is as good a reason to use them as any other.