I don’t like semantic games either. I always do my best to resolve a word to mean “the thing people care about when they use this word”. In the case of “bailout” it seems to me that what people care about is whether it will cost taxpayers.
In the case of SVB, it seems that their assets will cover their deposits, and FDIC has an insurance fund that gives them the liquid capital to cover deposits immediately while waiting for assets to sell. So no cost to taxpayers - not even in the form of “higher deposit insurance costs to banks being passed on to bank customers, who are taxpayers”.
(It’s possible to play semantic games until we formulate a picture that does show taxpayers will pay, e.g. “the FDIC’s deposit insurance fund is made up of payments made by banks, and banks would have passed on the cost of those payments to customers in the form of not offering as much interest on deposits as they otherwise would have offered, so the funds used to make the bridge are a bailout the taxpayer has already paid for”. Money is infinitely fungible, you can always tell a story where taxpayers paid the bill. But we said we weren’t going to play semantic games.)
The anger I’m familiar with surrounding bailouts has to do with the government stepping in to rescue banks that, in the eyes of the angered, were engaging in corrupt and risky/greedy practices. Whether the money came from taxpayers, or was truly magically free, this anger would remain.
Your definition of ballot is the one that is strange to me —- in attempting to avoid confusion, you would have created much confusion with me.
I don't think the second part is a semantic game at all. This switch to insure all deposits rather than just deposits up to a fairly low limit will definitely impose additional costs to the banking sector which will definitely be passed on to some degree or other. I agree this is certainly not a transfer of tax money to private institutions, and I applaud that, but I still think it is socializing a big chunk of additional risks of an industry where the rewards are large and private.
But more broadly I just don't think "bailout" is as narrow as just "costs taxpayers". This may be wrong, but I think of "bailout" as having its root in what you do to save a sinking ship. The widespread belief here is that there was a significant risk of an important ship - the banking sector - sinking, and government action has been taken to keep it from sinking. To me, we've bailed out that sinking ship. (And I'm glad we did!)
I guess it remains to be seen whether I'm the weirdo with a strange definition, or whether everyone will agree that this was a bailout, once it stops being a question with such immediacy.
I do see where your definition of a bailout is coming from, I don’t think it’s that weird. Perhaps the disconnect is that I’m assuming people would not hate a bailout that they actually genuinely really don’t pay anything for; they would press a button to bail out a sinking ship if it was really free to do so, even if the ship was sinking solely by incompetence on the part of the ship’s captain.
So the opposition to bailouts is actually “opposition to bailouts that cost taxpayers” plus an enormous dose of “we know you sneaky fuckers always lie about bailouts not costing taxpayers so we will assume all bailouts cost taxpayers”.
The disconnect comes from the question of whether there is actually a magical thing where government can provide insurance to private entities without it costing society anything. Of course that magic doesn't actually exist. Public subsidies always cost something.
I liked this definition of what a bailout is, which meshes with mine but puts it in better words, via Dan Davies on today's Odd Lots podcast:
> "When the state steps in and provides insurance so that something economically destructive doesn't happen."
Yeah, like I said, this is the disconnect. Assume for a moment that magic does exist. Maybe aliens come to Earth and hands the government a stack of gold from outside the solar system worth exactly that much, which the government uses to pay for the bank’s issues and nothing else, and then the aliens leave promising to never return. If that happens, it didn’t cost taxpayers anything, so it can’t be called a bailout, since bailouts necessarily cost the taxpayers. Except in another sense it is obviously a bailout, the aliens literally flew in from outer space and bailed out the bank and the government.
So a bank bailout is when an outside party pays to solve the issue, and a bailout is also when taxpayers foot the bill. If taxpayers do not foot the bill for SVB in any appreciable way, is it a bailout?
> I liked this definition of what a bailout is, which meshes with mine but puts it in better words, via Dan Davies on today's Odd Lots podcast:
> "When the state steps in and provides insurance so that something economically destructive doesn't happen."
So the FDIC existing is a bailout to start with, so arguing over whether SVB should get a bailout isn’t about the systemic risk exception being invoked at all, but about the existence of public deposit insurance in any form?
In the case of SVB, it seems that their assets will cover their deposits, and FDIC has an insurance fund that gives them the liquid capital to cover deposits immediately while waiting for assets to sell. So no cost to taxpayers - not even in the form of “higher deposit insurance costs to banks being passed on to bank customers, who are taxpayers”.
(It’s possible to play semantic games until we formulate a picture that does show taxpayers will pay, e.g. “the FDIC’s deposit insurance fund is made up of payments made by banks, and banks would have passed on the cost of those payments to customers in the form of not offering as much interest on deposits as they otherwise would have offered, so the funds used to make the bridge are a bailout the taxpayer has already paid for”. Money is infinitely fungible, you can always tell a story where taxpayers paid the bill. But we said we weren’t going to play semantic games.)