> At the same time, this is yet another example of changing the rules in the middle of the game.
Not exactly. Or rather yes, but the rules changed in 2008, not this week. Specifically after IndyMac failed in 2008, there was significant blowback on the FDIC from Congress, and an unoficial, unnounced policy was put in place to ignore the $250k limit and ensure uninsured depositors took no losses in (almost) all cases.
> Of the 127 banks and thrifts that failed from Jan. 1, 1993, to the last bank that failed before IndyMac was closed [...] 71% of the total deposits of the 127 failures were in institutions where uninsured depositors suffered a loss, while 29% of the deposits were in institutions resolved through a P&A that fully protected uninsured depositors from any loss whatsoever.
Whereas:
> Since IndyMac, there have been 522 failures, excluding Washington Mutual [...] Of the 522 failures, just 31, or 5.9%, were resolved in a manner that only protected insured deposits — uninsured depositors were therefore put at risk of a loss. Those 31 banks and thrifts held just 4.9% of the deposits of the post-IndyMac failures.
(Washington Mutual is excluded because it was enormous compared to the other failed banks - although since uninsured depositors were protected, including it just skews the stats even further.)
So for the past 15 years, we've had a system where the overwhelming majority (well over 95%) of uninsured deposits were protected, and thus, it would have been legitimately very surprising if recovery for uninsured deposits in SVB wasn't 100%, because it's very clear that unstated FDIC policy is to aim for that, and they've got a strong track record of achieving it. (I will state that I find the hidden nature of this policy problematic, however.)
The only thing surprising about events so far is that there's been enough noise that some new policies had to be announced, instead of it all just being quietly resolved like normal.
Not exactly. Or rather yes, but the rules changed in 2008, not this week. Specifically after IndyMac failed in 2008, there was significant blowback on the FDIC from Congress, and an unoficial, unnounced policy was put in place to ignore the $250k limit and ensure uninsured depositors took no losses in (almost) all cases.
From https://www.americanbanker.com/opinion/will-fdic-keep-protec...:
> Of the 127 banks and thrifts that failed from Jan. 1, 1993, to the last bank that failed before IndyMac was closed [...] 71% of the total deposits of the 127 failures were in institutions where uninsured depositors suffered a loss, while 29% of the deposits were in institutions resolved through a P&A that fully protected uninsured depositors from any loss whatsoever.
Whereas:
> Since IndyMac, there have been 522 failures, excluding Washington Mutual [...] Of the 522 failures, just 31, or 5.9%, were resolved in a manner that only protected insured deposits — uninsured depositors were therefore put at risk of a loss. Those 31 banks and thrifts held just 4.9% of the deposits of the post-IndyMac failures.
(Washington Mutual is excluded because it was enormous compared to the other failed banks - although since uninsured depositors were protected, including it just skews the stats even further.)
So for the past 15 years, we've had a system where the overwhelming majority (well over 95%) of uninsured deposits were protected, and thus, it would have been legitimately very surprising if recovery for uninsured deposits in SVB wasn't 100%, because it's very clear that unstated FDIC policy is to aim for that, and they've got a strong track record of achieving it. (I will state that I find the hidden nature of this policy problematic, however.)
The only thing surprising about events so far is that there's been enough noise that some new policies had to be announced, instead of it all just being quietly resolved like normal.