[dragonwriter]

> No, only SVB and Signature enjoy infinity insurance.

No, only the balances of SVB and Signature at the time of the failure of the former banks have that. There’s no prospective guarantee inheritable by an acquirer. (Admittedly, any bank that could reasonably bid for them, especially for SVB, would probably independently qualify for the systemic risk exception itself if it suddenly failed, but also any bank that could reasonably bid wouldn’t be in any near term risk of that, either.)

[Alupis]

SVB may be called something different today, and probably something different in the near future, but we all know what we're talking about here.

Like I said downstream - if my bank fails next year (or 10 years from now) and I do not get infinite deposit insurance - then where are we? Just the well connected get special treatment? Seems so...

[dragonwriter]

> Like I said downstream - if my bank fails next year (or 10 years from now) and I do not get infinite deposit insurance - then where are we?

In the exact same place we’ve been for the last 15 years (much longer, really, because the last crisis wasn’t the start of this, either), between the time the systemic risk exception was announced for three large banks, and all the bank failures in between where it was not invoked.

A place where the FDIC guarantees $250K per depositor per ownership category per bank but tries to facilitate takeovers that protect uninsured balances and where, with the Treasury and President, might protect something more, if the conditions for the systemic risk exception are determined to apply.

The systemic risk exception has existed since at least 1950, was invoked as far back as 1980, and was easier to invoke (the FDIC could do it on its own) prior to 1991. It was also less necessary prior to 1991, since the FDIC could facilitate a sale even when doing so was more expensive than a payout of only the insured accounts until the least cost rule was put into the law in 1991, and in fact, since the 1960s, the general policy was to, where possible, facilitate a buyout by another bank to protect all depositors even when the cost to the Deposit Insurance Fund was greater than a payout of insured balances.

The arguments about the use of full-protection via the systemic risk exception for SVB fundamentally changing things is just, completely, historically ignorant.

[Alupis]

It is disingenuous to say something required a SRE, will be guaranteed 100% by the government (ie. tax payers) - and then also claim it is not a bailout.

I am not putting words in your mouth - that is the logic the government is feeding everyone today.

It is also disingenuous to claim a techy bank that catered to the tech sector posed an imminent risk to the entire banking system, ie the systemic part of the SRE. A bunch of tech elites and big tech companies would have been burned - and some failover would have happened certainly, but this was not a system issue, it was bad choices made explicitly by banking executives at some specific banks.

It is also disingenuous to claim no tax payer money is involved when it is in fact tax payers that are providing all the guarantees here, bear future risks, and ultimately will pay for it with bank fees and more.

The entire thing is a political exercise. Don't look behind the curtain... because it might all topple over.

[dragonwriter]

> It is disingenuous to say something required a SRE, will be guaranteed 100% by the government (ie. tax payers) - and then also claim it is not a bailout.

The whole FDIC system (with or without the systemic risk exception) is a system of bailouts of depositors paid for by assessments on banks (which, sure, are a kind of targeted tax, and thus constitute funding “by the taxpayers”.)

Other than the fact that your earlier points are indefensible, I’m not sure what the point of responding in thread with such a sudden radical shift of topic is, though.

> It is also disingenuous to claim a techy bank that catered to the tech sector posed an imminent risk to the entire banking system, ie the systemic part of the SRE.

I dunno, more than $100 billion in uninsured deposits, largely he operational accounts of a large number of businesses (not isolated to the tech sector, but mostly either geographically in the region of the bank or in the tech sector or both), which given the nature of the asset situation of the bank could be expected to either be resolved quickly at a very low percentage of face value or extremely slowly at a better percentage, would have massive knock-on effects on the businesses involved, there employees and investors, their creditor (ultimately, in large share, other banks), etc. Is it a different character of systemic risk, in some regards, than other previous invocations? Sure. But while there are clusters of similar case, systemic risks tend to be different from each other in details.

> A bunch of tech elites and big tech companies would have been burned - and some failover would have happened certainly, but this was not a system issue, it was bad choices made explicitly by banking executives at some specific banks.

The “systemic” in “systemic risk” refers to the scope and nature of the effects of the risk materializing, not the nature of the cause of the risk. The systemic risk exception is not about blame, its about the effects of inaction.

> It is also disingenuous to claim no tax payer money is involved when it is in fact tax payers that are providing all the guarantees here, bear future risks, and ultimately will pay for it with bank fees and more.

Maybe. Again, this is just a radical shift of topic.

> The entire thing is a political exercise.

Yes, acts of government are by definition political exercises. This is not, even slightly, in dispute. Are you just looking for random things unrelated to the earlier discussion to try to get into an argument about now?