[AlchemistCamp]

In the case of the depositors, they put their own money into an account and want to be able to spend that money to pay their employees. It might easily cost the government even more in lost tax revenue if the thousands of companies cannot make payroll due to a banking failure, thus forcing them out of business and their employees out of their jobs.

In the case of students, they borrowed money that was not theirs, spent it and don’t want to have to repay it.

IMO student debt forgiveness has a major problem of essentially punishing those who did repay their debts and the many, many more who didn’t go to college in order to help those who borrowed and did not repay their debts. There’s an additional problem in that college costs are spiraling out of control, largely due to easy loans that students can never escape.

The solution I’d rather see is to let student debt be discharged via bankruptcy again. This would let people in a tough spot get a reset and it would also encourage lenders to be a bit more judicious and maybe even apply some downward pressure to tuition rates.

[throwmeaway1212]

>In the case of the depositors, they put their own money into an account and want to be able to spend that money to pay their employees. It might easily cost the government even more in lost tax revenue if the thousands of companies cannot make payroll due to a banking failure, thus forcing them out of business and their employees out of their jobs.

But the money over $250K doesn't exist anymore if the bank is gone. It doesn't matter what they would use it for. This was a risk calculation, people put more that $250K into the bank assuming nothing would ever happen, it did, and now people want all their money back regardless of the risk they should have been aware of. But the contract/rules depositors signed up for the money is gone. Now those companies want money that doesn't exist anymore. They were playing roulette with very very low odds, but odds none-the-less.

The tax revenue aspect is nonsensical when compared to student loans as you could quite easily say getting rid of student loans would allow people to have more money to purchase more things for the government to get tax revenue on.

[lapcat]

> In the case of the depositors, they put their own money into an account and want to be able to spend that money to pay their employees.

Their own money. Well... aren't these mainly venture capital based startups? It's not actually the money of the startups but rather the money of the VC funds. So the situation is more similar to student loans than you portray it.

In fact, the ideas behind VC startups and student loans seem very similar. In both cases, you have people who lack capital — the startup founders (some of whom are as young as students and may even be students) and the students — and people who do have a lot of money — VC funds and the government — give them money in the hope that it'll help these people make money in the future and pay back the investment.

> It might easily cost the government even more in lost tax revenue if the thousands of companies cannot make payroll due to a banking failure, thus forcing them out of business and their employees out of their jobs.

That's an argument to bail out every failing business. Why this one in particular? Why not every one?

Anyway, it's not the job of the government specifically to maximize tax revenue. If the government needs more tax revenue for some reason, they can raise the tax rates. But interfering directly in the free market is not the way to do it. Bad businesses are supposed to fail. It's morbidly funny how many people rail against socialism until they're the ones in need of assistance.

> In the case of students, they borrowed money that was not theirs, spent it and don’t want to have to repay it.

This is a very one-sided description, making it sound like the students stole the money. There are two sides to every loan, the borrower and the lender. The lender in question here was the US government itself. The government lent the money to people who could not afford the loans and who had no collateral for the loans. In other words, without regard for the ability to repay. If a bank did this, the bank would go out of business. But then by your own argument, there ought to be bailout. ;-)

> essentially punishing those who did repay their debts

How so?

> the many, many more who didn’t go to college

Forgiveness of student loans is not a punishment to these people. The punishment was the high college costs and society's requirement that job seeker have college degrees. Both debtors and non-debtors are punished by this situation; they just suffer the punishment in different ways.

> encourage lenders to be a bit more judicious

You're missing the part where the lender is the government. These are direct government loans, which is why the government has the power to forgive them. The government cannot forgive private loans.

[AlchemistCamp]

> Well... aren't these mainly venture capital based startups? It's not actually the money of the startups but rather the money of the VC funds.

No. They literally sold pieces of their businesses for that money.

The equivalent for students would be if instead of borrowing the money, they signed over a percentage of all future earnings for the rest of their lives.

[lapcat]

As soon as a loan is disbursed, it literally becomes the money of the borrower.

There's no effective difference. Only the terms are different. Although if your student loan debt is large enough, you may in fact be signing over a percentage of all future earnings for the rest of your life. One of the biggest growing groups of student loan debtors is senior citizens.

Both a loan and VC funding are legal relationships between someone who lacks money and someone who has money. It's a trade of current money for future money. Of course it's always a risk, because the future money may never show up: the debtor defaults, or the startup goes out of business. Plenty of startups die for reasons that have nothing to do with bank failure.

(Note also that a loan holder cannot simply repossess the money if the loan is in default. The disbursed money is no longer theirs. At worst, the loan holder can sue to have the debtor's wages garnished by a certain %, maximum 15% for federal student loans.)