[xiphias2]

The difference is that the whole banking business model is about not never having 100% of the deposits on hand (the banking license is a license to not be 100% fully backed with liquid assets, but you have to follow special rules/regulations in return).

FTX was a different issue, because it had a requirement of 100% backing of customer deposits for example (that's why SBF was trying to acquire a bank).

[antibasilisk]

>The difference is that the whole banking business model is about not never having 100% of the deposits on hand

It sounds to me like there's a big disconnect between what banks actually do, and what their customers think they do.

[cwsx]

Do people really not know how fractional reserve banking works? I'm not saying the general public, but those with >$250K sitting in a bank.

I agree on the disconnect, but I don't think it's all relevant to this situation. Almost every party involved should have been well aware of this fairly basic concept.

[antibasilisk]

Given the fact that alot of people didn't think to diversify their cash between banks to stay insured, do you really think it would be a stretch to suggest they don't really know what they're doing?

It's a bit like suggesting zoomers know what a filesystem is because they grew up with computers; seems like it should be the case on the surface but you'll quickly realise they've never dealt with the underlying realities of the system, they just use the interface.

[cwsx]

I would be suggesting that if those zoomers ran a business that could die with poor file system management, but that's hardly what we're talking about is it?

I am suggesting that business owners with substantial cash holdings should be well aware of fractional reserve banking, or at least the notion that money in the bank is not guaranteed.

Do you seriously think any of these companies weren't aware of the $250k insurance limit?

I'm genuinely curious what you mean, as your example sounds like a straw man, but I'm hoping there's something I'm missing.

[antibasilisk]

You would be genuinely surprised at the number of people in charge of publicly listed companies, who have absolutely no idea about the existence of fractional reserve banking, or even the fact that money isn't backed by gold anymore.

[jsjohnst]

> even the fact that money isn't backed by gold anymore

Don’t you mean “or even the fact that money was ever backed by gold”? If you knew about gold backing at all, surely you’d know we left the gold standard last century.