Which is why you should always bank at a "too big to fail" institution.
Why America has 4000 banks is beyond me. In my country they all consolidated in the 60s and 70s into a half a dozen giants.
Why America has 4000 banks is beyond me. In my country they all consolidated in the 60s and 70s into a half a dozen giants.
My company used to bank with Bank of America. It was awful. They seemed to have no concept of how to work with small business or a tech startup. We moved to another bank (not svb) and it's been a much better experience.
Only leveraging the giants of a given industry is not good for innovation nor specialization.
At least that is what I have seen here in Canada, I imagine the US is very similar in that regard.
To draw an analogy, should every business owner with physical goods only sell and distribute their goods through Amazon and/or Walmart? Yes, their size provides many benefits, but also has dramatic costs to their business and impacts how customers are served.
Local community banks make it far easier for farmers and coffee shops to get loans. Local community banks keep money locally and grow locally. The consolidation of banks is a problem to avoid, not desire.
Local Credit Unions and small local banks rock.
The phrase "too big to fail" doesn't mean it's impossible for it to fail; that's not a thing. It means the govt/public feeling obligated to bail it out when it does fail because the public thinks they're so dependent on it that they're worse off of they let it fail.
A lot of confusion centers around the assumption that any bailout will be for the bank’s operations, not for the depositor’s deposits. That’s perfectly valid confusion - historically it’s been the latter! - and the FDIC isn’t willing to talk about deposits yet, either.