Anyone having a bank account will pay for it trough the banks fees/rates etc. Yellen avoided directly using tax money for the bail out, but it just is the next closest thing.
SVB's assets cover an overwhelming majority of the deposits, and other banks cover the rest through FDIC. the impact on the American citizen is negligible, bordering non-existent. yes, this money comes from customers of those banks, but again, the $ amount likely translates to pennies.
when you compare it to the alternative people are proposing of doing nothing, that means thousands of layoffs and shuttered companies, and the American tax payer paying these people's salaries in the form of unemployment/welfare. this is a remarkably more expensive strain on the economy.
there is a reasonable argument to be made about the precedent it sets for banks in the future with regard to their risk tolerance; I don't have an answer to that.
anyone upset about this for any other reason just wants to be upset.
Every bank account holder was made to pay insurance premium for those with more than $250K in a couple of banks. And this was done AFTER the risky event the insurance covers has already happened. This absolutely is socialization of losses, while privatization of profits goes on as usual. Good reason to be upset, IMHO.
The socialization of losses is the hallmark of a functioning society or social system. A person breaks an arm in a hunter-gatherer tribe, and the rest continues to feed them. A farmer's house burns down, and each person in the village chips in a bit to help them rebuild. A hail storm wipes out farmers in a region, and the state or federal government helps them cope with it. A bank collapses, and the FDIC makes the depositors whole.
Isn't it great that groups of people can step in and help those that got the short end of the stick?
I do hope that such recuperation schemes continue to get funded by mandatory insurance and other contributions during the good times. This way, the privatization of profits is a little smaller, and the safety cushion gets built for when things get bad.
This isn’t a random event or act of God. If the person said they would take care of everyone’s food while taking whatever share of that food they wanted, then broke their arm after finishing off the last steak, how do you think the tribe would respond?
But in the future we can avoid such situations on deposits: Why should commercial banks be allowed to fund themselves via deposits? If deposits are inviolable, they really shouldn't be with commercial banks but rather with the Fed etc.
Banks are a business and they invest deposits. It’s the very idea of a bank. What SVB did was not foolish nor crazy. Somewhat less conventional and more risky, sure. But all the strong adjectives flying around in the media do not describe the situation properly.
> The socialization of losses is the hallmark of a functioning society or social system.
If the "socialization of losses is the hallmark of a functioning society" THEN WE DO NOT HAVE A FUNCTIONAL SOCIETY because in EVERY city of this country there are people who are homeless because of their "losses" and NO ONE GIVES A FCK.
I am one of those homeless. What was my crime? I became ill with an undiagnosable neurological disease.
This is about WHO gets the socialism. What is happening with SVB is socialism for the rich.
Are you seriously comparing the greed at SVB is reay like breaking an arm or a hail storm? Some unforeseen natural disaster or just a whoopsie????
This along with the bilions to Ukraine, while people are being forced into homelessness because of housing costs and inflation, you are all asking for some fascist groups to gain power in the U.S.
It is insurance that banks pay for, so yeah that is how it works. The issue is that if FDIC doesn't save this regional bank, all regional banks would probably fail in the next week and there would be 4 banks left that the government refuses to let fail.
