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Comment by mdorazio | Hacker News Reader

Title is technically accurate, but kind of weird. Investors are pulling money out of some (smaller) banks and transferring them to other banks. Or are pulling money out of savings/checking accounts and adding them to money market accounts with different risk profiles. The title implies the banking sector is at risk, but that's not what's happening - the big banks are getting bigger.

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Basically what everyone expected to happen when the Fed bailed out [0] the depositors of SVB while also continuing to be cagey about FDIC coverage limits. The right answer is to expand the scope of FDIC coverage to all accounts and assess/regulate accordingly, but of course the big banks are happy to continue the lower-regulation fiction so they can privatize higher gains and then socialize the losses when they're "too big to fail".

[0] Without seeing how the balance sheet actually works out, it's hard to say how much money the FDIC gave to SVB depositors (if any). But there is certainly a massive difference between a few weeks of ambiguity and the FDIC quickly asserting that all depositors will be made whole.

Money markets also invest in highly liquid instruments so their prices are marked to market daily and traded faster than HTM portfolios. Therefore they get to adjust faster to macro conditions to ensure that the dollar amount of the asset is maintained.

Definitions are hard. They are pulling them out of banks and investing them in mutual funds which hold T-Bills or maybe commercial paper. Money Market Mutual Funds MMMF and Bank Mutual Funds (a savings account with checks) are different things.

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