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Banking is a basic utility. Penalizing customers of a business for the business going under is bonkers. We learned this lesson during the Great Depression. Ban

Banking is a basic utility. Penalizing customers of a business for the business going under is bonkers. We learned this lesson during the Great Depression. Bank shareholders or creditors are engaging in risky behavior and should face the full consequences of bank failures. No bailouts for them.

munk-a 9mo ago
I dislike that the SVB bailout happened without a revision to FDIC insurance rules. It felt like a good time to reevaluate those rules (if the limit needs to be raised then lets raise it) and encode the new version to ensure consistency of insurance going forward. SVB accounts getting a full bailout without any formal shift towards that being the future policy felt arbitrary - either we want that policy or we don't - lets not just change the rules for a single case.
- triceratops 9mo ago
  Agreed.
- YetAnotherNick 9mo ago
  > SVB bailout There wasn't any bailout at all. This entire thread is so confusing. But yes they got 2 days or something of deposit freeze IIRC.
  - munk-a 9mo ago
    My apologies on the imprecise language - maybe "extension of FDIC account insurance beyond the standard 250k limit to depositors" is better terming? SVB came out of this broke - as they should for such mismanagement - but the concern is that depositors were made whole beyond the amount usually insured by the FDIC.
    - SpicyLemonZest 9mo ago
      It's not a question of terminology. As you say, SVB came out of it broke, but their stuff didn't burn to the ground - their operations and assets were taken over by a bridge institution Silicon Valley Bridge Bank, which was then quickly acquired by First Citizens Bank. Where's the point where the depositors should have lost money? Would it have been fair for First Citizens to tell every customer who had over $250k in their account "sorry, we've taken the rest as an acquisition bonus"?
    - YetAnotherNick 9mo ago
      No, not only there was no extension, there even wasn't 250k given by FDIC. Absolutely no taxpayer money or even FDIC money went into the collapse.

munk-a 9mo ago

I dislike that the SVB bailout happened without a revision to FDIC insurance rules. It felt like a good time to reevaluate those rules (if the limit needs to be raised then lets raise it) and encode the new version to ensure consistency of insurance going forward. SVB accounts getting a full bailout without any formal shift towards that being the future policy felt arbitrary - either we want that policy or we don't - lets not just change the rules for a single case.

triceratops 9mo ago
Agreed.
YetAnotherNick 9mo ago
> SVB bailout There wasn't any bailout at all. This entire thread is so confusing. But yes they got 2 days or something of deposit freeze IIRC.
- munk-a 9mo ago
  My apologies on the imprecise language - maybe "extension of FDIC account insurance beyond the standard 250k limit to depositors" is better terming? SVB came out of this broke - as they should for such mismanagement - but the concern is that depositors were made whole beyond the amount usually insured by the FDIC.
  - SpicyLemonZest 9mo ago
    It's not a question of terminology. As you say, SVB came out of it broke, but their stuff didn't burn to the ground - their operations and assets were taken over by a bridge institution Silicon Valley Bridge Bank, which was then quickly acquired by First Citizens Bank. Where's the point where the depositors should have lost money? Would it have been fair for First Citizens to tell every customer who had over $250k in their account "sorry, we've taken the rest as an acquisition bonus"?
  - YetAnotherNick 9mo ago
    No, not only there was no extension, there even wasn't 250k given by FDIC. Absolutely no taxpayer money or even FDIC money went into the collapse.