Fully reimbursing SVB depositors may be a bad move

On Sunday, the US Treasury, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) jointly announced a package of actions to stop the turmoil from Silicon Valley Bank’s insolvency and Signature Bank’s near collapse. As details gradually emerge about the process that led to that decision, it appears likely that a primary motivation was to rescue Silicon Valley from what might have been a severe downturn.