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Comment by brookst | Hacker News Reader

But you seriously believe that banks are generally better at completely losing deposits than keeping them? It’s just hard to see any evidence-based person believing that.

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https://en.wikipedia.org/wiki/List_of_bank_failures_in_the_U...

And how much money was lost in those failures by depositors?

And don't fall back on 'they were bailed out'. They were bailed out by other banks buying their assets + liabilities, and by the insurance payments they were making. They weren't getting a blank check from the treasury. That's the system working.

Who bailed out the crypto losses? Some of the losers got made whole, but many, many, many are realized losses.

FDIC can insure up to $100k (before 2008) and up to $250k (post-2008), so that's at most one person can get back, the rest puffs and it's gone.

What crypto losses you're talking about? The ones from centralized custody operators that hold your money in arbitrary way rendering your balance on web page in crypto currency or something else?

In practice since 2008 even if the theory is that it’s up to 250k in practice banks get acquired from the FDIC basically on the unspoken condition that all deposits are maintained at 100 cents on the dollar

Its not “unspoken”, its the overt goal to find a bank to take over that will provide that.

But SVB is a much bigger bank with a much larger share of uninsured deposits than a typical bank failure. If the problem extends beyond liquidity and really is an insufficiency of assets by any significant share, its going to be hard for a no-loss takeover to be facilitated.

$250k is not the most an account holder can get back if a bank fails, it is literally the minimum.

It's the maximum bank can get insurance for.

No, it is the minimum , maximum, and only insurance the FDIC provides. Banks can and do get private insurance beyond that.

And stop acting like any uninsured money evaporates in a bank failure.

Actually probably just stop talking about banks. This whole thread is an embarrassment of “smart people with strong opinions about things they have zero knowledge about”.

Well, thanks for clarifying, TIL that "(...) since 1933, no one has lost money due to a bank failure (...)" in US, according to FDIC.

I wonder how this situation looks outside of US in more distressed economies ie. Argentina.

We had foreign banks who advertised that as a strength and sent their profits to their countries. But when there was a crisis they said we are just a local bank with the same brand as a US bank and won't give the customers their savings back.

> FDIC can insure up to $100k (before 2008) and up to $250k (post-2008), so that's at most one person can get back

This is wrong for two reasons:

(1) The insurance limit applies per owner per ownership class; its possible to have accounts in more than one ownership class, and thus more than $250k insured.

(2) Recovery of the insured amount is guaranteed by the full faith and credit of the US government. Recovery of additional amounts is possible, and FDIC will make an effort to make it happen, but that's no guarantee.

> And don't fall back on 'they were bailed out'. They were bailed out by other banks buying their assets + liabilities, and by the insurance payments they were making.

Is that true? I'm not sure it is. The U.S. government gave hundreds of billions of dollars direct to banks and other institutions. The total actual cost has been estimated to be around $500 billion, despite claims that the loaned money was all paid back.

https://en.wikipedia.org/wiki/Emergency_Economic_Stabilizati...

https://mitsloan.mit.edu/ideas-made-to-matter/heres-how-much...

Let me correct that for you. "The total actual cost has been estimated to be around $500 billion, though to be frank the loaned money was all paid back."

That quote appears nowhere in the linked MIT Sloan article or the paper it summarizes, so please don't post such misleading quotes.

As I already mentioned and from the paper's abstract:

> Those conclusions stand in sharp contrast to popular accounts that claim there was no cost because the money was repaid, and with claims of costs in the multiple trillions of dollars.

So to be clear, the paper claims there was still a cost of $500 billion even though money was paid back.

I highly recommend you to check the original source referred in that article to understand the methodology used and what they were referring to.

https://gcfp.mit.edu/wp-content/uploads/2019/02/BailoutsARFE...

And that’s the majority of banks in the US, or the majority of bank customers that were affected?

Seriously, it was a childish and overly dramatic comment. Stop digging.

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