[tyre]

Narrow banks are no longer attractive because lending out depositors’ money has positive externalities. It’s used to fund mortgages and small business loans. That’s a positive.

Are there downsides? Sure, but what we saw this past few days is that the system worked. SVB was dumb, the federal government stepped in to save deposits, management was fired because they did dumb things, and the shareholders were likely zeroed out because they owned the company doing dumb things.

Yes, we could pull money out of the financial system, but that might well be worse for everyone.