What am I missing?
Silicon Valley is “building the future”, but at the same time can be very disconnected from the lives of many people around the country. That leads to mistrust and lack of empathy when these kinds of things happen.
1. Increase the amount of funds covered by FDIC insurance
2. Reduce the potential for loss of funds by a bank failure
I get that it's a pain in the ass to manage a bunch of accounts, but any business with >$1mm in cash reserves really should have everything but their operational float in a CMA or manually move it around themselves into multiple banks. When I see comments about a startup that had $x million in cash with SVB I have to wonder what the hell the founder and their investors were thinking keeping all of that in a single place.
This guy who has spent years (decades?) constantly whining about how government regulations are excessive and federal agency should be curtailed and government should stop protecting various groups from harm etc. is now suddenly crying out for urgent government help once something is hurting him and his friend circle personally.
Part of the issue here is that SVB was able to get into trouble because important regulations and safeguards were removed years ago.
The ones that exist to minimize the wider impact of a bank failure are working, and I don't see anyone upset about that fact.
An alternative is to bankrupt the partners, cancel the shares, then take action for depositors
That is what did not happen in 2008
Let them crash and burn, they shouldn't have all their assets in one bank.
its not just government bailout versus nothing. private equity could have come together and tried to shore of the bank in its capital raise, but nobody (not enough) wanted to be first. their own collective risk aversion is their demise. And on the greed front, people totally plan to buy the carcass and firesold assets.
Dilution and share classes also are worse nowadays I believe.
