The customers aren't the issue that I'm concerned of because the FDIC already would have insured up to 250k of deposits to begin with as per their own guarantee. What about the uninsured creditors? Their money is completely gone and there isn't any indication that they'll have remedy with the federal government (not that I think they should). The issue this creates is that there's a lot of companies out there that don't have liquidity who need it.
The FDIC $250k insurance was almost meaningless in this case. According to
the Financial Times almost 96% of client deposits were not covered by insurance, as the SVB's client base was dominated by start ups and venture capital backing them.
But as mentioned above, regulators refused the bail-out but, at the same time, promised that customers (of both, SVB and Signature bank) will regain access to their finds.
It's all a confidence game at this point. If people lose confidence and do another bank runs, the financial system could run into much bigger trouble.
I figured the bulk of the funds were from tech start ups/tech companies and that would have been all unsecured. I wasn't that so little was covered.
I suppose that makes the dynamics of a bail out more interesting because the Biden administration has an interest in making sure the economy doesn't prolong into a greater recession than it already is. It was his economy that resulted in federal interest rate hikes after all.
Of course the moral dilemma of bailing out the banking industry after their own bad calls is another story. IMO, no bail outs to the unsecured creditors.