Re:Yellen says government will help SVB depositors but rules...
by danenania on Sunday March 12, 2023 @05:36PM
(#35126599)
If the deposits are insured, a bank failure is far less likely in the first place.
It might be efficient for the FDIC to require complex and expensive financial engineering just to keep operating capital safe, but it's hostile to businesses, especially small ones, and is out of reach for many.
Re:Yellen says government will help SVB depositors but rules...
by dragonwriter on Sunday March 12, 2023 @06:00PM
(#35126860)
> It might be efficient for the FDIC to require complex and expensive financial engineering just to keep operating capital safe, but it’s hostile to businesses
The FDIC exists to protect against a general collapse of banking like the one that preceded the Great Depression, not as a generalized subsidy to business.
FDIC doesn’t want to insure that much against a single bank failure. Encouraging diversification of large balances helps the FDIC’s goals, since it reduces the impact of single bank failures and reduces the possibility of single failures turning into broader economic collapses without increasing the cost to the Treasury of a single bank failure, which is an efficient way of promoting the purpose for which the FDIC exists.