[rib3ye]

Don’t you think there is a huge difference between the bank shareholders getting bailed out and depositors getting bailed out?

Let’s think about the risk of “morale hazard” in these case: Bail out the shareholders: we can throw more money into the stock and never lose money! Risk free returns, I better pump this bubble up! Bail out depositors: I feel safe having my money in a reputable bank! I can operate my business and pay vendors/employees, I can keep doing my job without interruption.

Bailing out one group makes them greedy, bailing out the other makes them productive.

This is not old testament judgement, this is a financial war and our gov has to use every appropriate tool to fight it.

[koolba]

> Don’t you think there is a huge difference between the bank shareholders getting bailed out and depositors getting bailed out?

Of course they're different. But they're both bail outs.

If my house burns down and I have $250K of home owners insurance, do I get the rest covered by the Feds?

> Let’s think about the risk of “morale hazard” in these case: Bail out the shareholders: we can throw more money into the stock and never lose money! Risk free returns, I better pump this bubble up! Bail out depositors: I feel safe having my money in a reputable bank! I can operate my business and pay vendors/employees, I can keep doing my job without interruption.

SVB, and banks in general, offer incentives for people to deposit money. It can be anything from account bonuses to non-monetary perks like access to other sources of capital. To say that depositors had nothing to do with the losses is extremely naive.

> Bailing out one group makes them greedy, bailing out the other makes them productive.

They're both greedy. Or stupid. Or both. Either way, no hand outs.

> This is not old testament judgement, this is a financial war and our gov has to use every appropriate tool to fight it.

The government does work solely for the depositors or investors of SVB. It works for all of us and we've established rules for when it is authorized to step in and provide both liquidity and direct bail outs.

Romanticizing a specific customer base does not earn them special treatment.

[rib3ye]

> If my house burns down and I have $250K of home owners insurance, do I get the rest covered by the Feds?

Not on your home, no.

But if it were your factory and you were responsible for a respectable percentage of the workforce being able to put food on their tables, I would hope a gov entity step in and try to reduce friction for getting the factory back on its feet.

And again, that reduced friction doesn’t need to be a check to you, it could simply be forced asset sale.

[nodemaker]

There is not much difference if you look at it from the point of view that one of those parties was just underestimating the risk they were taking (which is true of all bad decisions in life). I see no reason to bail out depositors over 250k

[rib3ye]

When you capitalize a bank with deposits, are you really an “investor” with expected risk/reward?

I am not for totally punishing someone who expects a near-zero return on a loan, especially when they made the loan with the expectation the borrower would help other businesses be productive.

[nodemaker]

We should not take for granted that value can be transferred through time for free and without any risks. When you give another party control of your money (including a bank) they make decisions on your behalf for which there are consequences.