Yes, the fact that US government will, to use the words of Rich Smith, cover all depositors at Silicon Valley Bank (SVB) made it clear that the rich have no problem with socialism when their highly leveraged money is on fire. This sorry business of going on and on about how the bailout will ultimately benefit Joe the Plumber (he will get his paycheck!), is the oldest con in the book.
One example of comments among many:
It's not socialism for the rich to make sure companies that used SVB can make their payroll and pay their WORKERS. I'm flabbergasted that people are conflating insuring depositors who trusted a bank to keep their money safe with bailing out investments.
A careful examination of this position will find it's not at all different from that made by the GOP when it comes to global warming: reducing America's dependence on fossil fuels will kill jobs and will hurt, in a word, WORKERS.
But if a bank can't do something as basic as secure deposits or be trusted to provide continual payroll services to businesses, then why do we have privately owned and run banks in the first place? Why don't we let the state just do this job? Why not make banking a utility like a sewer system? USPS could provide stress-free accounts to small businesses and individuals. This is, in part, the inspiration for the Postal Banking Act introduced by Sen. Kirsten Gillibrand and Sen. Bernie Sanders in 2020. There really is no need for the public to experience one headache after the next: deregulated banks taking huge and unrealistic risks that go bust, banks with minimal capital requirements, and banks that always end up too big to fail (TBTF). The banking sector is, in fact, already nationalized. It has been so since, at least, the collapse of Penn Square Bank in 1982. Indeed, TBTF is just another way of saying nationalized.
Note: The heterodox economist Dean Baker makes pretty much the same point in his recent Real-World Economics Review post "The Answer to the Silicon Valley Bank Bailout: Federal Reserve Banking":
The most obvious solution would be to have the Federal Reserve Board give every person and corporation in the country a digital bank account. The idea is that this would be a largely costless way for people to carry on their normal transactions. They could have their paychecks deposited there every two weeks or month. They could have their mortgage or rent, electric bill, credit card bill, and other bills paid directly from their accounts.
When Donald Trump raised the threshold for yearly stress tests from $50 billion to $250 billion in 2018, he made it sound like mom-and-pop banks would be liberated from cumbersome regulations. It was not about the rich people; it was, once again (trickle-down economics, job creators, cheap fossil fuels), about the little people.
...The change from a standard $50 billion threshold [signed into law by Barack Obama in 2010] to a standard $250 billion threshold was widely described as a major victory for banks with assets below $250 billion.
The list included SVB, whose chief executive officer, Greg Becker, had urged Congress to raise the threshold.
Becker argued in 2015 congressional testimony that imposing the regulations when a bank hit the $50 billion level would “unnecessarily” burden SVB, which then had assets approaching $40 billion, and require the company to spend time and money complying with rules instead of providing loans to job-creators. He also argued that SVB, like other “mid-sized” banks, “does not present systemic risks.”
SVB had $209 billion in assets when it collapsed last week. (And we can imagine the kind of satanic magic that transformed SVB from a bank with just a little under $40 billion in assets to one with nearly $210 billion assets in just seven years.) This "no systemic risks" business became the second-biggest bank failure in US history.
Note: In his Vanity Fair post "This Bank Panic Should Not Exist," Zachary D. Carter, The Price of Peace: Money, Democracy and the Life of John Maynard Keynes (I reviewed it here), makes it clear that, one, the typical person who banked with SVB had little in common with the probitus moms and pops of this world (they were filthy rich); and, two, a good number of Democrats supported Trump's 2018 rollback of bank regulations.
I think this is the best thing I've read on the SVB debacle. From @zachdcarter https://t.co/MlNQ4sPW3r— Chris Hayes (@chrislhayes) March 16, 2023
When will we give up backdoor socialism and finally have what is already right in front of our faces, front-door socialism? If our mainstream papers were down with the real, then this would be the only debate on the web and on TV. We do not live in a capitalist society; ours is, and has been since the collapse of welfare state capitalism in the early 1980s, state-backed capitalism.
Approving a merger with Boston Private Bank & Trust in 2021, Powell insisted SVB would not pose significant risk to the financial system in the event of financial distress. 20 months later, Powell cites systemic risk to justify bailing out SVB. https://t.co/TZmvCciNTf— David Fields (@ProfDavidFields) March 16, 2023
And so it is. Now that the rich are in deep shit again, will the Federal Reserve Chair Jerome Powell administer the pain (raise interest rates) that he openly and proudly targeted at the working classes? You know the answer already.