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Comment by latchkey | Hacker News Reader

> I'm perplexed, then, to see so many people gleefully celebrate the collapse of an institution that helped level the playing field for people from all backgrounds.

It isn't about being gleeful. This bank took massive risks, which were enabled by Trump changing the laws (and they supported), which then allowed them to take even more risky bets (aka: level the playing field).

https://www.motherjones.com/politics/2023/03/silicon-valley-...

Now we get to see the fallout from all of that, which was even predicted by someone who was paying attention...

https://seekingalpha.com/article/4565388-svb-financial-blow-...

https://seekingalpha.com/article/4586033-svb-financial-blew-...

https://seekingalpha.com/article/4586342-svb-financial-today...

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This was a crisis of confidence.

Most other US banks are just as exposed to long term bonds and mortgages and have also been hung out to dry by the fed raising rates after a decade of zirp and we distorted yields and prices.

Yes this bank failed to hedge risk appropriately, but if customer confidence fails, all major US banks would be vulnerable to exactly the same situation.

IMO share/bond holders should lose if all but depositors should lose nothing/very little (which is perfectly possible and not too expensive). Otherwise the risk of contagion is very real.

Which fractional reserve bank is actually safe from a bank run without the implicit promise of an fdic backstop?

> Most other US banks are just as exposed to long term bonds and mortgages

And maybe that is the crux of the issue here?

https://www.cnbc.com/2018/05/24/trump-signs-bank-bill-rollin...

“When the president signs this, we put community banks back in the mortgage lending business, which is really exciting for me,” Sen. Heidi Heitkamp, D-N.D., told CNBC on Wednesday.

"exciting"

> Which fractional reserve bank is actually safe from a bank run?

No FRB is 'safe', but the people who hold money in there are safe as long as they are managing their 250k risk...

https://www.intrafi.com/solutions/depositors/

Customers who hold money at banks are not the problem - individual savers losing some cash savings is not systemic risk and substantial cash savings are rare anyway after 10 years of zirp.

Company bash balances are the problem here, which for any companies greatly exceed insured deposits and these cash deposits are required to meet payroll and other commitments if they are not making profit at present (most startups).

Hundreds of thousands losing their jobs because of multiple bank runs is the risk at this point, because of companies unable to pay workers/services and unable to raise more money.

First, I shook my head at the same sentence. The railway union whose potential strike was recently broken by the government and railroads levels the playing field (and works to evert things like the Ohio toxic train derailment). Silicon Valley Bank does not level the playing field.

The sob story about the partner at the VC firm did pull at my heart strings though.

The CEO of SVB spent half a million dollars to roll back banking regulation five years ago. Hoisted by his own petard...well not really - bonuses went out hours before the seizure and he was selling shares like crazy before the collapse.

Now David Sacks and all the tech bro libertarians want the taxpayer to bail out the SVB depositors beyond the FDIC limit.

Libertarions really are the house cats that think they are lions.

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