I'm not a supporter of bailouts in any sense.

But obviously there's a difference between fixing things so someone receiving what they signed up vs someone not paying what they signed up for

None of the SVB customers signed up (or paid premiums) for unlimited depositor insurance. Nonetheless they will now receive that, paid for by a new assessment (tax) on other banks and their customers.

They expected (with 99.8% confidence) to be able to retrieve their deposits in full.

So the 0.2% scenario is turning out different.

If insurance company had assessed the risk as 0.2% the premium would have been miniscule. But they still didn't pay it, or the risk was not 0.2%?

Students took the loans before the expectation of government pay-off existed.

For their own benefit? Seems like an educated population benefits everyone, hence why we spend a portion of the national and local budgets funding schools kids can go to for free. The big miss in the usa seems to be not extending this idea to higher education - perhaps this is why the usa is so dependant on immigration for jobs that require higher education.

Student loan forgiveness seems to be one way to do that. I don't know why they don't just nip at the bud of the problem and subsidize education from the get go though.

WRT student loans: I am not clear why the law cannot change to allow them to be discharged in bankruptcy like every other debt. It seems to me that would make things better for everyone. I do not thing people w/huge student loans would all just a. immediately declare bankruptcy, and b. get their debt forgiven.

Federal student loans can’t, absent unusual circumstances, drive anyone into bankruptcy. The government offers income contingent payment plans. You only have to pay if you make enough income. The same thing that happens in a restructuring bankruptcy, which most people have to use after bankruptcy reform, already happens with student loans automatically.

This is also why it is so nuts to suspend payments for three years “because Covid.” Anyone that suffered financially already had their loan payments adjusted down and if you didn’t suffer financially why can’t you pay your loans?

Making student loans bankruptable has less to do with protecting students and more to do with 1.) reigning in tuition costs and 2.) forcing lenders to consider risk.

The fact that an 18 year old can get any amount of money, no questions asked, means that institutions have all the incentive to charge whatever they want - their customers will pay almost any price.

There are no lenders. That’s been gone since the Obama administration. It’s almost entirely direct government loans now. If you want them to consider risk or limit the lending amount you need to change the law.

Biden’s forgiveness notably does not come with any such legal change that would plausibly make the problem better in the future. It’s purely a one time sop to constituents.

>As for student debt relief, there's a huge difference between someone depositing money in a regulated major bank and expecting that Federal regulators were doing their job and that their money would be safe,

I've made a couple posts about this already but I don't see how people don't see the optics of the situation look incredibly bad. First off student debt is a special kind of debt, you can't bankrupt it and this has led to several adverse affects, namely skyhigh tuition prices and zero due diligence. You can't say in one breath that CEOs of tech businesses are completely helpless to audit whether their bank is trustworthy, and in another say 18 year olds should have understood the risk they were getting into.

To you it's "disingenuous" but to everyone else it just looks like the haves play by a different system; rig the system against the have-nots, and then tell the have-nots they should been "more responsible".

> expecting that Federal regulators were doing their job

Regulators set a framework that an industry should follow. It is incumbent on industry players to act in good faith and not operate on edge case regulatory compliance. It is not on the regulators that an agent lobbying against the very regulations for stress testing their balance sheet then turns around and does something dumb. Analogously the USDA and FDA aren't not doing their job if a food or pharma manufacturer intentionally labels dog food for human consumption and ships it.

This type of accounting is criminal and needs investigation. So what if your cash isn't performing to make target yields. Its on you to responsibly manage it if that is your stated mandate. And fed rates didn't balloon overnight. J Powell forecasts weeks in advance.

This is not on the regulators. The bank should have operated with a better risk profile. And all these disruptive companies need better financial sense than to be storing their >250K assets in a savings and checking account. I don't know what that answer is I haven't had the privilege.

So what if Stripe recommends this bank to all their clients. Seems like their incentives need investigated. What did they have to gain by funneling a clientele to their bank.

This isn't on the Fed or Treasury or SEC. Though their response may create future problems arising from this assurance.