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Example? Bankman-Fried committed outright fraud. He lied and stole money. This is simply incomparable to what anyone in finance is doing, much less being left unpunished for.
"But that's how banks work", you say. Only because you drunk the Kool-Aid. Only because banks are so damn good at managing risk that we haven't questioned the practice. But at the end of the day, it's my money, and they shouldn't have the right to lend it against my will.
"But you could store money under your mattress", you say. If taxpayer money can provide me with the necessary security guards for that, sure. If not, I don't consider it an option.
SBF was just worse than Bank of America at managing the risk, and got into deep shit. SVB got into deep shit but because the law allows them to legally commit the same fraud of lending out money they don't own, the law protected them with FDIC funds. Bank of America is equally in the wrong, though, it's a messed up system that we just accept because everyone around you accepts it.
They' don't lie about it.
> SBF was just worse than Bank of America at managing the risk
He lied about it. Also, he wasn't lending money to anyone. He was lending it to himself. If Bank of America was lending most of its balance sheet to its CEO, that would be a problem!
> SVB got into deep shit but because the law allows them to legally commit the same fraud of lending out money they don't own
They do own it. You lent it to them. Depositing money at a bank is not putting your cash in custody. There are cash custodian services, though it's more traditional to custody Treasuries. You didn't go to them. And again, at no point were you mislead.
We get these frauds every generation because money and banking is complicated. But instead of addressing that deficit with understanding, enough people deal with it by pretending it doesn't exist, thereby making themselves vulnerable to those who take advantage of that willful ignorance.
You can buy short-dated treasury bills if you want direct tax payers support for your money, for example. Giving money to a bank is lending the money to the bank with your permission, but there are other debtors available.
It shouldn't be that way. Banks should be forced to either (a) never lend your money out, or (b) offer an interest rate higher than the Treasury plus state taxes -- that's the only reason I'd ever want to lend to them.
Use a custodian account. Put your money in a safe deposit box. Nobody is forcing you to use a standard bank account.
But you're already agreeing at prevailing rates! You have other options, and you're not taking them. Why would they pay you more for shits and giggles?
> Any less than 6.5% and it's a hard no-consent-to-lending-my-money because the Treasury gives me more.
So buy Treasuries!
I am taking them!
> So buy Treasuries!
I do! But everyone seems to fall for the same bank(man-fried) trap.
Thems the breaks. Take it up with your government if you don't like it.
Sure, if you give me the interest rate, sure.
But if the feds are giving me 5.5%, you, as a private bank, better well give me 6.25% so that it's >5.5% after state taxes. If you give me ANY LESS than 6.25% you have no right to lend out my money.
Where do you want this free return to come from? While also funding all the things people using a checking account properly (i.e. not to generate a return) want from it, e.g. transaction capabilities?
Again, you can literally get this by buying Treasuries. But you don't want that--you also want the other things. For free. I, too, want free things. But it's obviously not a serious suggestion.
I dunno, the Treasury gives me the 5.5% which is the same as a private bank giving me 6.25% and getting robbed by the state of California which leaves me with 5.5%.
Banks want my money? They need to beat that bar.
I dunno, lend it out to someone at 10% to buy a car and then give me 6.25%. Be creative. But I'm not taking Chase Bank's laughable 0.01% or even WealthFront's stupid 4.8%. It's not 6.25%, they didn't beat the bar, plain and simple.
If you're only giving me 1% you might as well give me 0% and I forbid you to lend out my money.
Do you have a bank account?
> If you're only giving me 1% you might as well give me 0% and I forbid you to lend out my money
Then do this! You're railing against a scarecrow.
All that'd do is make credit hilariously more expensive for everyone, which will push up the price of everything. I'm not sure that's a good idea.
Prices are high because the whole damn country has a habit of buying things they can't afford. It's not actually normal to do that in a lot of the world.
The U.S. is number 15 in the world by household debt to GDP [1]. The winners in your low household debt basket are Pakistan, Algeria, Ukraine, Tajikistan and Bangladesh.
[1] https://en.wikipedia.org/wiki/List_of_countries_by_household...
To an inefficient degree, yes. Congressional oversight of the Fed is massive because it's popular with many voters. That unfortunately crowds out oversight over the many other financial organs of the United States, e.g. the FHLB.
He ran a literal ponzi scheme, something the SEC was created to combat and that Bernie madoff ramped protects against up to 11. He could not have pulled of this scheme without unregulated securities, that was the point.
Say what you will about finance, but the fact is you get a ton of information and protection when you go through the system. Bypass it at your own peril.