It’s not because the FDIC insurance is for the masses - everyday workers and waiters and taxi drivers and teachers. Lack of it can cause a revolution and actually destroy the economy whereas SVB will bring some companies down with it (unless investors take care of their portfolio companies) and VCs will send lots of Tweets and stuff.
The scale is extremely important.
But also we didn’t bail out Enron shareholders including regular folks who lost their life savings - this is more akin to that or something similar. VCs are professionals and sometimes shit happens and this time some of them got screwed (undeservedly) but screwed nonetheless. But it’s no different than the employees losing their jobs or when someone up and moves a factory - we don’t bail them out either and they also get screwed.
Low risk is not the same as no-risk. FDIC amounts will be returned and bank assets will be sold to cover deposits as much as possible. Outside of an investigation into any wrongdoing that should be the end of the involvement of taxpayers. VC firms should protect their investments or the government should get an equity stake or favorable loan terms for remaining balances. It’s really bad for the free market to signal that all banking is risk free for any corporation. If we are going to do that then just nationalize the banks and cut out the middle person.
The scale is extremely important.
But also we didn’t bail out Enron shareholders including regular folks who lost their life savings - this is more akin to that or something similar. VCs are professionals and sometimes shit happens and this time some of them got screwed (undeservedly) but screwed nonetheless. But it’s no different than the employees losing their jobs or when someone up and moves a factory - we don’t bail them out either and they also get screwed.