Excellent points. The whole concept of expecting bailouts enables banks to take risks without any risk - a recipe for disaster.
The management and owners of the bank should pay for their foolish management. There should be no bail out. The FDIC protects investors up to $250,000. So the only people being hurt are those that had deposits of greater than $250,000 total. If you are that wealthy, then you have a responsibility to be aware of the risks of where your money is. This isn't the same as "mom and pop" doing routine banking at their local bank. Our government (the FDIC) system assures "mom and pop" that they are okay and not at risk (and thus don't have the burden of worrying if their $10,000 is safe in their local bank).
It's not like this hasn't happened before. This isn't a "surprise".
I think some of the people complaining they need to be bailed out are employees of the businesses that used this bank, but they obviously chose poorly what business to work for then. That happens. Now we know we need to be concerned with where our employer banks. We will become the more resilient for it.
But as you pointed out, coddling people doesn't help them.
If instead of having our government babysit us, we had a robust economy then the people who get hurt by something like this can move on to another job. But in a financial collapse like we are in (and have been for decades) it can be tough to get a new job, these are the people who will be really hurt. The solution isn't bailouts, it's being aware of the costs and stiff penalties for gambling and making poor choices.
SVB won't be the last of the pain. Bailouts just spread the pain to everyone. It's better that we learn our lesson and prevent the pain rather than treating it after the fact.
Excellent points. The whole concept of expecting bailouts enables banks to take risks without any risk - a recipe for disaster.
The management and owners of the bank should pay for their foolish management. There should be no bail out. The FDIC protects investors up to $250,000. So the only people being hurt are those that had deposits of greater than $250,000 total. If you are that wealthy, then you have a responsibility to be aware of the risks of where your money is. This isn't the same as "mom and pop" doing routine banking at their local bank. Our government (the FDIC) system assures "mom and pop" that they are okay and not at risk (and thus don't have the burden of worrying if their $10,000 is safe in their local bank).
It's not like this hasn't happened before. This isn't a "surprise".
I think some of the people complaining they need to be bailed out are employees of the businesses that used this bank, but they obviously chose poorly what business to work for then. That happens. Now we know we need to be concerned with where our employer banks. We will become the more resilient for it.
I hate to say it but even small businesses and individuals should take caution placing all their cash and savings in a single bank.
Yes! "Diversification" is one of the *fundamentals* of finance! Never put "all your eggs in one basket".
Exactly. The only reason people today felt so comfortable taking such a risk is because we've been coddled for too long.
Yes, people will be hurt by this.
But as you pointed out, coddling people doesn't help them.
If instead of having our government babysit us, we had a robust economy then the people who get hurt by something like this can move on to another job. But in a financial collapse like we are in (and have been for decades) it can be tough to get a new job, these are the people who will be really hurt. The solution isn't bailouts, it's being aware of the costs and stiff penalties for gambling and making poor choices.
SVB won't be the last of the pain. Bailouts just spread the pain to everyone. It's better that we learn our lesson and prevent the pain rather than treating it after the fact.