Thanks to a friend of mine who has a degree in philosophy - very handy these days - I've been reading about John Rawls' veil of ignorance and how it can help us make more just decisions. Not saving SVB needlessly punishes a great number of people for making a reasonable decision. Yes, it is risky to put all your eggs in one basket but if that basket has been around for 40 years and in some cases is the only basket that accepts your eggs then the decision becomes quite rational. How could anyone have predicted that a clique of the biggest depositors at a bank would collude to execute a mass withdrawal? Or that the CEO of a bank would be completely incapable of inspiring confidence? Or what the Fed's rate hike would be? Decisions to deposit at SVB a decade, a year, or a month ago could not have possibly taken all these variables into account. The more I've read about the collapse of SVB the more it seems, not quite random, but certainly unpredictable. If tomorrow another bank - could be your bank, your employer's, or your mom's - suddenly and randomly collapsed and you had no foreknowledge, would you be in favor of a bailout? I think most people would be because not saving that bank needlessly punishes the depositors for something random and out of their control.
I have a deep disdain for the elitist tech culture here in the Bay Area but we should recapitalize SVB and essentially pretend last week did not happen.
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