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Comment by seo-speedwagon | Hacker News Reader

> If you had the wit to think "hey, maybe I should be careful with $5 million" and bothered to put it in T-bills or an insured sweep, you're just a nerd who should know the Government will take care of such things.

It creates the precisely wrong incentives. If you run startup and spend any time, effort, or money to mitigate these risks, you're being irresponsible. The Fed will bail you out, stop wasting your precious runway on nonessential things.

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Counterpoint - this is the type of risk that should be abstracted in our system. Screwing around with cash management for risk avoidance is yet another layer of effort that shouldn’t be passed on to the consumer (business or individual) which is the result of an old system that doesn’t exist anymore where a community bank had a comprehensible level of risk and reach.

I think this is probably where we will end up: Deposits above the FDIC insured level have to automatically go into money market funds with a weighted average maturity of 5 days or less instead of the loan portfolio of the bank.

this. propbably the best comment on this thread

It seems like raising the FDIC insurance amount to, say, $10mm USD fixes this for the general case.

What is the purpose of having non Government owned banks in this scenario?

Why weren’t they already advising their companies to not put more than they can afford to lose in a single bank?

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