You probably can't hope for better under the US system. Maybe other banks will push hard to not allow more SVBs in the future after seeing this.
Suppose I'm a Utah bank that is mostly lending money to diverse local businesses and home owners, and mostly taking deposits from other businesses, some local and some not, and would-be future home owners. Last week I probably didn't care that SVB wasn't required to be as risk-averse as I was, if they failed what do I care?
Today, seeing this news, I care a great deal, and I don't want to see other banks allowed to take risks I wouldn't have been permitted unless they're paying a lot more than I am for the privilege, because when they fail - and they will fail - I don't want to pay for that.
I'm no expert, but that Utah bank sounds pretty risky to me.
At least treasuries and MBS are relatively liquid securities that can be quickly sold at prices that don't deviate much from their marks as long as you're marking to market.
Those loans to local businesses and home owners sound much, much scarier.
Sure, as far as I understand from that table the maximum fee FDIC charges is $1 for every $200 on deposit, which if we're expecting it to act like full insurance means they're expecting that these riskiest banks won't fail more often than every 200 years on average, which doesn't come anywhere close to how risky these banks actually are.
Suppose I'm a Utah bank that is mostly lending money to diverse local businesses and home owners, and mostly taking deposits from other businesses, some local and some not, and would-be future home owners. Last week I probably didn't care that SVB wasn't required to be as risk-averse as I was, if they failed what do I care?
Today, seeing this news, I care a great deal, and I don't want to see other banks allowed to take risks I wouldn't have been permitted unless they're paying a lot more than I am for the privilege, because when they fail - and they will fail - I don't want to pay for that.