Scott, in general I think I am pretty aligned with your general stance on banks: they take risks and reap the rewards, while we the tax payer pays for costs of those risks. In this particular case, at least the FED did not bail out the bond holders, but only the depositors (who where generally not getting any benefit from risky behavior).

But I also think you might be far enough out of your wheelhouse on this one that you don't really understand the situation:

It is true that SVB was seeking higher returns by having longer maturation bonds... so you can call that greed. Though treasuries are hardly a "get rich quick" scheme of excessive risks.

But you have to understand how fractional banking works. The bank holds a certain number of dollars, but then loans out and gets deposits many times over on those same dollars. (all banks do this). This means that even a small percent loss across the board on their investments can make them own more money than they have.

you make is sound as if the federal gov had not done anything, they would have been fine, they would have just made less money. This is not true. In ONE DAY, their depositors withdrew $36B dollars and it simply bankrupted them. Even for a healthy bank a bank run is very hard to survive... and they were NOT healthy.

so if the fed did not intervene depositors would have not had access to their money for a significant length of time, and then when they did get access it would be for less than they deposited.

Worse, the whole collapse happened because of a loss of confidence, which precipitated a bank run. This can easily catch like fire to other banks. So it is in American interest to pay quick to stop such contagion. (Especially to make the depositor's whole since they were not even getting economic upside from any risks being taken).

~~

- I believe Obama failed to get strong bank reforms because of rich bank interests.

- I believe the banking industry does have a moral hazard built into it, where risky behavior in some cases is incentivized.

- I agree, if the population understood the issues we could probably write laws that would properly price these risks into the system in a way that did not leave the taxpayer holding the bag. (but am dubious this will ever happen)

- but I don't see this particular case as being especially egregious on the behavior of SVB.

- and in this case I am happy to see the FED leaving the bond holders twisting in the wind as a way of reducing the moral hazard of the situation.