Banking in uncertain times
What I still do not understand is why the whole SVB episode isn&#x27;t a bailout and didn&#x27;t just introduce much more risk into the system. Yes, the stock went to 0 and investors did not get compensated (if they didn&#x27;t already cash out when they saw it coming due to inside information) but the gaping hole in the books was filled due to government intervention and explicitly lifting the 250K FDIC limit.<p>Why would any bank look at SVB and NOT think &quot;oh, time to take more risk for more profit; the government will prop up the FDIC limit if we fail anyway&quot;. Saying that taxpayers won&#x27;t pay for this is a joke too. The burden of filling the insurance gap won&#x27;t come out of the pocket of other banks or their shareholders. Even though the FDIC receives no federal funding on paper, they seem to be fully invested in treasury securities and can borrow directly from the treasury, against rates not available to the common Joe. It&#x27;s a perverse relation which the taxpayer contributes to.