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Comment by bruce343434 | Hacker News Reader

Privatize the gains, socialize the losses. Before the government supplies anything, the wallets of those at the top of SVB should be first to be liquidated. Otherwise, it's equivalent to just randomly awarding those top guys with millions of taxpayer money. Easy scheme, honestly. Set up a bank, get some deposits, gamble it away, walk away with gains you periodically skimmed off the top. Let the government deal with the fallout.

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That's not what happened though. SVB did not gamble with the money.

They did put money on a "sure bet", bonds and mortgage backed securities. Due to the fuckery with interest rates, those sure bets were suddenly unfavorable (at least if you have to cash them in early, which they did). The fact that stocks were sold tells me they knew about this going belly up eventually.

What I would like to see come out of this is the banking system offer risk tiered accounts. No-risk tiers are FDIC insured, but the bank is not allowed to move that money anywhere. Higher tiers offer higher levels of risk, deposits are not guaranteed but receive better internet rates, and the banks are able to “gamble” in whatever way they choose. The current structure is fundamentally broken and no amount of regulation layered on top of that structure will provide the stability and security for customers while driving market innovation.

We already have this: it's called a "brokerage account", or various other names: "mutual fund", "ETA", "company stock", etc.

If you want higher interest (gains) and risk, you buy stock, or a fund.

Finally, if the bank can't move money anywhere, there's no reason for the bank to exist, and there's no way for it to pay interest (in fact, they'd have to charge you to keep your money). The whole way a bank works is by investing your money somewhere, then giving you a fraction of the proceeds (as interest). You seem to not understand at a fundamental level how a bank works.

That's not what I'm suggesting at all. A tiered structure would be normal banking (checking/savings) accounts with differing levels of risk depending on the owner's tolerance and willingness to pay (no/low risk, charged something like 0.5% per year) or be paid (very high risk, and paid to store money there because the bank is lending it out at higher rates).

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