I hear what you’re saying. The FDIC was never designed to protect all accounts as you state. Banks can and do go out of business for many reasons, and the FDIC has done a good job charging the banks a proper insurance fee to give that protection. I don’t have a big problem on what was. It was working. Currently they are raising those rates.
It will not stop bank runs, well, I guess last 3,4 they can, slowed it anyway, but on SVB the bigger issue wasn’t the 250k on down, it was the billions above the 250k. Blackrock, Vanguard for example would have taken some major hits, which would have caused bigger problems.
Clearly it shows the FDIC will not be able to cover bank runs, if people want to pull the money and move to can’t fail banks, you can’t stop them. My solution is far harsher, only provide large banks with FDIC support, and only charge those banks. Then people can decide want they wish to do. Yes, far less banks, but far bigger, less risky ones. You still can have as many branches of those large banks as you want.
However, the problem in this case was twofold. The first failure was when Trump eased up the Dodd /Frank restrictions on banks, regionals on down in 2018. That experiment took 5 years before the effect was felt. Many said at the time this could happen. We didn’t learn from 2008.
And even then, it still wouldn’t have the effect it did unless you have brain dead incompetence managing the banks, and even then, it should have been caught by the Federal regulators who clearly did not do they’re job. You just can’t protect yourself from stupid it seems.
However, there is a lighter note. Around Feb 1 Jim Cramer was on the air and proclaimed SVB is a buy at $320. Now it was on a hundred-dollar runup, which would have been a time to sell, not buy. Anyway, currently it’s at .50 cents. Later he confessed he was wrong. So those investors got that from him anyway. That was the biggest mistake in all this. Just the latest of many he has had IMO, but I have no idea why a failed hedge fund manger is still on that program. Doesn’t matter I guess as I’m not a fan.
CVSI should be coming out with their numbers very soon I would think, but the company is dead and appears to be going nowhere. CW should be out Friday, very interesting on what the say, and report with their business plans. Still watching the SG&A with that but they seem to be setting up well. I guess we’ll see. All IMO
