from Sam Altman | by Sam Altman

ugh fine here is my SVB thread: TL;DR: at this point, to be certain of avoiding catastrophe, the FDIC needs to temporarily guarantee all deposits. other solutions might work, but this is the best one.

first, this really is just a liquidity issue. depositors at SVB are going to get all or most of their money back, and will have a significant fraction of it this week.

however, depositors should get *all* of their money back, and fast. equityholders in SVB and lenders should be wiped out. but we really, really don't want depositors to start doubting their banks. the world has changed since 2008; the speed of a cascade could be very fast.

as of friday, many of the relevant people in government didn't understand the magnitude of this. now i think more do. unfortunately, it's been much too long without reassurance and action, and the energy for bank runs tomorrow now exists.

this would have been easy to fix friday, but now being certain of avoiding calamity requires something drastic. e.g. the FDIC temporarily guaranteeing all deposits, and announcing emergency liquidity as needed for continuity of operations.

much weaker action would have worked on friday, but here we are. much weaker action might still work today, but i don't feel certain of it. again: the speed of the world has changed. things can unwind fast. people talk fast. people move money fast.

i believe that if Silicon Valley Bank were instead called Farmers Bank Of Santa Clara (they bank a lot of winegrowers!) we would have had this easily resolved. unfortunately it became somewhat political.

very surprised to see some politicians taking the position that payroll just isn't that a big deal, that companies/individuals personally need to make sure their bank doesn't go under, etc.

also, i was once on the board of a bank holding company. the fault here lies with the management of SVB, but there were intense and frequent audits by regulators to prevent exactly this from happening.

the government has a role to protect depositors, and we should all want this certainty. but part of the deal should be that when they get it wrong, they help take care of depositors (liquidity, arranging a sale, etc.)

P.S. "bonds are safe" is true in some sense but not if you might need to sell them before maturity.