Fractional reserve banking is basically giving banks the authority to create money on behalf of the government. They didn't create any extra money to cover this.

this is also a good point.

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...

No money was printed, this will all come out of the FDIC's coffers, which is filled by banks paying essentially insurance premiums. It'll be covered by selling SVB's assets, with any gap covered by an additional assessment on banks.

I think that you need to read more into what backstops the FDIC.

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...

It's not like the entire 160b at svb went poof. Fdic takes everything svb had and that covers A LOT more than just 250k per customer. Sure a little bit off the top would have been missing, but yellen figured covering that small gap out of the fdic's pocket was worth calming down the panic. All other banks will be assessed a little bit more for their fdic coverage and the fdic is made whole in just a few months.

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.