Our memories are too short and our collective greed is too great.
Fractional should only be allowed if fully insured. which would make it cost inefficient, so they wouldn't do it.
and that should tell you something about fractional reserves...
Taxpayers do.
FDIC pulls from the Treasury when they can't cover what's needed. FIDC are only meant to cover up to 250k but it looks like Yellin has decided to cover a lot more than that, and that will come from the treasury.
>The FDIC is not supported by public funds; member banks' insurance dues are its primary source of funding.[8] When dues and the proceeds of bank liquidations are insufficient, it can borrow from the federal government, or issue debt through the Federal Financing Bank on terms that the bank decides.[9]
https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corp...
So if anything it's a small short term loan from the money taxpayers already set aside as the fdic to cover the gap at svb.
No money getting printed, no tax hikes.
The confidence in a system where 'nothing bad ever happens to nobody' is at historical minimums actually.
After the lockdowns, the experimental vaccine, 3 Trillion spending, free money for everybody etc... people aren't stupid. They understand that forest fires are needed for a healthy forest. And this is true in any context.
In the last 3 years we have seen the fire brigade and the 747s water bombers being summoned as soon as even a small spark is seen (or even projected to appear).
Whatever solution engineered by humans will always be way inferior vis-a-vis Natural selection. This is true for virus, bacteria, antibiotic resistance and also bank failures. Not to mention how the solution is 99.999% of the times just kicking the can down the road, as it happened in the last 3 years.
Aaron Klein (former Treasury official, now with Brookings) agrees with you:
>There are just under 5,000 banks in America ... the right answer for the number of banks to fail in a year is greater than zero. If you have no bank failing, then you probably have bigger problems in the economy. Look, the first time in American history you went a year without a bank failure was 2005. 2006 was the second year and the regulators told us at the time, that they'd won, that this was great regulation, see, no one was failing, the system couldn't be safer. Kablooey.