[tripletao]

I'd tend to agree that expecting depositors to police their banks is bad policy. It would be better to make that policy change explicitly though, by insuring all deposits, rather than by slouching into it with ad hoc rescues like here.

I agree there's no moral hazard as to the SVB shareholders, since they got zeroed. There is a moral hazard as to the shareholders of other banks, who will benefit from the new lending program in proportion to the amount of bad interest rate risk they took.

[8ytecoder]

That’s the point IMHO. We want depositors to keep money in the banking system. The inverse of it where depositors don’t trust the system would result in even more bank runs. However well run a bank is, there’ll always be a certain amount of assets in long term that lose value in the short term. We’ll be seeing perpetual bank runs and a new shadow banking system will emerge if this continues unchecked.