Golden Parachutes. Socialized Losses. And the Illusion of a “Safe” Banking System.
- Steadfast Equity
- 4 days ago
- 3 min read
In early 2023, Silicon Valley Bank and Signature Bank collapsed under the weight of poor asset-liability management and bloated exposure to duration risk. The headlines focused on depositors being “made whole.” But as always, the real cost was buried—redistributed quietly to the public under the guise of stability.
What was framed as depositor protection was, in reality, a bailout of systemic recklessness—funded by you.
The Mechanics of Modern Banking Failure
Let’s get clear on how this played out:
SVB and Signature were overexposed to long-dated Treasuries and tech-concentrated deposits.
They ignored interest rate risk and made yield-hungry bets during a near-zero rate environment.
When rates rose, those bets cratered—and the banks couldn’t cover the withdrawals.
Instead of letting the collapse run its natural course (where uninsured depositors take the hit, as risk theory would dictate), the government invoked the “systemic risk exception.” This meant:
All deposits—insured and uninsured—were protected.
The FDIC absorbed a $22 billion loss.
The bill would be passed to all banks through special assessments.
Banks would then pass those costs to consumers through lower yields and higher fees.
Let’s be clear: this wasn’t depositor protection. It was risk transfer—from wealthy depositors and poor management teams to the average saver and future taxpayer.
Moral Hazard, Meet Monetary Amnesia
What message does this send?
That risk doesn’t matter—so long as you’re big, loud, or well-connected.
That you can pay insider bonuses, issue rich equity grants, and then offload the bill when things blow up.
That yield-chasing institutions can run reckless portfolios, and the government will still sweep in to clean up.
It’s privatized upside, socialized downside.
Meanwhile, the average American:
Earns 0.5–2% on deposits,
Pays higher fees to subsidize FDIC assessments,
Faces reduced purchasing power as deficits balloon and inflation creeps in,
And sees their tax dollars quietly absorb the damage from another elite failure.
This isn’t a glitch in the system. It is the system.
The Broader Cost: Generational Theft
These aren’t isolated incidents. They’re symptoms of a system addicted to leverage, backstops, and manipulated incentives.
When banks fail and FDIC steps in:
Premiums rise across the sector.
Yields on savings accounts compress further.
Risk is swept under the rug.
And when that’s not enough? The Fed prints.
The end result?
You earn less.
You pay more.
Your children inherit the inflation and debt.
So while SVB’s insiders walked away with severance packages, and Signature’s executives dodged real accountability, you—the so-called “protected” class—covered the tab.
A Different Framework: Discipline Over Dependency
At Steadfast Equity, we don’t believe in safety by decree.
Our model is built around first principles:
Low leverage (0.25:1 or better)
Asset-backed structures
Real underwriting, not theoretical coverage
No reliance on bailout culture
We’re not exposed to public markets. We’re not playing interest rate arbitrage games. And we don’t need a government backstop to keep promises to investors.
We don’t insure the downside—we overcollateralize it.
Final Word
The public was told these failures were “handled.” But handled for who?
When bad actors are rewarded, average savers punished, and systemic incentives go uncorrected—you’re not in a safe system. Instead, you’re in a fragile one, painted over with bureaucratic reassurance.
Real safety isn’t a stamp from the FDIC. It’s a capital structure that doesn’t require one.
Choose firms that build from discipline, not dependency.
