If you have less than $250K in a bank account, then all of it is automatically protected by law. So yes, all the regular people got similar protection in 2008.

If I had >250K at a smaller bank, I'd be concerned.

It’s time for a lot of people to grow up.

In the end, bank might be preferable option.

It's about guaranteeing that the stewards of very large wealth don't have to practice the conservative risk management strategies available to them.

Ackman isn't wrong that the practical result of bank runs is that all accounts beyond the FDIC limit will suddenly migrate to one of two or three major "too big to fail" banks.

I'm not sure what the solution to all this is but it sure looks like a good time to buy stock in quasi-monopoly bank companies and short all the rest.

Or: diversify bank relationships, diversify asset classes/types, buy private insurance, etc. Deposit risk is not exactly a novelty.

> Ackman isn't wrong that the practical result of bank runs is that all accounts beyond the FDIC limit will suddenly migrate to one of two or three major "too big to fail" banks.

He might be right that immediate reactionary adjustments will rush these risk-blind deposits into big institutions, but FDIC insurance and bailout-able banks aren't the only ways to keep a liquid portfolio largely secure and money will inevitably spread out more prudently once the dust settles.

He just wants a bailout for SVB depositors because he calculated a bailout into his own risk strategy and is now developing that strategy through its next phase by whipping up the political pressure that could make it happen. It's a game.

???

It's a safe place for the units of cryptocurrency identified by it, but those aren't money until it can be exchanged for something. Between you burying that USB key under the old oak tree and you digging it back up post-apocalypse, those units of cryptocurrency will have a very different exchange value. It's no different than tucking currency under a mattress, except that the odds of your 2023 cryptocoin being worthless by the time you pull it out is much higher than that the 20th century's global reserve currency becomes worthless. Although it might go the other way, your wallet contents don't sound like a very safe store of money at all.

These completely mindless dunks on crypto on HN are getting out of hand. You can say it's not scalable, or that it doesn't have a future for A, B, C reasons, or any other number of valid complaints. But instead they've devolved to the most degenerate falsehoods that can be disproven with a single look at the long term chart.

So this will still affect the regular person.

They should definitely NOT do a 100 cents to the $ bailout...Someone needs to take a haircut

It seems weird that a company paying someone less than $5K a month would need $250K in the bank. we had $100K seed check at my startup and I got paid $6K per month as a counter example.

My claim is that the bank accounts of regular people in 2008 were in fact protected, since anything under $250K is automatically protected, in exactly the same way proposed here.

Investors certainly lost a lot of money in 2008. And investors in this bank will lose all their money too, since bailing out the bank's investors, or the bank as a business, is not being proposed by anyone.

Do you really think it's sensible to let healthy companies fail and people lose their jobs or keep working without getting paid because other people had to wait far too long to recover their 401k?

This logic of equal misery makes no sense to me.

That’s what’s at stake here, the companies would prefer to have all their money, right now. They could have almost all of their money if they are happy to wait, or they could pay, out of their money, to have their money right now.

Don’t fall into the trap of corporate sympathy here, they would not do the same for you.

Yes, I just worry that some of them might not be able to sort this out quickly enough on their own.

Also, the total amount of similarly illiquid government bonds is gigantic after interest rates have shot up so quickly. Let's not make the Lehman mistake again. It's not worth sacrificing the entire economy to ideological sensitivities (on both sides of the political spectrum).

No but I also dont think its sensible or healthy for tax payers to cover losses incurred through mismanagement of funds for a select class of people.

An opportunity was just created for companies willing to take a risk to gain new clients, I think that should be allowed to play out.

In general, I disagree that it is never sensible for tax payers to act as insurance of last resort provided that the insurance premium in the form of business taxes is adequate. It can be the least worst solution for society as a whole in case of a domino effect. But this is not (yet) what's happening here.

The market already has adequate solutions, while these shortcut intervention ideas have moral hazards. Why cant other companies that see the opportunity take the required risk?

There has been a massive inequality exacerbating bull run with record profits but the beneficiaries want to avoid even the slightest downside of that risk-taking. If my understanding is correct, this kind of behavior is trading short term instability for potentially massive long term tail risk.

I.e. "high-risk businesses that did not assess the risk of their bank (or banks) properly." That's not a good reason to shift the risk penalty to the taxpayer, IMO.

Banks are heavily regulated. They have to pass stress tests all the time. The regulator is paid for by the taxpayer to stop things like this from happening, but apparently they were asleep at the wheel.

Also, helping depositors out of this mess doesn’t necessarily mean that taxpayers lose a cent. It’s a timing issue. The assets are there.

Maybe the Wells Fargo executives could start another bank, but making you lose all your money doesn't do anything to prevent that.

This feels like an Ethereum thing. Code is law, but not if it's inconvenient.

Buying private insurance leaves you open to the risk of the insurance company going bust, and, it not being mandatory means people can take the risk and then come crying to the US Treasury to solve this unknowable systemic risk that everyone actually does know about--which we're already seeing heavy pressure from people to bail out these depositors who are above the insurance limits

On the other hand, if I managed a large liquid asset portfolio and I considered having Wells Fargo provide banking services, I would know that my deposits would not be implicitly insured and that any substantial deposits were more like a loan to the bank, subject to their own illiquidity and insolvency. Because that's how banks work, except for the specific carve-out for small accounts. Thus, I would practice risk management suitable to my needs by vetting my bank(s) practices, diversifying my holdings, buying private insurance, or just hiring a professional who I could entrust to manage those things for me. Thankfully, because I have a large liquid asset portfolio available, I can afford to do that.

So at the end of the day, any large deposit I make with Wells Fargo is actually a risk-laden investment that I've made a calculation to play, just like that equity share that you bought on the stock market.

So I'd be extremely skeptical of any stories accusing executives of dumping stock, they are almost always benign.