re: I can’t stop being angry about this SVB thing and Yellen makes it worse

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I hate Janet Yellen. But what is she supposed to do? She says "Yes, we will cover depositors in all banks" she's made up a new policy (with no authority) on the spot. If she says "No, everyone else is screwed" it will cause a run on small to mid size banks.

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You told me SVB wasn't getting special treatment. Sounds like are, you just think it's justified?

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You say you don’t insure depositors or do “bailouts” then insure depositors and provide bailouts when there is systemic, Great Depression risks. It’s imperfect.

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The way we've structured banks and insured depositors sucks. But that's congress' fault.

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Are depositors not the senior creditors in a failed bank bk?

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One would think. But I'm not sure. Some seem to think depositors shouldn't get anything over the FDIC limit, even if assets exist. It's weird. They can't seem to figure out who should get the assets. Trust me I've asked.

Here's another really good backgrounder on the 2008-2009 financial crisis and bank runs. Another example of FDIC insurance being extended to large account holders in 2008.

LINK

Here's how WaMu (remember them?) run unfolded. Any of this sound familiar?

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Uninsured deposits accounted for the bulk of withdrawals during the runs described in
the previous section, according to reports by banks and their supervisors. For example, in the
case of the July run at Washington Mutual (following IndyMac’s failure), the bank lost 13
percent of its uninsured deposits, while losing only 2 percent of its insured deposits. Computed
another way, about 70 percent of the outflow came from uninsured deposits. In fact, 25 percent
of the outflow reportedly came just from accounts with more than $500 million each, which are
enormous by the standards of deposit insurance and far above the $8,700 average account size at
Washington Mutual. Large withdrawals from just a handful of such accounts can lead to large
aggregate losses even if all other accounts do not change.

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Deposits are heavily concentrated in a small number of accounts. Table 3 details the
insurance coverage of deposits at the large depository institutions with outflows discussed
earlier. At Washington Mutual, 98.8 percent of accounts were fully insured at the end of 2007,
but the remaining 1.2 percent of accounts held 39 percent of all deposits. These 1.2 percent of
accounts had some partially insurance on their balances up to $100 thousand, so that overall 26
percent of Washington Mutual’s deposits were uninsured. Statistics at Wachovia were similar,
as only 2.0 percent of its accounts were not fully insured but those accounts held 47 percent of
deposits. Figures in these ranges were typical of large institutions at the time.

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Uninsured deposits are held by a variety of depositors. Corporations are one especially
important group, as they maintain large accounts for payroll and other transactional purposes. At
Wachovia, for example, descriptions of that institution’s run during September 2008 focus on
withdrawals by large corporations. The institution’s supervisors noted that about half of its uninsured
deposits were “comprised of corporate, non-time deposits that are considered highly sensitive,” and
estimated that about 16 percent of these deposits would be withdrawn. These predictions proved accurate, as the American Banker
reported that Wachovia’s “corporate
customers began to pull uninsured deposits” the day after the failure of WaMu.

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So what did FDIC do? Insured those depositors.

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In October 2008 the FDIC initiated a new program, the Transaction Account Guarantee
(TAG) Program, a part of the Temporary Liquidity Guarantee Program. Under TAG,
participating depository institutions could receive unlimited insurance for so-called noninterest-
bearing transaction deposits. The FDIC described these accounts as “mainly payment-processing
accounts, such as payroll accounts used by businesses.” An FDIC official stated that “We're
trying to address the problems that we've seen with, you know, these non interest-bearing
transaction accounts, these corporate accounts leaving banks.” Another FDIC official, likely
referring to Washington Mutual, stated that “the guarantee for these transaction accounts, we
think will help with some of the liquidity pressures that we've seen on what in many cases are
healthy and certainly viable institutions. The withdrawal of these accounts have put severe and,
in some cases, liquidity pressures on otherwise healthy institutions and forced some resolution
process there.” This program adds to the evidence that large corporate deposit accounts were
important sources of deposit outflows in late 2008.

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I'm not sure why you put quotes around that; it's not an obscure term, it's not some mythical thing that doesn't really happen.

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The FDIC resolves banks individually. Every single one is different. So... in that sense every bank takeover is "special".

We could say SVB was "special" because the FDIC came out and explicitly said over-the-limit depositors will be covered, to prevent a run on other banks. But they did that in 2008. How many times until it's not "special" anymore?

We could also say SVB was "special" because the asset losses are mostly unrealized, and the asset quality is still pretty good. Unlike when 2008-2009 banks were taking huge (realized) losses on isht quality assets.

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but insinuates that everyone else is at risks, especially if you have more than $250 grand in any account.

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This is too non-specific. Yes, every account over $250k has SOME risk. Hell, I wouldn't consider the FDIC to be risk free. But that's if a bank has inadequate assets.

Again, who should be in line for the bank's assets ahead of uninsured depositors?

I get people want to be mad. I hate Yellin, Powell, and Biden's policies as much as anyone. But we should be mad at teh right people. Be mad a Congress for stupid FDIC rules that penalize small banks. Be mad a Congress for allowing "unstated" policies to exist, because they are to chicken to actually legislate anything and want to dump it on the executive branch.

But being mad at SVB depositors for getting their money back? That seems odd and misplaced to me.

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This is exactly why each state is equally represented in the Senate: to protect the small states from the large states from robbing all the resources.

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Meanwhile, in Lefty Land, there are folks who don't think it's fair that each state has two senators and believe the Uppper Chamber's membership should be apportioned based on population like the Lower Chamber's. I say we repeal the 17th amendment and let state legislatures pick Senators.

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she has never had a real job in her life. She has never owned a private business or had to meet a payroll. I do not trust her.

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Sadly, this is true of most politicians and political appointees. I wish there were limits to public office to prevent lifelong politicians and qualifiers for real world experience in order to be elected.