If banks fail, who pays ?
mark94
Arizona
From the Kobeissi Letter
Uninsured Deposits by Bank:
“1. BNY Mellon, $BK: 97%
2. SVB, $SIVB: 94%
3. State Street, $STT: 91%
4. Signature, $SBNY: 90%
5. Northern Trust, $NTRS: 83%
6. Citigroup, $C: 77%
7. HSBC Holdings, $HSBA: 73%
8. First Republic Bank, $FRC: 68%
9. East West Bancorp, $EWBC: 66%
10. Comerica, $CMA: 63%
There are now a total of $8 trillion in uninsured deposits in the U.S.
Roughly 40% of all deposits are uninsured.”
Right now, the account holder is legally at risk for these amounts over $250,000. Even so, Treasury decided to protect the account holders at SVB.
Now, there is a debate about whether the government should assume the risk of all of this.
Personally, the moral hazard argument sways me. If you remove any penalty for doing stupid shit, people will do a lot more stupid shit. And, as someone who doesn’t keep $250,000 in a bank, I don’t think I should pay for others stupidity.
In most cases, these accounts are businesses and wealthy investors who should understand the FDIC limits. They also had an obligation to determine the financial health of the bank where they were parking their money. That’s how you incentivize banks to invest wisely.
Uninsured Deposits by Bank:
“1. BNY Mellon, $BK: 97%
2. SVB, $SIVB: 94%
3. State Street, $STT: 91%
4. Signature, $SBNY: 90%
5. Northern Trust, $NTRS: 83%
6. Citigroup, $C: 77%
7. HSBC Holdings, $HSBA: 73%
8. First Republic Bank, $FRC: 68%
9. East West Bancorp, $EWBC: 66%
10. Comerica, $CMA: 63%
There are now a total of $8 trillion in uninsured deposits in the U.S.
Roughly 40% of all deposits are uninsured.”
Right now, the account holder is legally at risk for these amounts over $250,000. Even so, Treasury decided to protect the account holders at SVB.
Now, there is a debate about whether the government should assume the risk of all of this.
Personally, the moral hazard argument sways me. If you remove any penalty for doing stupid shit, people will do a lot more stupid shit. And, as someone who doesn’t keep $250,000 in a bank, I don’t think I should pay for others stupidity.
In most cases, these accounts are businesses and wealthy investors who should understand the FDIC limits. They also had an obligation to determine the financial health of the bank where they were parking their money. That’s how you incentivize banks to invest wisely.
10 comments
If you have a few million you and your spouse could spread it out over several local banks and still be FDIC insured.
I imagine if someone has 3 million in one account they probably have 3 million in other banks and is that like us losing a $50 bill? Would would all be pissed but it wouldn’t be the end of the world for us.
Hearing about good businesses in good standing not being able to make their payroll because of a bank failure is quite scary. I don’t have a problem with their money being protected to be able to pay their bills to continue to operate and pay their employees.
You really have to look at inflation as a tax. It's not a progressive tax that falls more on the rich. It hurts rich and poor alike. The tax is to pay for government spending done to benefit those with political connections. Right now, people are moving money out of smaller banks into bigger banks because they understand the bigger banks are more likely to get bailed out. They will be "too big to fail". It's the little guy, the little business, the little bank that's gets hurt under the current system.
“It is the sufferings of the many which pay for the luxuries of the few.”
~ Greta Tintin Eleonora Ernman Thunberg
~ Born: 3rd January 2003 Stockholm, Sweden
~ Occupation: Student, environmental activist
Awards:
~ Fritt Ord Award (2019)
~ Rachel Carson Prize (2019)
~ Ambassador of Conscience Award (2019)
~ Right Livelihood Award (2019)
~ International Children's Peace Prize (2019)
~ Time Person of the Year (2019)
~ Gulbenkian Prize for Humanity (2020)
Plus, research good a credit union rather than a commercial bank. The vast majority don't need to use The Bigs for their banking.
U.S. Billionaires Got $1 Trillion Richer During Trump’s Term
https://www.bloomberg.com/news/articles/…
Since 1913, the Fed has intervened many times to counteract market forces. I would argue it has caused as much harm as good. For example, keeping rates artificially near zero for 15 years has led to the problems we now face.
The Fed often over corrects, both on the upside and downside, causing wild swings in the economy and negating natural market forces.
Now you have the Democrats, along with neocon Republicans, delivering weapons to the Ukraine to benefit the giant military-industrial complex. The real divide in this country is between the corrupt parasitic elites at the top and everyone else.