They had no choice. Every outlet and pundit and influencer and anyone else with an audience gets points for framing this one way or another, but the truth is they didn't have a choice.
In what sense? It's not as if anyone was going to lose their ass. Most estimates have the likely losses of uninsured accounts at 5-15%. They could have easily extended short term low interest loan of some percentage of deposits so that depositors could have met cash payment needs without interruption.
Contagion and runs at other banks is what they had to prevent. The depositor situation at SVB wasn’t the issue. I think it was the reverse, at any rate. Something like 90% of depositors had more. Most estimates have the likely losses of uninsured accounts at 5-15%.
No the actual realized losses on accounts above the 250k cap would have been in the 5-15% range. The bank still has lots and lots of assets and lots and lots of cash. So all those assets and all that cash get distributed to account holders before creditors, and if you had $1,000,000 there, then the best estimates I've read said you stood to lose about $75,000 (10% of the sum above $250k). Not chump change, but also not exactly Armageddon. Just do a thought experiment where instead of being the bank of tech, this was the preferred bank of the Factory Farmers of America or Big Oil or whatever, and that they're all vocal Trump supporters. Do you think it would have played out differently? I do. We can't live in a world where laws don't matter. Ever since the AUMF each president has taken it upon himself to rule by decree, each more so than the last. This is just another example to me.
https://www.reuters.com/markets/us/first-republic-bank-tumbles-drags-down-shares-other-regional-lenders-2023-03-16/ It’s a desperate struggle atm. The left hates SVB depositors. No political points were scored.