SVB-Fueled Turmoil Junks Lessons of the Global Financial Crisis

>Uninsured depositors don’t seem to discipline their banks’ behavior, said Eric Rosengren, former president of the Federal Reserve Bank of Boston and now a scholar at the MIT Golub Center for Finance and Policy.

What ?? Isn't that what happened? The uninsured deposits were withdrawn and the banks suffered. Seems to me that's a huge discipline. The only problem is that the regulators didn't allow the banks to go under.

The so-called "shadow banks" would include institutions like vanguard and Fidelity and investing in short-term treasuries directly. Those seem way safer than uninsured bank deposits. The only risk you have at that point is fraud or gross mismanagement in which case you can at least sue. We are going to get into heap load of trouble if we try to insure all deposits and make banks impossible to fail.

Great substantive article on the issue.

No Paywall: https://archive.is/dcdc8