Somehow, the bank definitely needs to be punished, but I'm not sure how or if that can happen in this current system.
The only risk is trying operate in a broken banking system.
https://www.cnn.com/2023/03/12/investing/stocks-week-ahead/i...
Umm, any and every bank deposit in excess of the deposit insurance limit has a risk associated with it.
If that means we get less interest on savings accounts then so be it.
Errm ... there are an awful lot of people who will never, ever, in their entire lives, have anywhere close to $250,000 on deposit at one bank.
Q: Why should all those people backstop your investment?
Given that, is it perhaps possible that you should take responsibility for your investments which exceeed $250k?
I had zero dollars in SVB, and I would probably be less affected than the average person if there was a full on banking collapse.
I'm still not stupid or capricious enough to oppose this 'bailout' though.
(/s)
Depositors can pick the banks whose risk profile they prefer.
Deposits <$250k are FDIC insured. One could say those accounts didn't evaluate the institution that held their funds and didn't really need to. But were they aware of FDIC limits? IMHO, they should have been and likely were.
Depositors >$250k are well aware of FDIC and the risk associated with money in their bank. They really should think about the banks they work with and understand their risk profiles.
Subjective, but I understood how FDIC worked when I opened my first bank account that was no where close to 250k. If it was greater, I would optimize my holdings across different institutions and instruments.
That way small time depositors are also drawn into the ranks of the watchmen of the financial system.
[study on financial literacy from 2022](https://gflec.org/wp-content/uploads/2022/04/TIAA-Institute-...)
Second, what does that really mean? How to evaluate the quality of your bank isn't typically discussed by personal finance teachers, beyond looking at the interest rates and fees.
In any case, you don't need to be a sophisticated investor as a depositor. Ordinary market participants manage 'flights to quality' just fine, even if they are not sophisticated investors. See https://en.wikipedia.org/wiki/Flight-to-quality
If you want to have a stable financial system, you shouldn't suppress the incentives for people, including depositors, to look for safety. Just the opposite, you should have them sensitive so that they make moves (on the margin) long before danger is serious. Have people move their deposits _before_ it's too late.
More seriously, you don't need to do extra due diligence. Just buy insurance for your funds above $250K. Or use standard treasury methods like using institutional insured liquid deposits or sweep accounts.