[kyrra]

There's a certain amount of risk with all lending and investment that banks do with deposit funds. This can be home loans, government bonds, and other relatively safe products.

I don't think it should be up to the government to back these risks, because if banks think the government will always rescue them, they don't need to care as much about risky investments.

You could argue that it is depositor money, so they're not really saving the bank, they're saving customers. But if banks don't have to care about their risk profile, customers will deposit their money in whatever bank is offering the greatest interest rates, which will likely be those that are making the riskiest investments, which could lead to more bank failures with market swings.

[Ntrails]

> I don't think it should be up to the government to back these risks, because if banks think the government will always rescue them, they don't need to care as much about risky investments.

Counterpoint - if depositors had known that the bank could not lose their money, because the government will back it, there would be no run on the bank. Why bother? It's _safe_ by design. I do agree with the general point, and there are huge questions around capitalisation and marking with long term debt etc.

What's most interesting here to me is the inaction within SVB when they could have been fixing these problems for survivable losses early, but instead tried to ride the storm.

I'd love to read some of those meeting minutes...

[mywittyname]

This isn't really feasible. Bank executives will fill fight the regulations that stabilize their bank against market swings, and citizens will demand that the government do something when irresponsible bank executives lose their life savings. Banking regulations, like most regulations, are written in blood, but for some reason, the banking sector is the most adept at getting regulations overturned.

So the resulting system is a patchwork of solutions that force the government into the role of rescuer. It's just too difficult to get most regulations to stick long enough to prevent another banking crisis. Barring a Constitutional amendment to create a banking "tsar" with broad authority and who reports to no-one (i.e., non-political), the best solution we have is to have the government step in when banks inevitably fail.