This is a gigantic bailout, do not be confused by the governments wording.

Functionally a bank and hedge fund are practically the same. When you deposit at a bank it is no different than investing in a hedge fund. You get a return rate even though it is stupidly small, but it is guaranteed and you are allowed to withdraw whenever you like. They take your money and leverage 30x to do whatever dumb shit they want that regulators tell them is allowed.

A hedge fund will also take your money and leverage it 30x to do whatever dumb shit they want with less regulations.

The biggest difference is that 250k of your investment is covered through insurance. If you have more than 250k in a bank you should already know that the money can be lost.

What should happen is that SVB should have all assets immediately sold at auction, pay out the 250k from the insurance fund and whatever is left to the rest of the depositors.

If some random hedge fund went busto, is it fair at all that the government steps in and gives investors all their money back?

Not to mention a guaranteed loan to smaller banks is a big bailout by definition. Doesn’t matter if the government says backstop or whatever bullshit they come up with, it’s literally a textbook definition of bailout. If you were a smaller bank and realized you were in trouble you would have taken steps to mitigate the risk but now with the government loan you can continue doing dumb shit.

People complain a lot about capitalism and free market when in reality it is the government that is giving free hand outs to these big companies. Higher risk means higher rate of return but if the government won’t let you fail you will always take higher risk and smaller companies can never compete with that.