For depositors like in this case, a little bit complex. What about possible contagion? Where will the contagion be stopped? Or just let it destroy the world if possible.
> nor expect sympathy or compensation
Maybe compensation like Bernie-Madoff style, remove all the profits of other persons. But this works fine by me because it will probably destroy crypto.
It seems to me it's a decision that trades off the risk of moral hazard for risk of contagion. To me, the rules were crystal clear -- if you have more than $250k in your account, that excess cash should be seen as "at risk".
Workarounds include depositing money in a brokerage account (and buying risk-free t-bills) or spreading it out across multiple bank accounts. Smart and risk-aware people did that, dumb people didn't (or alternatively, through specific rules that Silicon Valley Bank set, were prevented from taking their money elsewhere).
But as always, system tends to take decisions that increase moral hazards as time goes on. Swift and easy solution in the moment, but bad in the long run.
(Probably not productive to bring crypto into this discussion in my view.)
Which contagion though? The average person has between $5-6k in their bank accounts. There was certainly lots of talk on Twitter about this thing spreading -- and it's very possible that it might have -- but it was not a given. The loudest arguments for contagion came from the same people who had the biggest incentives to see SVB "bailed out". Hardly a coincidence. Just look at how vocal otherwise libertarian David Sachs was.
I don't think there is an official definition of bagholder as far as I'm aware.
I felt really stupid and angry after the collapse of FTX as you know, and truthfully, I could probably have used some professional therapy at the time. But at this point, I'm trying to look forward instead, and to me that is likely having an equally good (and positive) effect on my mental health as therapy would have had. Hopefully you can do the same as you search for the next chapter. Best of luck.
For euqity/bond holders of the bank, probably.
For depositors like in this case, a little bit complex. What about possible contagion? Where will the contagion be stopped? Or just let it destroy the world if possible.
> nor expect sympathy or compensation
Maybe compensation like Bernie-Madoff style, remove all the profits of other persons. But this works fine by me because it will probably destroy crypto.