> Per capitalist philosophy, the bank should sink, along with whatever deposit was in there - "Buyer beware".

Why do you think that? There is no axiom of "capitalist philosophy" that says "when one party screws up all parties must maximally feel the pain".

There is a framework for unwinding these sorts of things. Depositor agreements as well as the relevant regulations and laws regarding business agreements and contracts are all part of the "capitalist philosophy".

> Why do you think that? There is no axiom of "capitalist philosophy" that says "when one party screws up all parties must maximally feel the pain".

That was a capitalist business in which the depositors were LENDERS of that business with the understanding that the business would use their money for profit making activities and give them an interest rate and other returns in the process. Along with whatever investment scheme the bank was providing for its clients.

Those depositors could have chosen any bank in the US, and most of them have the power to choose any bank in the planet. But they chose SVB for what it provided. It was a business decision. They chose the highest yields by choosing this risky bank.

And now that the risk taking caused a crash and burn, the rest of the public who did not take those risks cannot pay for the sunken bank or its mega depositors. They all took risks, its their burden to bear. Profits cannot be privatized and risk socialized instead.

> There is a framework for unwinding these sorts of things. Depositor agreements as well as the relevant regulations and laws regarding business agreements and contracts are all part of the "capitalist philosophy".

Precisely. And the limit is $250,000. The government is responsible with bailing out that amount by law. Not the rest. Doing otherwise not only bails out risk taking depositors who took a risk while keeping all the profits - it also reduces SVB's liabilities and risk and props up its value. Its an indirect bank bailout too.

Laws and regulations that protect the players in an economy come from socialism. Not capitalism. In capitalism, 'buyer beware' is the rule and those who take risk and screw it up are left to sink with their bad choice. You live in a social democracy created by imposing socialist practices on capitalism.

If the laws said that "Up to $1 billion of each depositor account can be bailed out", yes, it could have been done. But it doesnt say that. And any such bail out of such mega deposits by using public money is a middle finger given to everyone who did not take such risks.

> Precisely. And the limit is $250,000. The government is responsible with bailing out that amount by law. Not the rest.

You seem to be assuming that there are no assets available to match to the depositors above the $250,000 per account. The legal framework doesn't prohibit additional amounts over $250,000 from being made available to the depositors and as far as I can tell the assets are available to do that.

> You seem to be assuming that there are no assets available to match to the depositors above the $250,000 per account

I dont assume that. Since the bonds they have lost their value, there aren't enough assets to match the deposits. The size of the haircut was dependent on what the market would decide to offer when those were sold. The bailout prevented that from being needed.

> The legal framework doesn't prohibit additional amounts over $250,000 from being made available to the depositors

Legalese doesnt change the nature of the event. The law allowing arbitrary application of the limits means that there is no limit, or worse, the limit depends on who is being bailed out. And that's exactly the message that was sent: If you are big enough or you can pressure the government to bail you out, just screw around with other people's money and gamble. If you win, you will win big. If you lose, the losses will be socialized.

I find your comments very hard to follow. You seem to be conflating depositors and investors, liquid assets from illiquid assets, taxpayer dollars from FDIC insurance funds, and so on.

I was trying to make a small point that if the FDIC unwinds the assets of a bank in a liquidity crisis and the resulting cash exceeds the $250,000 limit for the depositors, then the depositors should get also get that additional money (side note: I think employees are even higher on the creditor list than depositors). You seem to be saying that the depositors should not get anything because "caveat emptor" and that would be a bailout. Then who should get that money?

I don't know if the cash value of SVB assets will satisfy the $250,000 insured deposit value or not, I haven't followed the story closely enough. All I'm saying is that any excess that is available should be distributed to the depositors and doing so is not against "capitalist philosophy".

If you want to focus the conversation on the scenario where the cash value of the assets turns out to be insufficient to cover the insured deposit amount, then we could dig into where any additional money is coming from (FDIC insurance fund and ...) or what the moral hazard of making depositors, never mind investors whole might be.

I was just trying to sort out those scenarios a bit for clarity.