Opinion: No More Bailouts

to inflation. This was a big problem for SVB because it invested billions in Treasury bonds with long-term maturities, whose value was practically destroyed due to the increase in the interest rate. The reality is probably a combination of these factors, among many others.

After the crash, the government had to decide whether or not to “bail out” the bank and the depositors. Since the 2008 crash, many banks have gotten the informal classification of “too big to fail,” meaning that the government will bail them out if they get into financial trouble. This system has rightly been criticized as “privatized profits and socialized losses,” meaning that the banks get to keep any profit that they make, but the government will bail them out if their business decisions don’t pay off. While the government did not bail out SVB itself, it decided that it would pay back all of the depositor’s money, even though 85% of it was above the $250,000 limit that is insured by the Federal Deposit Insurance Corporation. So while it is true that the bank itself did not get bailed out, many rich depositors, who had enough money to deposit multiple millions in SVB, will be getting all of their money back.

In light of this decision, many people have drawn comparisons to the student loan crisis, wondering why student loans aren’t being forgiven while these deposits are. Consistency is needed when dealing with both of these cases. The guiding principle should be that people are responsible for their own decisions, whether that’s taking out loans to go to college or putting their money into a bank. Their losses should not be subsidized by other taxpayers who were not involved in the decision. For both student loans and bank collapses, we need to address the root of the problem, not the unfortunate effects. We should work on lowering