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Comment by tome | Hacker News Reader

The problem is that continuing to bail out depositors means that they'll never do due diligence on their banks and therefore bank executives will keep trying risky strategies that increase their bonuses.

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Or start running ponzi schemes. Why not offer high rates to depositors even pay them out and join in with some of your own companies. And then when it inevitably comes crashing down have the tax payer bail it all out.

And then the regulators have to approve EVERY asset and of course anything looking slightly weird (hint: a startup) will be "risky" and unloanable.

The only way an SVB can exist is if banks are allowed to take risk.

what kind of due diligence are you imagining that I, a depositor with under 250k should / am doing on a bank? What do you believe, I, as a single depositor of 250k CAN DO to audit a bank or otherwise make sure it's safe for my deposit?

Oh, when I say "bail out" I mean bail out of depositors with more than $250k of deposits, less than $250k already being well-understood to be covered. You, as a single depositor of $250k are fine. If you have $1m then you spread it out amongst 4 banks and are fine. If you have more then you'd better use your own nous or hire a financial advisor.

thanks for clarifying... that nuance wasn't clear. I literally thought you were going on the true libertarian bent of I as some dude with $100 needs to be responsible for all parts of the system.

Others have mentioned here, although I am not sure if or to what extent this is true, that depositors may have had an exclusivity relationship with SVB in order to secure loans or other financial services, which might account for depositors maintaining more the $250k in their accounts. If this is the case, then the risks of their banking relationship was manifest, and I feel there is an argument for taking no special action to reimburse depositors in the full amount. If not, then I agree with you. There is a level of due diligence that is simply unrealistic for individual depositors to perform.

The only DD you as a depositor with less than 250k USD in deposits needs to do is check that it is FDIC insured. When you sign up for the account it will be prominent and I doubt there are many accounts that aren't. So, basically you don't need to do anything special.

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