I strongly disagree that SVB should be judged to big to fail. The criteria for that are laid out in advance and they don't qualify. It comes with real costs to those banks in terms of tighter regulations, so letting smaller banks like SVB off the hook for stress tests and then bailing them out anyway is a bad precedent.
Roku et all will get their money back eventually, they'll just have to wait for an orderly liquidation.
Where the fed should step in is if it becomes a contagion/crisis of confidence system wide. If it starts to spread THEN have the Fed guarantee all deposits for awhile to stabilize the system.
But the moral hazard of bailing out SVB now shouldn't happen. Anyone putting more than $250k into a bank should know the risks. Maybe bump it to $1MM per bank or something.
|