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Comment by jzb | Hacker News Reader

I think it’s really important to distinguish between bailing out the people who invested in the bank, and the people who have deposits at the bank. Those are not the same thing at all we should have a system where people can put their money safely into regulated banks, and expect to get all of that money back.

We should also have a system, the same system, where investment is a risk. But parking your money in a bank account should not be a risky endeavor.

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> parking your money in a bank account should not be a risky endeavor

Why? It is. Transparently. There are measures of how risky different banks are.

For ordinary people, the risks should be insulated. And they are. Deposits are insured. Unemployment is insured. If you have more than $250k in a non-investment grade bank, you should have a strategy for mitigating that risk. If you have tens of millions of dollars of cash, you should have a treasury function.

because the fed is targeting a 2% inflation rate. Laissez faire policy led to the Great Depression. The lesson there was the downs absolutely do not need to resolve on their own without government involvement and LF was abandoned. The reforms from it significantly contributed to the growth and stability from thereon.

If you want no risk you will have to pay an institution to handle all the logistics of moving your money around, not have them pay you for the privilege.

The fact that SVB pays depositors should have been an indication that there was risk.

There ain’t no such thing as a free lunch.

This is arguably the government's job and people already pay for it.

I don’t see anything in my copy of the constitution about subsidizing demand deposits.

The federal government should provide electronic money accounts with capabilities to perform transfers as infrastructure. Perhaps this will cause some richer people to politically support this.

https://en.m.wikipedia.org/wiki/United_States_Postal_Savings...

The government already solved this with the FDIC deposit insurance, and it is funded by the banks.

"...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." - https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corp...

There are already accounts that do this for you - split large sums automatically across numerous insured accounts.

In another thread, someone mentioned that First Republic did offer special conditions for leaving large cash deposits with them. I assume it's similar in this case, isn't it?

Essentially, you buy e.g. lower rates on a personal loan by keeping your company's cash with them, far beyond the insured amount. It's not just "I could've chosen any bank, I just wanted my money securely stashed somewhere", it's "I put my money here, knowing it's not insured beyond this amount, but I get favorable rates in return". The lines between deposit and investment get really blurry there.

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