[throwway120385]

Yes, and my understanding is that SVB's assets, which are still productive over the long term, were sold on to pay for this "bailout." So the narrative that there was a government bailout is not really true here. The real concern I've heard is that FDIC insurance paid out to a lot of depositors who had more than the statutory limit, but what's left out is that FDIC actually sold on SVB's assets to pay those depositors. It seems like they're taking an interpretation that the statutory limit only applies to banks which don't have any assets that can be traded on.

[rcme]

SVB’s bailout is estimated to have cost the FDIC 20B. The Fed also set up new lending programs to support the banks, which was essentially free* money.

[ahupp]

The FDIC insurance fund is paid by banks, so ultimately depositors were "bailed out" by the broader banking industry.

[rcme]

I don’t really see how that’s relevant. Paying into the FDIC DIF is a legal requirement of the banks. It’s basically a tax. Somehow bankers have convinced everyone that they have impunity to mess up the financial system just because they pay a special tax.

And if the FDIC is really going to offer unlimited depositor protection, they’re going to need a lot more than the 100-200B in the DIF.

[throwway120385]

What would you propose as a system to replace the FDIC?

[godelski]

To be clear, that money comes from the Deposit Insurance Fund

[mynameishere]

Their assets were worth less than they owed depositors. An auction would have caused a 30 percent or so loss to many millionaires.

[yazaddaruvala]

The SVB investors which were many millionaires, did lose 100% of their investment.

The depositors, regardless of wealth, were lied to about the safety of their funds. It was roughly fraud - it wasn't their fault - they didn't take excess risk. How is it a bailout to let them keep their money?