"It's not all tax payers, just all tax payers with bank accounts", which is basically all tax payers.

Sounds like word games played by people in charge to have tax payer bailouts using two layers of obfuscation.

And also "people with bank accounts who don't make enough to pay taxes" like my grandma.

Normal/poor people don't put enough money into banks for it to represent much of their earnings. IIRC, from that image that was circulating around, much less than half of the deposits of even BofA are from accounts <$250k. So I don't think accounts like your grandma's are going to bear any percentage of the brunt of this.

> Normal/poor people don't put enough money into banks for it to represent much of their earnings.

This is hurtful in more ways than one. Banks routinely charge all kinds of fees from account maintenance to whatever Wells Fargo did for years.

Retail banks won't let the Federal Reserve open a bank account for everyone by default with the Fed.

Either what you say is true and the retail customers are insignificant, and banks must offer no fee accounts. If not, they can't block federal reserve from creating default USD accounts for everyone.

Or they are an important part of the bank's marketing strategy or whatever. In this case, banks must lose the ability to gamble customer funds.

Which one is it?

> Retail banks won't let the Federal Reserve open a bank account for everyone by default with the Fed.

Actually the FED is opposed to this themselves. A company called the narrow bank was going to try this. The FED refused them a banking license, all the way to court.

The FED wants deposits reinvested into the economy.

Quoting from: https://www.econlib.org/why-does-the-fed-oppose-narrow-banki...

> A narrow bank takes deposits and invests the money in interest-bearing reserves deposited at the Fed. Because that’s all these banks would do, they would be very low cost and hence could pass along to depositors the interest earned on reserves, minus a small fee.

> Narrow banks could attract many large depositors, who currently receive much lower interest rates on their deposits at ordinary commercial banks.

It feels like they were offloading their cost to a service that the government maybe offers at a loss.

It's not so much about the loss, its about the fact that banks lose their depositors. It is great for an economy that the 'savings' of people are used to safely invest in good ideas. This is the function of banks, and incidentally a function that really benefits from a profit motive.

Hence I believe the Fed was against this to keep the economy running by 'keeping money rolling'.

I am not convinced by this argument* because banks can already do that. I don't think that bank are "required" to invest client's deposits, so they can already just stash paper cash in a big vault. It is clearly a dumb strategy for a retail bank.

This proposal for narrow banking seems to employ the government as this vault, sort of like treasury bonds that can be freely withdrawn, which seems a more significant difference.

* I am not denying that this is what the feds claimed and/or believed

Weird… why are so many account holders at BoA depositing more than the FDIC insured amount for an account?

It’s deposit volume rather than number of accounts that are over $250k. I’m sure that most of the accounts are <$250k, but a single $1m account accounts weighs the same as 100 $10k accounts.

But why is anyone holding $1M in an account insured up to $250K?

Many companies pay out their workers more than $250k per pay period.

If you have 100+ employees for payroll.

Yeah, the fees and lower interest rates from this will be pretty brutal for the poor. Not using tax dollars is actually pretty regressive.

Most people get so little interest from their accounts that it is basically immaterial

They only need to cover 20 billion or so for SVB? In the grand scheme of all banks, that's not a ton. SVB wasn't some FTX oops it's all gone level fraud.

Assuming it's a one time charge and not a contagion, it sounds like why we have government and FDIC.

$20 Billion is roughly $60 for every person in the country

It's more the state government budget for about 1/3 of the states in the union

128 billion in the FDIC reserves as of December 2022. Better than letting more dominoes fall if you're trying to preserve that insurance pool.

> Yeah, the fees and lower interest rates from this will be pretty brutal for the poor.

I'm fairly sure the poor aren't that affected by interest rates - the very definition of being poor is not owning much in the way of assets that could earn interest...

It's not only the earned interest on savings being discussed here, the OP was also including variable high interest rate loans that most poorer borrowers qualify for.

5 basis points was the last special assessment in 2009. Would you seriously notice a 0.05% lower rate of return on your account?

An assessment on banks costs shareholders of the bank, not accountholders. (Maybe it indirectly costs accountholders if banks lower interest rates on customer deposits, but these rates are generally not affected by a small short term shock).

It might seem unfair that shareholders of random other banks have to pay for this but no more unfair than accountholders of SVB paying for it.

More of the population lacks banking services than you think. According to a pre-pandemic report, IIRC, very large number have <$600 savings.

Being unbanked is on a whole other level : no cheques, no debit cards, savings vulnerable to theft...

They’re spinning it because no politician or appointee wants to be on record as bailing out Silicon Valley, venture capitalists and Crypto.

But the end result is the same: a tax on everyone to bail out Peter Thiel and friends.