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- Manlobbi
Halls of Shrewd'm / US Policy❤
No. of Recommendations: 2
''So what is the bad thing that would happen if ALL deposits were covered by deposit insurance? Why don't we do it that way? '' why don't we charge large depositors a fee, to guarantee balances above 250k, like standard insurance? What would the grifter banking execs do with depositor money if they knew all balances were guaranteed? Bring the cash to Vegas? Worse? There is no free lunch, taxpayers always pay for ignorance, incompetence, and greed.
No. of Recommendations: 2
What would the grifter banking execs do with depositor money if they knew all balances were guaranteed?
Lets assume 3 banks, A, B and C and 3 depositors with $750k each.
Option 1, depositors split funds so they deposit $250k into each bank. Each bank has $750k fully insured, each depositor has fully insured funds.
Option 2, each depositor does not split funds, depositor 1 puts $750k into Bank A, depositor 2 puts $750k into bank B etc. Each bank now has $250k insured and $500k uninsured.
In which case would the bank executives operate in a poor fiduciary manner? From the author's previous comment, it would appear that you are suggesting it is better to not have fully insured amounts and the depositors should not split their funds. Perhaps having insured or non insured deposits does not affect bank executive behavior.
Craig
No. of Recommendations: 0
""From the author's previous comment, it would appear that you are suggesting it is better to not have fully insured amounts and the depositors should not split their funds."" hi, WHERE do you believe I said or suggested that? Thanks.
No. of Recommendations: 0
"So what is the bad thing that would happen if ALL deposits were covered by deposit insurance? Why don't we do it that way? '' why don't we charge large depositors a fee, to guarantee balances above 250k, like standard insurance?"
Agreed.
Perhaps those levels might need to be subject to inflation adjustments and/or periodic review.
Same for the fees.
