Reply to SVB Bank Run: Fed Calling Emergency Meeting

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Jesus, they're predicting bank runs on Monday.  What is this, 1929?

Hold on to your butts folks.  This could get ugly quick.  What company in their right mind who does business with smaller/regional banks would keep funds over $250k in them now that they're watching SVB fail?  It is scary to think how this could spread and cause a nation wide bank run.[/quote]

[b]That’s why depositors need to be made whole.[/b] It’s fine if equity holders in SVB lose out. But if people don’t have faith in smaller banks, this could spiral out of control extremely quickly. [/quote]

No - they do not need to be 'made whole'.  They were aware of FDIC when they opened their accounts (and were able to buy insurance for deposits that exceeded FDIC limits if they chose to do so.

If you think that depositors in any bank need to be 'made whole' if the bank collapses then we are into a completely different regulatory scenario.

If the feds are required to make depositors 'whole' if their bank collapses - then we really don't need private banks at all.  Instead, the feds can just turn itself into a public-offering bank, accept all deposits and the associated liability.

Sorry but 'private banks accept the deposits + the profits, the feds pay back when that fails" isn't actually a thing.

[/quote]

Great way to collapse the entire country and economy and we can live in Hoovervilles all over again. Where exactly can businesses store their money then just to function and to do things like pay payroll, buy supplies, and pay bills?  If your small company has $10-20M, you cannot spread it out over multiple banks at $250k a clip. It is absolutely not feasible. The economy only works when people have faith the banking system works. No banking and we go back to the stone age.[/quote]

That is true but at the same banks need to do a better job scrutinizing their high value depositers.  No bank could have survived the sudden withdrawal of $40 billion that happened to SVB.  It was an organized and intentional attack on the system by a vulture capitalist.  [/quote]

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