[smcin]

Somewhere between "$250k" and "infinite" would have been less moral hazard. Feels like we've set a dangerous precedent, but only for depositors who are politically connected and can instill panic. When does the de facto unlimited FDIC insurance expire/ When does Silicon Valley Bridge Bank go back to normal?

Second: IIUC, any shortfall in making SVB depositors whole will come from a levy on the rest of the banking system (and maybe small (<$400m) clawbacks from execs' share sales). How much will that levy cost the rest of us? Can it be legally or politically challenged? Are any Congressmen challenging it? (Where are the libertarian Republicans on this?)

[rhaway84773]

When was the last time non politically connected depositors lost money from their checking accounts?

The only “moral hazard” being created here is encouraging people to deposit money in smaller banks.

If the govt hadn’t created the “moral hazard” then people and businesses would simply have chosen to do all their banking with the much safer big banks like Chase and Citibank.

The reality is that Americans don’t want all banking to be concentrated in the hands, but smaller banks are significantly more risky and inefficient. Depositing money in the smaller banks and not just the top handful is the “moral hazard” that has been created by government intervention.

[TMWNN]

> When was the last time non politically connected depositors lost money from their checking accounts?

Many times. The typical uninsured depositor in bank failures from 2008 to today got about 75 cents on the dollar.

Depositors in IndyMac in 2008 got 50 cents on the dollar.

[Scoundreller]

> The only “moral hazard” being created here is encouraging people to deposit money in smaller banks.

Or everyone, nationwide, starts moving every penny they have into whichever bank, anywhere, offers the highest interest rates, without regard to how they accomplish that. Let's call it "risk intensification".

[Scoundreller]

The only appropriate thing to do would be to levy a haircut on only the uninsured deposits elsewhere in the banking system. And that's already unfair because it should be retroactive to some degree.

The rest have already been paying for this insurance all along. Wouldn't make sense to levy a fee on fire insurance policyholders when someone without fire insurance has their house burn down.