So we have a bailout. In case you missed it, SVB successfully lobbied Congress to weaken dodds regulations. So in a way, similar to 2008, Main Street pays so the rich will not loose their funds.
This is not a bailout in the historical sense of the word. Equity holders in the bank are getting nothing. They'll be wiped out. Senior leadership has been removed.
All this did was protect _depositors_, the people who put their money in the bank and thought it would be there tomorrow. And it's being done by dipping further into the FDIC fund, which is paid by banks. It will reach down to taxpayers likely through reduced rates or increased fees.
It is absolutely in the collective market's best interest to retain confidence in the bank infrastructure of the nation. There were already people lining up at First Republic over the weekend, Signature Bank was shut down as part of this same announcement, and almost certainly more would have come in the following week.
The collapse of a ~$200B bank was going to have significant ripple effects that would almost certainly have exceeded the fees that banks will pay to fill in any shortfall resulting from this backstop, whether they're ultimately charged down to account holders or not.
Why are people so freaking obsessed with passing responsibility onto depositors. It’s perfectly reasonable for the government to be responsible for protecting money as property, just like we do with every other property. Unlike a house which needs maintenance, money is a virtual good. There’s nothing I should have to do to maintain my claim on my bank account.
> There’s nothing I should have to do to maintain my claim on my bank account.
Thats a wrong statement. You are thinking of money as a public good and thats how it should be, but thats not what it is now. Your claim is against a private enterprize.
You could have access to risk free sovereign money with the central bank and its entirely possible. But private banks are livid against it because it would deprive them of precisely the kind of game that blew up in their face with rising interest rates and discounted government securities.
Ultimately this is not about idiot VC depositors and whether they deserve a haircut or not. Its about idiot bank managers and whether they deserve extracting rents from the entire economy doing basically nothing.
Bank bailouts in 2008 were not made to bail out 'the shareholders'. They were made to bail out the sunken assets inside the banks so that those banks could continue operating, including still 'having' the depositors' deposits. Because if the bailout was not made, all of those deposits would go away due to there not being assets enough to cover the deposits.
That's what a bailout is. And this is precisely that.
