No bailouts for #SiliconValleyBank or its depositors. Insurance has always been there, and those companies that didn't buy it are the ones responsible for taking that risk. https://www.theguardian.com/business/2023/mar/12/silicon-valley-bank-collapse-no-bailout-janet-yellen
@lcannell @eighthave Best option for that is sweep accounts. Which either put excess amounts into various other FDIC banks but treat them as one or send the excess to Money Market Funds. There is no one that I’ve seen offering straight deposit insurance - the products instead seek to cover the excess by money movement of some kind.
Bailing out #SVB depositors means that the insurance premiums go up for all depositors. FDIC money comes from banks paying insurance premiums. #SVB is getting special treatment. I think we're back to #TooBigToFail, this time the #SiliconValley is taking the lead, not #WallStreet.
Plus #SVB was actually fighting against expanded deposit insurance, so why should the banking system bail out depositors in such a bank? https://www.levernews.com/svbs-lobby-groups-fought-proposal-to-bolster-deposit-insurance/
@eighthave @Siberian Yes, I agree. We are back to too big to fail, which is why it was deemed a "systemic risk exception"
@lcannell @Siberian the #US could instead bail out the depositor companies by taking an ownership stake, in which case they would not fail, and then it would not come out of the FDIC bank fees. I suppose this is better than 2008, since the bank owners are not being bailed out. But I still think back room deals to bail out private companies is corrupt. If FDIC insurance for all deposits is a good thing, then change the laws and regulations to make it so.
@lcannell There are many tools to manage financial risk, I've never heard of buying extra #FDIC coverage. But a quick search for "private deposit insurance" shows many options. Isn't the #US supposed to be a #capitalist system built around private enterprise? That's the typical story, but the truth lies somewhere else.
@eighthave I don't want to get into an ideological argument, just thought you might know of something practical. US government often steps in when private options are possible, such as flood insurance.
@eighthave Taking these kind of actions is what keeps the US Banking system on solid foundations. The treasury, FDIC, and Federal Reserve all have been a key component of keeping the system stable through shocks like this.
@Siberian I think the FDIC is a great idea, my point is that it automatically covers a fixed amount of deposits. This is widely known and documented. Those who deposit more than that in a bank are taking risks. If you have that much much, you have resources to manage risk. But here, we have typical US #socialism for the rich. Oops, I left my millions in a risky bank that cratered, the US Gov will bail me out. But if I lost my job and can't pay my mortgage, sorry tough luck, this is #capitalism!
@eighthave This is the first I've heard that depositors can buy insurance themselves. Can you please provide pointers to such providers? Is there an extra rider I can purchase from FDIC? #svb