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> What makes this even worse, is that Yellen would have lost nothing had she said they would back every bank and not just large banks - small bank failures are just not that common, and the risk is low, (and can be walked back in two years when the tension lowers).

FDIC is supposed to protect smaller individual depositors, not gigantic companies with hundreds of millions of dollars in deposits. Gigantic companies have financial teams that should be tasked with protecting their operating capital.

FDIC is also a last-resort. The idea is that bank assets are sold off and all depositors are made whole. It's very difficult and time-consuming to do this with a mega bank though.

Maybe FDIC limits should be raised, but the problem with that is someone needs to pay for it. Perhaps companies with $100MM deposits should be paying for private insurance.

> Even worse, well over half of the SVB bailout went to <20 accounts.

Do you have a source for this?

I don't have time to research now, but there were some well detailed breakdowns of the large payments when the bailout happened.

The first relevant link in DDG is a statement by the Chairman of the FDIC. He claims that the top ten accounts held more than 13.3B between them, which is more than 10% of the total of all deposits in the bank, and more than half of the $20B that the government is expected to payout in total. [1][2]

The FDIC would otherwise have had to pay a scant 3M of that, so there's 2/3 of the bailout just in those 10 accounts. If we include the next ten accounts, it will be much, much more. (One of the articles at the time claimed more than 85% went to 15 accounts, but I didn't want to be extreme without time to research sources.)

[1]: https://www.banking.senate.gov/imo/media/doc/Gruenberg%20Tes... [2]: https://www.fdic.gov/news/press-releases/2023/pr23023.html

I think that's a misinterpretation of the data. Based on reports, SVB had around 130B of deposits when it was taken into receivership. Something like 90% of that was uninsured, so around 115B of uninsured deposits. The 20B hole means that without FDIC backing the uninsured deposits, they still could have paid out over 80 cents on the dollar. So if the top ten accounts had about 13.3B of deposits, they only received less than 2.7B of the bailout - less than 15%, not "well over half".

Accepted, and thank you for the clarification.

At the time of the collapse there were definitely articles making that claim, with analysis and numbers, and I still assume it to be correct.

When I saw this, I was surprised, it seemed too clean and straightforward. Will have to look for the original sources.

I strongly suspect that any sources that claimed that simply made the same error that you did.

Looking at the source you provided from the Chairman of the FDIC, it actually says that the top ten accounts held $13.3B - not _more than_ $13.3B, as you claimed. The next ten accounts necessarily held less than that, so say a generous upper bound at $26.6B for the top twenty accounts. In order for them to get at least half of the bailout, they would have needed to hold north of $55B in aggregate. The FDIC itself would have to have gotten the size of SVB's largest depositors wrong by over double in order for your original claim to be true, in the absolute most generous case.

The large banks are more heavily regulated. Trump raised the limit at which a bank is called large from 50bil to 250bil. The small banks value their freedom from regulation more than they would value full FDIC coverage. The fed would love to make that trade:more regulation of small banks in exchange for full FDIC coverage for small banks.

Canada is dominated by five enormous banks, they are closely regulated, and Canada has had a better experience than USA with both fewer bank failures and higher real interest rates paid to customers.

Sure the Canadian banks are more stable but they are EXTREMELY conservative when it comes to lending out money. That's why the USA has a robust venture capital milieu while Canada does not.

In fact a Canadian bank would rather loan money to an American business to buy out a Canadian business than to lend the same Canadian business to expand.

Canada has higher real interest rates paid to customers? You sure? My Canadian bank account pays pretty much what my US one does, 0.00001% or something similar.

I'm not sure I understand your argument, because it is ONLY larger banks that are failing! Not the uber-big but larger.