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Comment by balozi | Hacker News Reader

There have been stories about the one SV honcho asking his portfolio to check their money at svb days before the chaos. Leading me to wonder; are there any laws or regulations against tipping off your friends that the bank you work at is in serious trouble? What happens when some depositors have insider information allowing them to act well in advance of a bank's problems becoming public? Aren't other depositors put at a disadvantage?

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Making such laws would be a signal that the government sees bank deposits as something akin to tradable securities, where you are competing with your fellow depositors for some fixed value and must do so on a level playing field, and that's the exact opposite of what they want to convey. The illusion that every single customer can get their money out whenever they want regardless of anyone else's actions is the single thing keeping the entire system afloat.

Bank deposits are outside the scope of the SEC which is where the usual rules against insider trading come from (selling shares, as mentioned in the article, would potentially be a crime). We (rightly) have laws against improperly profiting from inside information, but I'm not sure they would or should cover pulling your deposits, since deposits aren't meant to be investments that go up and down, they're meant to be reliably worth what they're worth.

I guess the underlying consideration for us is whether developing intel within our finical servicers is a prudent move.

with this logic, you will probably end up with laws governing every action you take or does not take. More laws is an intuitive solution but often the wrong one.

Want do you want them to do, ring a giant bank run bell?

What would you call it if a VC was sending group chats to founders telling them to withdraw from a specific bank? Seems like ringing a bank run bell to me.

My understanding is that insider knowledge on the risk literally precipitated the run as more and more founders were trying to move all their money out at the same time.

Well, Silvergate called the government and began unwinding. At some point, voluntarily starting the process makes sense instead of trying to hold on a little longer.

If they think tip-offs like this are a risk they’ll raise the covered deposit amount.

There's barely laws against making money off inside information that actually result in enforcement in 99% of cases, would it even matter if there's laws against not losing your bank deposits?

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