> you should be paying market rate for insurance on those funds
which, if you bought short term treasuries, you can easily just get that safety for "free" (aka, there's no such a need for insurance, unless you believe the insurers are safer than the US gov't).
Having it at a bank should've been equivalent, since you can make the bank's scale of economies in the buying/selling of short term treasuries to make it even easier (dare i say, even transparent). However, when a bank does this, they want to squeeze even a tiny bit more profit, and thus, instead of buying the requisite amount of short term treasuries, they bought long dated bonds/treasuries, which is insanely risky.
The VC depositor should've been financially savvy enough to look at their bank and see this, so i argue they did not deserve the bailout beyond the existing mandated FDIC one. it's causing moral hazard in the banking sector.
which, if you bought short term treasuries, you can easily just get that safety for "free" (aka, there's no such a need for insurance, unless you believe the insurers are safer than the US gov't).
Having it at a bank should've been equivalent, since you can make the bank's scale of economies in the buying/selling of short term treasuries to make it even easier (dare i say, even transparent). However, when a bank does this, they want to squeeze even a tiny bit more profit, and thus, instead of buying the requisite amount of short term treasuries, they bought long dated bonds/treasuries, which is insanely risky.
The VC depositor should've been financially savvy enough to look at their bank and see this, so i argue they did not deserve the bailout beyond the existing mandated FDIC one. it's causing moral hazard in the banking sector.