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- John
- I am married and we have 3 adult daughters and a dog. We live in Plymouth MN. My interests are learning, communicating, home improvement projects, motorcycling, boating, and other outside activities. Thank you for reading my blog and have a great day !!!
20 comments:
Insurance is a bet that we hope to lose. The problem with bank insurance is that with banks, the people who make the decisions aren't the onees who will lose if they turn out badly. It is shareholders, and without insurance, depositors who lose. Managers, who made the bad decisions simply move on to other banks, or get jobs in Washington as lobbyists.
==Hiram
But where is the personal responsibility?
The FDIC sign in every bank clearly states that their deposits are only insured to $250,000.
And yet these idiots decided to pay out millions per customer in many cases.
The irony of course is that they are bailing out the WEALTHY depositors... :-O
What do you think should be done about the bankers who mismanaged the bank? Do you think running a business into the ground should be a crime?
--Hiram
Should all of us be punished for allowing banks to exist that did not adequately insure their investors? Should we have heeded the warning of those signs, that lots of people depositing money in this bank might go broke? Was the morally preferable thing to just store the money under the mattress?
--Hiram
It is one way the wealthy can hold the economy hostage. If the deposits are not paid off, pretty much all banks will go broke, and the costs to the FDIC will be far greater than the amount paid off to SVB depositors. For that reason, I have always viewed the insurance limits as somewhat illusory.
--hiram
I think only the government limits are illusory...
Yes people should have heeded those warning signs.
I doubt if mismanaging the bank is criminal unless fraud could be proven.
It is interesting that you seem to support this bail out for the wealthy depositors...
I think the insurer should have heeded the warning signs. Among other things, they should have noticed the extraordinary number and size of accounts that were over the limit.
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--HIram
Why would the insurer care if they were not responsible for paying for that stupidity?
We have deposit insurance to stabilize the economic system. I may have homeowner's insurance, but does that mean I shouldn't care if all the other houses in the neighborhood burn down. Bear in mind, insurance is a bet we want to lose.
--Hiram
If your house burns down, and you had it insured for 200,000...
Would you expect to get $400,000?
No.
If my neighbor lost the bulk of the money he deposited in a bank, would I withdraw my money from the bank? If his bank is collapsing, does that mean my bank is not?
Bear in mind that no bank can redeem all it's deposits at once. In theory, all of them are existentially vulnerable to runs.
==Hiram
Why would you withdraw any money if it is insured up to $250K?
Again... This bailout is for the wealthy... And will be paid for by all through higher fees.
At least it stopped the "contagian" for now...
Why would you withdraw any money if it is insured up to $250K?
Would you keep your money in a bank you thought was on the brink of collapse?
--Hiram
I have faith that US government will cover up to $250K... Don't you?
Yes. so you would keep money in a bank you believed is on the brink of bankruptcy?
--Hriam
As a practical matter, it would be virtually impossible for federal insurers to stick to their insurance limits. The reason if they did, it would bring on more bank failures causing much more in losses than would would be avoided by paying off a few investors in small local banks. Ordinarily, this never becomes an issue because the banks in trouble are bought by larger banks with not change visible to the public.
--Hiram
--
Yes.. It is like welfare for the wealthy...
For one thing, federal insurers should never insure banks which have large concentrations of uninsured depositors. And banks that allow that to happens should be required to put warning labels on their checks.
--Hiram
They are ensuring the deposits. Not the checks...
That is why they put a big sign in every bank...
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