Unlimited deposit insurance: A radical idea that’s gaining steam in Congress(marketwatch.com)
marketwatch.com
Unlimited deposit insurance: A radical idea that’s gaining steam in Congress
https://www.marketwatch.com/story/unlimited-deposit-insurance-a-radical-idea-thats-gaining-steam-in-congress-8aca02be
7 comments
Why would banks take more risk with their deposits? The bank executives, shareholders, and bondholders wouldn't be personally affected by the loss of deposits anyway so I'm not sure they would care either way. If deposits aren't guaranteed, they lose their investment, and if they are, they still lose their investment.
> Unless the insurance is paid for by the banks themselves
It is though. The FDIC insurance fund is funded by premiums paid by banks.
> Unless the insurance is paid for by the banks themselves
It is though. The FDIC insurance fund is funded by premiums paid by banks.
> The FDIC insurance fund is funded by premiums paid by banks.
those premiums were calculated based on the $250k limit.
So the premiums are too low, it must be argued, if the actual limit is higher than $250k. Which means someone took a loss here paying out the insurance on deposits.
Who this "someone" is right now, i am unable to tell. The gov't says it's not the taxpayer. But i have a sneaky feeling that it will eventually be the tax payer.
those premiums were calculated based on the $250k limit.
So the premiums are too low, it must be argued, if the actual limit is higher than $250k. Which means someone took a loss here paying out the insurance on deposits.
Who this "someone" is right now, i am unable to tell. The gov't says it's not the taxpayer. But i have a sneaky feeling that it will eventually be the tax payer.
By law, if the FDIC takes losses to the insurance fund to pay out on uninsured deposits, they have to charge an extra premium to the member banks. So it's still the banks paying for it.
Congress standing up for the interests of the little guy with more than $250k deposit.
This seems like a bad idea. But hey, to our congress that has no concept of money or anything, of course it seems like an amazing idea.
They won't bother fixing the system.
As they can bail it out repeatedly.
Till the time the World uses your currency as the Global Reserve, you can print all the money you want.
When the actions of politicians in one country, make the rest of the world suffer, wonder how long will that privilege last.
Till the time the World uses your currency as the Global Reserve, you can print all the money you want.
When the actions of politicians in one country, make the rest of the world suffer, wonder how long will that privilege last.
I think it's understandable that the current depositors from failed banks that are over the FDIC limit feels hurt if they don't get made whole, but this sort of thing cannot continue. Unless the insurance is paid for by the banks themselves, the risk transfer is not fair.