Comment by anonymars
1 day ago
> Anyone with deposits in an accredited bank should be made whole - always
Sure, but is that the case now? Is everyone made whole when a bank fails and they have more deposits than the insurance limits? Or only when it's the well-connected / too-big-to-fail?
Looks like the answer is no: https://www.wsj.com/finance/banking/a-small-banks-failure-le...
So I don't think it's unreasonable to describe SVB as a bailout. Not for the investors, but for the depositors. Has anything changed to reduce the moral hazard / make it less likely to recur?
> Sure, but is that the case now?
Pretty much and has been for awhile.
https://nyulawreview.org/wp-content/uploads/2025/05/100-NYU-...
In early 2023, within the span of two months, the United States experienced three out of the four largest commercial bank failures in U.S. history, as Signature Bank, Silicon Valley Bank, and First Republic Bank all toppled.1 Yet, despite these banks having roughly $300 billion in uninsured deposits at the time of their failures2 and despite the failures costing the Deposit Insurance Fund (DIF) of the Federal Deposit Insurance Corporation (FDIC) an estimated $38 billion, uninsured depositors took no losses in any of the failures.3 While these results were striking, they were far from unusual. Since 2008, uninsured depositors have experienced losses in only 6% of total U.S. bank failures.
...
Formally, the United States caps deposit insurance at $250,000 per account,6 but, in reality, the post-2008 financial system comes close to providing de facto total deposit insurance covering all amounts in all accounts.
So we all now know that a bailout DID occur with the SVB depositors who had all their money in the bank and most deposits were over the FDIC insurance limit. The FDIC insurance rules somehow didn't apply here because there was too much money at risk. (And too big to fail).
But if there was a bank failure at a regionally smaller bank with a regular customer or startup depositing the same amount of money over the insurance limit, their money is gone.
Just like Intel got a "bailout" from investment as chosen by the US government, AI will eventually have a very similar story.