Short-term bonds have low risk. Long-term bonds are volatile and can go up or down opposite interest rates. SVB made a huge bet on interest rates not going up, and lost. In an alternate world where interest rates went back to zero, they could have made a sweet profit. Banks should have limits on how much they can gamble like this.

Making depositors share more in the risks would hopefully make them more risk averse, causing them to move their money before it's too late.

I'm not sure about that. As a depositor I put my money in an account and forget about it. We do have to put money in an account, right?

I think about that money again when I want to invest it or when I need it to buy something big. Everything else is ATM and credit card, or equivalent stuff. But getting money from a customer or an employer and automatically adding it to a bank account should not become the same thing as investing in the stocks of that bank. Keeping at least a weekly eye on my bank is too much of a burden. The only thing I do is make sure that my balance is well below the limit the state will pay back to account holders is the bank blows up. That's not difficult.

It gets difficult as you grow. A monthly payroll for 40 employees is around $500k, which all goes out on the same day. You can't avoid having that much money in your checking account. A well-run barely-profitable company might float between 3 and 6 months salary in the bank, with spikes and dips when they get paid or buy equipment. Businesses like that need accounts capable of safely holding several million.

You could stick it in a money market fund that only invests in short term government bonds, for example. (Or a bank that does the same.)

> I'm not sure about that. As a depositor I put my money in an account and forget about it. We do have to put money in an account, right?

It would be preferable if the regulatory environment would make sure that you as a depositor have an incentive to hold the bank to account.

Yes, you shouldn't have to keep a weekly look on your bank's soundness. You should be able to outsource that burden easily.

Eg with FDIC gone, private deposit insurance would still be allowed. And of course, journalists would also still be allowed to report on banks. Those stories might have a wider audience than now.