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What they did with SVB prevents this thinking. Make the depositors whole, wipe out shareholders, prosecute the executives.
by KptMarchewa 4y ago
What they did with SVB prevents this thinking. Make the depositors whole, wipe out shareholders, prosecute the executives.
- Aaronontheweb 4y agoNot really - rewriting the rules (FDIC insurance limits) midway through because SVB's own depositors yelled "bank run!" loud enough is still moral hazard. Do I need to make sure I bank with an institution that Jason Calcanis, Mark Cuban, et al use so I can insure my deposits with their political / popular leverage?
- criley2 4y agoIt's hardly a rewrite, everyone knows that your deposits with the big 5 are already 100% "too big too fail" anyway. The only change is that some smaller organizations might also get the same unspoken benefit that the big 5 already enjoy. This keeps them competitive, and as the US Gov and many folks noted, if they did not do this, everyone would flee to the Big 5 and regional/community banking would be wiped out.