FDIC – SVB FAQ
What people don&#x27;t seem to realize is that banks themselves are a form of speculative vehicle. You pay deposits to the bank, and they then invest these deposits in commercial loans. Banks are incredibly risk adverse as a rule, however, in this case the amount of deposits that SVB took in between 2020 and 2022 doubled from 40 to 80 billion dollars. The only way that this can happen is if the amount of available loans that the bank can make at the same risk profile increases through greater demand, or if the bank acquired several other regional banks.<p>Well. That wasn&#x27;t happening. So the bank started making riskier and riskier loans rather than reduce the number of incoming deposits.<p>Arguably, given inflation, the value of FDIC should be increased beyond the $250,000 limit. But it&#x27;s difficult to have much sympathy for companies that invested large sums of money into SVB without doing their due-diligence. If these companies need to be taken over by the federal government to prevent stock market contagion it would be nice to see some political consequences as well.<p>It&#x27;s absurd that a Lehman Bro.s CFO chairman was an executive at this bank. There will be lawsuits that come from this, but I&#x27;d expect that the federal government should also be an aggrieved party (as in, &quot;the People Against...&quot;) given the risk of this collapse to the finances of the larger public.