This is not the slam dunk analogy you think it is. Buying stocks is too darned complicated, which is why even the most astute, sophisticated hedge fund managers cannot beat an index fund on any significant timescale. Because even with all of the publicly-available information, and thorough analysis, you still cannot be sure what is happening internally at any particular company.
Similarly, it is quite literally -- and I do mean this literally -- impossible for anyone to conduct a meaningful and ongoing analysis of their bank.
This leaves basically three options:
* Buy private insurance, which is a fool's errand, as there's no guarantee it would make you whole in the event of a major black swan event.
* Split your account up into an absurd number of institutions. (You get FDIC insurance only per depositor, per account category, per institution. You can't open more accounts of the same category at the same institution).
* Place all your money at one of the Systemically Important Banks, where you basically get unlimited insurance.
Please explain what you thin the rational thing to do here is.
Is that really your total understanding of treasury management? You believe all American companies do 1 of 3 things with their cash, and it's those things?
Anyhow, yes, buying stocks is too complicated to be a sure thing. But rather than banning the process, we just make sure there are decent guardrails so the average Joe doesn't get too screwed and systemic risk is limited, and then we let people do a capitalism if they want, but on their own heads be it. And whole industries have risen up to help them do it.
It's the same deal with banks. The government's job isn't to hold the hands of people trying to figure out what to do with their millions. It's to protect the small players from predation and limit systemic risk.
I am not a professional in this field, so I'm not going to pretend to give one-size-fits-all prescriptions for something that is obviously complex and context specific. Instead, I will encourage all fellow founders and would-be founders that there are many things where they should just hire an expert. Like law, or regulatory compliance, or the best way to manage millions in cash.
Similarly, it is quite literally -- and I do mean this literally -- impossible for anyone to conduct a meaningful and ongoing analysis of their bank.
This leaves basically three options:
* Buy private insurance, which is a fool's errand, as there's no guarantee it would make you whole in the event of a major black swan event.
* Split your account up into an absurd number of institutions. (You get FDIC insurance only per depositor, per account category, per institution. You can't open more accounts of the same category at the same institution).
* Place all your money at one of the Systemically Important Banks, where you basically get unlimited insurance.
Please explain what you thin the rational thing to do here is.