[jmknoll]

Maybe I’m misunderstanding the issue, but how did the people losing money here make speculative investments? Is there some expected return on opening an account with SVB? I thought these were just normal depositor accounts being wiped out.

[AH4oFVbPT4f8]

They deposited excess of 250k in hopes of getting a better return on the money than traditional banks.

[cirrus3]

You _are_ misunderstanding. They banked at SVB betting on higher returns than other safer options and lost that bet. They were only ever told they would get 250k of that bet back. Now they are whining about it.

[riskneutral]

Do you have any information about how much higher this return was?

In any case, this is a failure of government regulation. If the FAA started allowing cheaper flights on aircraft that had less stringent maintenance standards but let passengers know that it was "at your own risk," then I would question the FAA and the airline industry, not the passengers opting for the cheaper flight.

The $250k FDIC limit on accounts with hundreds of millions of dollars is ridiculous and doesn't sufficiently protect the financial system. That is the regulator's and Congress's responsibility to provide better governance. That a bank like SVB was allowed to exist, with its client base highly concentrated in one very particular industry sector, is also a governance failure.

A startup company's bank account, where it holds VC investment cash and pays out salaries and invoices from, is not something that should experience occasional random disasters where the bank suddenly disappears into a thin air along with your US dollars. This is like a major transportation or industrial disaster, punishing the victims (depositors in this case) doesn't make sense. The focus should be on making the planes, trains or bank accounts safer of future users while compensating the victims of disasters and building trust in industries and regulators. Due to the unique nature of banking, punishing the victim also risks cause the phenomenon of bank runs to spread to other banks and causing further disasters at a time when the economic situation is fragile to begin with.