Originally posted as a Twitter thread on March 11, 2023

We no longer live in the “It’s a Wonderful Life” bank era. Fear can spread at the speed of WhatsApp and iMessage and Twitter, and electronic transfers can instantaneously render a bank insolvent.

Branches and branch-centric thinking are anachronisms.

At the same time, banks in 2023 do MUCH MORE than just lend and deposit money. They provide pipes and technology for *everything.* Payments are mostly electronic, not cash. Payroll goes to a payroll company which…has its own bank.

The Great Depression rendered a whole generation skeptical of banks. Money under mattresses was a thing. But that’s before commerce was entirely electronic. Most people can’t live life “cash under a mattress” even if they try. Lots of places won’t even accept cash!

And if you just say, ok, I’ll diversify banks at $250K max cap…what do you do if your business has a $1M payroll run to make and you use ADP/Paychex/etc. Which bank do THEY use? Or: How do you buy something like a >$250K house where the money “sits” somewhere in escrow?

Do we really want to concentrate all US deposits in 4 big banks? They can’t withstand a 50% instant withdrawal event, either. Or concentrate OUT of banks and into short-term t-bills?

2023 is not 1933