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

by DocFeind • 3 years ago

13 7 3 years ago

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.

hsjqllzlfkf• 3 years ago

Congress standing up for the interests of the little guy with more than $250k deposit.

testHNac• 3 years ago

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.

chii2• 3 years ago

Unlimited deposit insurance is basically just saying that the bank can take as much risk with their deposits as possible!

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.

tpankaj2• 3 years ago

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.

chii2• 3 years ago

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.

Unlimited deposit insurance: A radical idea that’s gaining steam in Congress

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