Here we go again. Bank bailouts

[ArthurItas]

@EimonGnome

All these clowns knew the max deposit guarantee was $250k. They chose to foolishly put all their eggs in one basket. And SVP, which had a meteoric rise in their assets since the pandemic made the classic ALM error of duration mismatch. Funding demand deposits with medium term treasuries is nuts. A speculation that interest rates would be near zero forever. It didn’t pan out that way. Fools, that the market should rightly punish

I agree with the latter half of this sentiment. Irresponsible banks, as well as their stock and bond holders, deserve their punishment that the market is doling out. Let them fail.

I somewhat disagree with the sentiment on depositors. I wrote this in another thread:

@ArthurItas

Wealthy individuals with more than 250k in a bank account made a poor choice. It’s much more complicated for small companies.

Working capital for even very small companies easily passes that mark. Making payroll alone for a quarter or even just a month will be over 250k for a pretty small company.

If you are a small tech company, working capital can easily exceed 250k, even for just making payroll.