The part that annoys me the most is the idea that all the depositors are mom and pop small businesses or early stage startups.
I’ve heard it said that Circle and USDC have an amazing business model: create a coin, call it a dollar, and deposit real dollars in the bank for interest while customers hold the coin. You don’t even have to offer a percent for the deposit like a normal bank. You can then make a couple percent on billions.
With this bailout the US Government just backstopped the business model with no haircut for a total lack of risk management. But sure, punish all banks (and thus customers / taxpayers) since the costs will be spread to others. Protecting us from systemic risks always seems to create more systemic risk. I’m sure were done though, they are putting protections in place this time.
Confidence in property rights? Not sure what you are talking about. They just provided guaranteed non-negative returns on loans. Put your dollars in a safety deposit box if you want property rights. Depositors need to be able to accept a haircut for banking to function, that's why you get interest and don't pay the bank.
You're not thinking what the most logical course of action would be for all companies that use regional banks. It would be to get your money out ASAP on Monday and into JPM or BOA. That's why the treasury has stepped in.
Many of the big banks give effectively 0% interest right now for everyone, so it isn't really that much different, but yeah I agree with your sentiment.
I’ve heard it said that Circle and USDC have an amazing business model: create a coin, call it a dollar, and deposit real dollars in the bank for interest while customers hold the coin. You don’t even have to offer a percent for the deposit like a normal bank. You can then make a couple percent on billions.
With this bailout the US Government just backstopped the business model with no haircut for a total lack of risk management. But sure, punish all banks (and thus customers / taxpayers) since the costs will be spread to others. Protecting us from systemic risks always seems to create more systemic risk. I’m sure were done though, they are putting protections in place this time.