https://www.youtube.com/watch?v=Bcvl104tyRY

Yellen says unsecured depositors at TBTF banks will always be bailed out, but those at smaller banks are on their own. It's one of the most incredible moments I've witnessed. I'm not sure if there's some hidden agenda being pursued, or if Yellen is just so far removed from the real world that she doesn't understand the consequences of her statement.

I'm not sure why any company or individual would hold >$250k at a non-TBTF bank after this. It borders on financial malpractice.

Even if it some sort of a hidden agenda and [further] centralizing banking is just seen as a convenient stepping stone towards CBDCs or whatever, you'd come up with some passable explanation ahead of time. I mean it's not like the Senator there pulled out some gotcha she couldn't have expected.

Yes we all know the previous President famously kept his family far away from the levers of power.

I mean, if there was ever a time to know the people supporting the current regime are in a cult, look no further.

I’m assuming the point you’re trying to make isn’t actually about nepotism and you’ve simply misunderstood what the word means.

Like, say, John F. Kennedy's brother.

I think about these crises the same way. They had 48h to sort it out and they had to make a decision. The decision has side-effect-like consequences. Should she now lie about this?

So now, why did they only have 48h to make a decision? I don't know. I doubt nobody has thought about this before. But I assume that regulating banks is particularly hard, because of lobby pushback and the banks ability to exploit any loop hole quickly. They are literally organisations that look out for how to make money by exploiting asymmetries. These organisations work against the slow democratic decision making that involves non-aligned actors (who are also often not trained in this particular issue) in the upper and lower houses of parliaments of different countries.

Another question is. Why are small banks treated differently than big banks. I have read somewhere that small banks have less regulatory oversight. Maybe the decision is much more to support heavily regulated banks and not so much those which are for various reasons not as much regulated. Why would the government want to hold the bag that it was not allowed to look into?

OODA loop? https://en.wikipedia.org/wiki/OODA_loop

One would hope that there were some specialists at hand that know parts of the system, laws, implications on the overall economy etc.

There are likely a couple of plans available how to deal with this kind of situation. But likely not for this exact situation. Plans that exist but have not been implemented as policy likely are too rough around the edges or have significant opposition for different reasons.

On top of this, at this level of complexity and abstraction everything is kind of an opinion until tested and proven (but no time for that). Because no one truly understands all details and system connections.

On top of this in government you never know 100% what the motivations behind all these suggestions and plans is. What is factual, and what is politically tainted.

So all of the sudden things turn from certain to probabilistic. The leader has to figure out how to weigh the opinions and how to make a coherent enough decision (remember this is a system, and individually good decisions can be bad when taken together) to be net positive until the structured decision making can catch up.

Hopefully this is what is happening now and a general policy is decided on based on structured analysis. And hopefully it is quick enough to be ready before the next crisis hits.

Central bankers are appointed based on two criteria:

1. A willingness to print money for the government so it can spend more than it raises in taxes.

2. Looking presentable, sounding sophisticated and emitting enough bafflegab that (1) seems scientific instead of ideological.

Thinking deeply about economics and the role of banking/central banks in society is an anti criteria, because if you did think about those things you'd end up concluding that the only fair and stable solution is way less money printing and quite possibly none. That would directly undermine the government that appoints you. Your salary depends on you not understanding your own area of specialism.

I do feel like the defining characteristic of the 2020s is turning out to be people's struggle to accept the horrible truth that government officials/scientists who claim to be experts systematically have no idea what they are doing.

I agree SVB and Signature uninsured deposits shouldn't have been guaranteed, but that's not quite what Yellen said. The $250K guarantee applies to deposits at all insured banks. Having clarified that, Yellen said:

> A bank only gets that treatment [guaranteeing all deposits] if a [super] majority of the FDIC, a super majority of the FED board, and I in consultation with the president determine that the failure to protect uninsured depositors would create a systemic risk and significant economic and and financial consequences ...

From: https://www.cnbc.com/2023/03/16/svb-signature-bank-failures-...

> Treasury Secretary Janet Yellen told senators that government refunds of uninsured deposits will not be extended to every bank that fails, only those that pose systemic risk to the financial system.

The government outsourced this responsibility to the Federal Reserve at the same time that a federal income tax began.

There are 3 main ways to balance a government budget. Spend less, raise more funds through taxes, or make the scale of debt decrease through inflation.

More like government is privatized

And if you save one bank, it restores confidence in the other banks against a bank run. Otherwise I was thinking of removing money in all banks combined.

Instead, why don't you look at how many people have lost uninsured deposits since the FDIC was created in 1933? You'll find its extremely low to nonexistent. Thats because while the FDIC has a 250k insurance limit, it does its absolute best to not use it- Usually by coordinating a bank sale or private-public rescue plan.