Obviously the regulations need to change, and frankly bad regulation is probably complicit in this whole affair. SVB is almost certainly NOT the only bank that invested money like this without the government knowing.

What really worries me is that the regulators might have seen these investments and not understood they were risky. Government bonds are pretty safe, right? Duration risk is sneaky and even though it’s obvious now, SVB was locked in back when rates were super low. Realizing the risk anytime after they got locked in is too late!

Applying the same stress tests to all banks regardless of the amount of deposits they have would be a good start.

Also, the FDIC insurance limit would be a lot higher than $250k if it followed inflation, but even if it did, a lot of businesses need to keep a lot of cash around to make payroll and float expenses. It doesn’t make sense for them to have the same type of insurance, and the same limits, as an individual person’s checking account.