this was to stop wider run - fdic can easily do an educational campaign reminding us of the insurance contract on cash savings accounts. since the regulators didn’t come down hard on bank mgmt pre-collapse this might have been the cheapest way to stem jitters. but it doesn’t change policy.
Once you've set the precedent you're changed the policy.
Did you not catch Biden’s 3-minute message?
And that is untrue. Those who we’re threatening a broader bank run could easily have been exposed as trying to protect their interests that had irresponsibly been compromised with deposits in an unhealthy bank beyond the guarantee level.
This was done to stop a global collapse. That is what everyone keeps missing here. The reach of these banks was far beyond our shores too.
It proves that the discretionary “systemic importance” tag will be applied whenever the FDIC chooses to.
More picking winners and losers.
The failure of SVB was not existential threat to the financial system. Its failure would have delayed access to deposits with some manageable loss to 10-20% to deposits. It would have been a learning experience for all. Instead the government pulls 1%-ers out of the fire.
It probably would have gone somewhat differently if it was a Ag Bank in Ohio or Idaho.