> At the same time, they’ve essentially raised the insurance limit to infinity.
No, they haven’t. The systemic risk exception was used during the last financial crisis for some banks and not others, so using it now doesn’t raise the insurance limit, actually or “essentially”. There is (still) no guarantee that it will be used for any particular failure in the future, just like there wasn’t after the last financial crisis, and people have lost funds in excess of the $250K insurance limit since the last use of the systemic risk exception.
One could argue that SVB depositors would not be expecting the be made whole if it weren't for the bailouts of 2008. The precedent has been set and reinforced. It's hard to argue that this will not encourage more risk taking and moral hazard.
That precedent was set at least as far back in the early 90's when they made depositors of Bank of New England Bank whole after it failed in 1991. This isn't something that started with the financial crisis of '08
No, they haven’t. The systemic risk exception was used during the last financial crisis for some banks and not others, so using it now doesn’t raise the insurance limit, actually or “essentially”. There is (still) no guarantee that it will be used for any particular failure in the future, just like there wasn’t after the last financial crisis, and people have lost funds in excess of the $250K insurance limit since the last use of the systemic risk exception.