[checkcircuits]

I don't think any coverage should go over FDIC.

We can't let the taxpayer cover such mistakes. Even though they have "explicitly" said that the taxpayer won't you simply have to follow the money to figure it's the case. Someone will be on the hook for the other end of their loan should it go bad. If you didn't insure your capital over FDIC you honestly deserve what came to you. I've never been a controller but I've been close enough to the bank accounts to know this is absolutely common sense.

The system is working as designed. Take stupid risks, win stupid prizes. I don't mean to be so mean about it but the alternative is unfortunately what we've done as of today. The FDIC insured everyone will be made whole. This means, effectively, FDIC insurance is limitless for a big enough failure and banks are free to do as they please knowing daddy G will come bail them out before it gets too bad. Worse there won't be jail time for the problem. I'm not sure who was responsible for thinking taking short money and buying long bonds was brilliant but it feels like at the very least a breach of fiduciary duty. I might have a softer view if they at least diversified along the yield curve and tranched their other investments properly.

There's far too much astroturfing going on here and elsewhere that these banks "did everything right and got crushed by a run". No, the run was the effect. The cause was piss poor risk management. The spin going on right now is dizzying and if you weren't paying close attention on Thursday and Friday you might even be forgiven for thinking the banks are innocent.

As a side note I'd be interested in a deep dive into why VCs recommended Silicon Valley Bank so feverishly. Perhaps there's a connection there to explore beyond "it's a popular stable bank" considering there are many better stable banks available.