[ctvo]

> Risk applies equally to depositors.

Share holders are owners in the company. They are rewarded financially when the company does well, and risk losing money when the company does poorly. In what world are customers equally subject to the same risks? They obviously do not get the same rewards.

Or do you mean in general? In that case, it's not particularly interesting. There's risk in walking outside.

[johnbellone]

Let's not pretend to not understand what they are talking about.

It is more than fair to say that the FDIC insurance is common knowledge, and yet, depositors were bailed out despite understanding that risk. Furthermore, depositors have benefited from quite the entanglement with the bank that, in normal business, simply wouldn't fly.

[gamblor956]

The issue was not bank entanglements.

The issue was the bank putting all of its deposits in illiquid long-term bonds that were worth substantially less if sold pre-term, and compounding that problem by becoming insolvent selling a large chunk of those bonds per-term at a huge loss to cover immediate liquidity needs.

[tom-thistime]

Looks like it. Except I don't see that the bonds necessarily weren't liquid. They just kept going down as the Fed cranked rates up.

As some others have said in this thread: I'm just trying to talk about what happened, within my limited understanding. I'm not talking about who was right or wrong at all.

[johnbellone]

I am referring to the fact that startups that are being advised by VC firms had a requirement to keep their funds in the bank. If you think that SVB and the VC firms didn't have a special kind of relationship you're missing the facts.

[gamblor956]

I'm aware of the relationship betweeen SVB and the VCs, but it seems that you're confused about what you're arguing.

You're blaming depositors (specifically VC-funded startups) for "benefiting" from a relationship with SVB they were forced into by VCs, and want to deny making all of SVB's depositors whole on the basis of a bank relationship that, for many, was not their choice. Worse, you want the fact that VC-funded startups over-depositing their cash reserves in a single-bank to be used against non-VC funded depositors (i.e., other businesses in the SV area) to deny making them whole on the basis of a "special relationship" that was simply "geographically closest bank willing to provide a loan and banking services."

[brwck]

> In what world are customers equally subject to the same risks?

Perhaps not the same risk, but risk nonetheless. People forget what banks truly are. They are institutions you give money to and hope they leverage ( fractional lending ), invest, etc it well so that you can take out the money out eventually. And maybe even earn some interest along the way.

> There's risk in walking outside.

No. The very real and actual risk that the banks managing your money may not be competent and gamble your money on risky loans, investments, etc. In this scenario, the depositer would lose part or all of their money.

It's amazing how well the industry PR has worked that people lose the sight of what banks really do. They fundamentally take your money, "gamble it" and hope it pays off. And if it doesn't, oh well, the government ( taxpayers ) bail them out. There is a reason why historically, people shied away from handing over their hard earned cash to banks.