SVB and them had it coming

By Sebastian Aguilar, Show Manager

The March 10 collapse of the Silicon Valley Bank was the second largest single bank collapse in US financial history and the Federal Deposit Insurance Corporation (FDIC) should have just let it ride out instead of insuring all depositors’ investments.  

The FDIC insures a maximum of $250,000 per account in the case that your bank collapses. However, unlike in 2008 where the federal government decided to use taxpayer money to bail out the financial institutions themselves, this time they decided to just move some money around that somehow wasn’t taxpayer funded and bailed out the depositors themselves. 

This was a spit in the face to everyone with student debt or healthcare debt in the country. During the entire time the $10,000-$20,000 pell grant loan forgiveness discourse was happening, all its critics said, “Where will the money come from?”

Well, the money for this bailout is coming from the deposit insurance fund, which is how they guarantee your $250,000, except this time they are  going to bailout every cent past 250,000 that the venture capitalists that banked with SVB deposited. Being a venture capitalist is inherently risky; you are throwing money at startups that you hope will one day make money. These aren’t 17 and 18 year-olds signing for federal loans so they can go to college, these are middle aged rich people that chose the wrong horse at the Silicon Valley race track. They know how the game is played; they don’t deserve a single cent past that $250,000.  

The argument in favor of the bailout is that if they let SVB  fail then it could cause a domino effect and you could see 2008 levels of bank closures. This wouldn’t matter that much for the average American family. The median American household has only around $4500 of savings in their bank. So if mass bank closures do happen, the FDIC would pay out to every individual or family that has an account up to that $250,000 max. The only people that would be hurt by this move would be the ultra rich and even then a lot of them have money in Swiss or other offshore bank accounts. What it would affect would be businesses that have money in a potentially collapsed bank.  

The other “issue” with a potential mass bank collapse would be the businesses that bank with them. Much like the people that bank with SVB and other similar investment style regional banks.The businesses that would go bankrupt because of a bank closure aren’t smart for putting all their money in a singular account like Airbnb. If your company is only held up because banks and other investors keep pumping you full of money then you aren’t a business that should survive. I wouldn’t lose sleep if all these tech startups went bankrupt. Tech companies aren’t somehow good just because they virtue signal more than oil and gas or financial companies. Tech companies, especially new media startups, monetize your attention and your person rather than having products of their own. This is why Facebook, Youtube, TikTok, Twitter, and Instagram are so addicting. They are companies that are wolves in sheeps’ clothing, preying upon their own user base. Let them lose everything but their $250,000. 

Also, the people that would lose their jobs from this industry wide bank collapse are extremely well-off already since they would all be Silicon Valley or Seattle tech workers that make more than six  figure salaries. They have enough money to be able to be solvent for a few months while finding another job.  

Instead of bailing out the billionaire investor class and predatory tech startups, the US government could have let the people that made bad financial decisions by “informed gambling” and used that money for bailing out students, those in medical debt, or reinvesting in communities that have been left behind. But I guess that wouldn’t keep the S&P 500 line going up. How dare I dream for a government not run by corporate oligarchs and their stooges.