In what way did the depositors add pressure for the bank to be more risky? Naively, it seems like there would be zero incentive for a depositor to do that unless they were trying to chase a measly yield on deposits.
Or that the depositors should have lost money, with the ensuing ripple effects: unpaid workers, state fines for violating wage payment laws, bankruptcies, lawsuits, unpaid vendors and contractors and all their downstreams, etc.
i.e. carnage, a big bloody nose, but not an extinction level event.
Maybe the depositors deserved a bloody nose. But do their employees, vendors, and contractors?
In my outspoken opinion you’re onto something. Regular FDIC insurance should kick in. Every aaccount gets their 250k, and rest will take years to figure out with lawyers scrambling to stake claims of the carcass. Enhanced unemployment for the non executive level employees of companies effected by the failure. Highly compensated employees that don’t budget might suffer, good. Executives, investors, etc should all take a bath from this. They should be made whole on the backend if they didn’t have insurance and well managed risk. There should also be a lot of high profile and HNWI people thrown in prison for their gross negligence. Hopefully the regulators can secure the evidence they need for convictions without their investigations getting compromised by any manner of the typical shenanigans.