I'm usually the first to scream "moral hazard" in a crowded theater, but... in this instance it's reductive.

Nobody of any note was really calling for SVB, it's director, it's board, it's bond/stock holders, etc. to be bailed out, and claiming otherwise is strawman shit. We all kinda agree that they made their bed and can burn in it accordingly... what some were calling for was a bailout of depositors, which isn't the same thing.

If there had been a proposed bailout of SVB, the moral hazard argument would say that socializing it's losses after years of private gains encourages banks of the future to engage in risk that's at least sometimes unsustainable, rather than banks restructuring themselves, and that we'll be right back here in another five or ten years.

There's a moral hazard to bailing out depositors too, I suppose. But what is that moral hazard? Avoiding that moral hazard by letting depositors lose that money is that it encourages any business with over 250k in a simple checking or money market account to distrust any bank other than the top four by fostering a lack of trust in the regional system itself.

Is that what we want? For basic accounts to be seen as inherently risky anywhere but the big 4, encouraging the consolidation of basic banking services into a few mega-players? Do we want to consolidate the entire industry into the big boys with the biggest lobbyists who already tend to write all our banking legislation through regulatory capture?

Bank runs are caused by a lack of trust, and the moral hazard of getting depositors their deposits back is that depositors might trust their deposits to be safe when put into accounts nobody had reason to suspect were risky in the first place.

There are good reasons to have bailed or not bailed out depositors, but I think my fellow libertarians that just scream "moral hazard" like it's entirely analogous to past bank bailouts that propped up actual banks aren't thinking it through.