I agree, and when Chairman Powell calls me to ask if they should bail out the depositors, my answer will be “no”.
I think I disagree with this.
The equity and debt holders of the bank should get crushed. They are investors in a business that was mis-managed. Too bad, so sad.
But I have a lot of sympathy for depositors and that includes the venture firms.
You're a venture firm with maybe $10-50M you raised in the last round. You're off working on your idea. Hiring people, running R&D, building sales, trying to build out marketing, etc. You're busy and far more likely that not you're a decent person pouring a lot of blood, sweat and tears into something.
Or you're also a young/smallish public company in much the same situation.
You should not also need to be a bank analyst or have to hire an expensive CFO to do your own liabilty matching. Or try to park $30M in 120 different accounts to get FDIC protection?
You should be able to count on a bank being ... a properly run bank.
And as shareholders in public companies, it's ludicrous that we are exposed to losses because we can't bring ourselves to properly run banks.
Should someone bail depositors out? That's a hard one for me. Maybe we should as a societal penalty for mis-managing basic tenants of the banking system. The societal version of what happens to the shareholders in the bank.
What needs to happen is reform where FDIC covers 100% of deposits with commensurate insurance rate increases & required bank risk behaviors to warrant the insurance. It is insane that we have to go through the silliness of parking money all over the place just to manage FDIC caps.
And all banks need to be able to survive a stress test because while they may not be systemically important to the nation, they are certainly "too big to fail" for their depositors.