Since I’m spamming anyway, not sure if this is the correct channel, but what do you all think about the recent moves regarding SVB? I see a potential value to the bailout in terms of stopping an all out bank run, at least to protect regional banks, but the other side is the חוטא נשכר dilemma- all banks pay into fdic, most chose to invest more responsibly and lose the upside, while the biggest risk taker gets bailed out, not to mention how much future increased risk we can potentially see! Not that it matters, but just for kicks, do you all feel that the fdic made the correct decision?

Isn’t the FDIC just fulfilling its promise of insuring depositors 250k? Isn’t it obvious that they should back up the amount the were responsible to?

I mean beyond the 250, as SVB was 93% above the limit IIRC (because it’s largely used by corporations) To be honest, one of the reasons I’m asking is there is a lot of discussion online spinning it as a “greedy corporations/lobbyist situation” (for example, apparently gov Gavin newsom had uninsured holdings there) so it’s hard to see objective discussion

As far as I am aware, the FDIC did not bail out SVB in anyway and didn’t insure any depositor more than the 250k

I dont know the exact details, but they are ensuring that the lower rate bonds aren't taking the markey losses due to the change in interest rates so that they can have liquidity. I think they're effectively fronting the money until the bonds mature.

i mean if they are municple bonds that isn’t really much of a bail out

https://abcnews.go.com/amp/Business/bailout-federal-government-bailout-silicon-valley-bank-signature/story?id=97846142 It’s not a bailout in terms of giving money to svb, they are paying depositors and will be reimbursed by the bonds maturing, but this will nevertheless cost other banks insurance money, as well as lower the cost of risky investments for banks

"The biggest risk taker gets bailed out" - I thought the ones getting bailed out are the depositors. The risk they took was depositing their money in a bank. The biggest risk takers here are the people running the bank, who lost their jobs, and the people who invested in the bank, who lost their investments. No?

@mysterious-tomato-10057 depends on these statements. Not sure which uninsured depositers lose.

Depositors will have access to all of their money starting Monday, March 13.

Shareholders and certain unsecured debtholders will not be protected.

https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm The media reports made it sound like uninsured will get 100% coverage.

The FDIC is making every depositor whole. To do this, they will charge every other bank fees which those banks will pass on to their customers. So all of us are paying to make whole SVB's customers. It may help save keep the economy a little healthier, but it may also have happened a little faster because SVB's customers had connections.