Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

> "The FDIC is not supported by public funds; member banks' insurance dues are its primary source of funding. When dues and the proceeds of bank liquidations are insufficient, it can borrow from the federal government, or issue debt through the Federal Financing Bank on terms that the bank decides."

If you're trying to say "look, 'taxpayer' isn't mentioned, all good", you're either in self-delusion or you're playing dumb. It doesn't matter how you dress it - "taxpayer money", QE, Sammy's piggybank - the inflationary repercussions will affect everyone.

> On top of that, SVB has the money to pay back almost all of the depositors. They just don't have it liquid right now because it's in bonds that won't mature for a while and would need to be sold for a loss.

This is a self-contradiction, yet it's written as an explanation. Bravo.

> You can vote for people who are dumb enough to let the entire banking system collapse because they want to hurt rich people. But of course that would probably put "peasants" out of work while the rich get slightly less rich.

This isn't about "hurting rich people", you can throw away that straw man (along with the twitter favorite "it's not a bailout, the bank equity goes to zero!"). It's about the response to a complex system's failure. Most would agree injecting liquidity ASAP is mandatory in the short-term, but that does not mandate insuring 100% of deposits. Any sort of response has negative repercussions, but it isn't a matter of fact that the banking system would collapse otherwise.

Nobody has "the answers", it's a complex system. The VC tech bro take draws a line in the sand and cries wolf for any approach that doesn't cover them 100%, and it's done under the guise of looking out for others; "the workers", "the banking system", "the economy", "a generation of technological progress evaporated".

Is it possible that the best thing to do for the long-term is to allow a worse short-term outcome (affecting a small part of the economy more drastically), so that the system is altered in a way that actually fixes/improves it? Even if we grant that hypothetical, should it be done? It's a complex question with no right answer.

The VC tech bro take on technological advancements that have negative short-term side effects, wiping industries and causing people to lose jobs usually falls in the range of "learn to code" to "that sucks, but we must march forward". There is a poignant sense of hypocrisy when grandstanding holier-than-thou "technologists" who claim in abstract that progress and efficiency trump all, find themselves on the other side and act oh so predictably.

The cynical responders aren't partaking in the question of "what is the correct response", but just because they don't gobble up the predictable VC tech bro take as gospel doesn't make them dumb.

While what you say is true, maybe we shouldn't allow mergers and other avenues to allow these banks (and other verticals) to be too big to fail. We've made that a target for all companies. Just get too big to fail and you get all the upside and none of the downside for free. That is my main complaint. By allowing deposits to be invested without risk, these too big to fail banks are encouraged to chase the highest yield, highest risk re-investments possible. If it works, another yacht for everyone! If it fails, we must be made whole!

So, a long-winded way to say:

"We will bail you out."

> In support of this view, they could have easily extended FDIC on a dynamic metric, for example 20k for each employee.

Implementing any such "dynamic metric" would have taken time, which would mean they would not have been able to restore all deposits by Monday, which means a significant risk of contagion.

> Explain to a peasant why he should have to share the risk you took with your money.

Dear Peasant,

I empathize with your pain and suffering on a daily basis. I know life isn’t easy being a peasant, you perhaps work as hard as anyone in Silicon Valley. You pay taxes just like everyone else and expect your government to protect you and provide opportunities not just for you but for your children and their’s. Silicon Valley is a major growth engine of our economy, it means lots of jobs for your future grand grandchildren. It means better lives for all of us benefiting from innovations that happen there. You no longer need to farm in freezing weather when your John Deere tractor can drive itself or hail a ride on Uber and know exactly when to go outside on a snowy day. So hope you understand that when a place that people trust with keeping their money collapses it means major disruption to the economy. It means those tech companies have to fold not to a fault of their own, but because of a series of domino effects that would have been not easy to predict. It comes with the territory, not too dissimilar to a famine. We need to do something to save those companies and thousands of people who work there contributing to the prosperity of our country and the world. We need to do what is smart, socially and economically responsible and save those companies by providing the cash reserves they stored in the failed bank. We need to borrow money from the tax payers to do that, just like when we did that in the last couple of years to help another group of citizens. I know you understand this is good not just for our country but it’s good for you and your children. I know many will not understand why a large population of the medium class should benefit as if they live in a vacuum and anything that happens to them will have no effect on the rest of us.

I know you will.