4 ms·

When was the last time you or anyone you know checked the solvency or the soundness of the financial practices of the bank your checking account it in? I'm bet

When was the last time you or anyone you know checked the solvency or the soundness of the financial practices of the bank your checking account it in? I'm betting on "never". I haven't either. This wasn't true before the FDIC. Banks tried to project an image of conservative solidarity. They don't bother with that anymore.

grzm 9y ago
Can you point to where the FDIC as an institution is responsible for this? The primary banking crises of my lifetime were the S&L in 1980 and the 2008 bailouts, neither of involved the FDIC. In the S&L crises, the responsibilities of the FSLIC (which were responsible for insuring the S&Ls) were transferred to the FDIC, and FDIC banks ended up contributing into the bailout, but I would have a hard time seeing the FDIC (as opposed to the FSLIC) as a direct cause of the S&L crises. As for "solvency", I frankly do take into account bank reputation (admittedly as a proxy for solvency or soundness) when opening an account. I also know the difference between a credit union, a bank, and a savings and loan company, and other financial services companies. I know the regulations between these differ. I also know that the regulations of accredited banks (as opposed to other financial institutions) are pretty stringent and don't allow them to hand out loans of the type that played a role in the 2008 crisis. One of the reasons these crises happened in the S&L and mortgage industries was because the regulations that covered those particular instruments and institutions weren't as stringent as the banks. It's easy and understandable to conflate banks and other financial institutions because often they're inter-related, but they are separate, and to really understand what happened requires taking these differences into account. Please don't read this as some sort of apologia for the financial industry: it's not. In my opinion there are systemic problems. I do take issue with landing this at the feet of the FDIC.
- skookumchuck 9y ago
  > Can you point to where the FDIC as an institution is responsible for this? The most obvious is to look at bank buildings built before the FDIC and after. Before they were massive stone edifices with spectacular vault doors inside very visible to the customers. https://upload.wikimedia.org/wikipedia/commons/f/f8/U.S._National_Bank_Building_-_Portland%2C_Oregon.jpg https://upload.wikimedia.org/wikipedia/commons/f/f8/U.S._Nat... https://upload.wikimedia.org/wikipedia/commons/thumb/8/87/WinonaSavingsBankVault.JPG/300px-WinonaSavingsBankVault.JPG https://upload.wikimedia.org/wikipedia/commons/thumb/8/87/Wi... After, they were cheap insubstantial buildings in strip malls. The corner Radio Shack here has morphed into a Wells Fargo branch :-) This one looks like a gas station: http://www.jeffarchitect.com/images/projects/exp-websterbank.jpg http://www.jeffarchitect.com/images/projects/exp-websterbank...
  - grzm 9y ago
    Churches have undergone similar changes in architecture. The local roller rink is now a church. I included a lot more in my comments which is more substantial. If this is what you're going to continue with, it's hard to imagine the conversation is likely to improve. Best wishes and I hope you enjoy the rest of your day.
    - skookumchuck 9y ago
      Very few monumental churches were built in the US. The monumental ones in Europe date from eras where the church was able to forcibly extract funds to build them - not volunteer donations. It's a very different dynamic.
- skookumchuck 9y ago
  > I frankly do take into account bank reputation As a proxy for soundness isn't the same thing as soundness. Consider that none of a modern banks promotional/marketing materials say anything about soundness. Customers don't care about that because of FDIC.

grzm 9y ago

Can you point to where the FDIC as an institution is responsible for this? The primary banking crises of my lifetime were the S&L in 1980 and the 2008 bailouts, neither of involved the FDIC. In the S&L crises, the responsibilities of the FSLIC (which were responsible for insuring the S&Ls) were transferred to the FDIC, and FDIC banks ended up contributing into the bailout, but I would have a hard time seeing the FDIC (as opposed to the FSLIC) as a direct cause of the S&L crises. As for "solvency", I frankly do take into account bank reputation (admittedly as a proxy for solvency or soundness) when opening an account. I also know the difference between a credit union, a bank, and a savings and loan company, and other financial services companies. I know the regulations between these differ. I also know that the regulations of accredited banks (as opposed to other financial institutions) are pretty stringent and don't allow them to hand out loans of the type that played a role in the 2008 crisis. One of the reasons these crises happened in the S&L and mortgage industries was because the regulations that covered those particular instruments and institutions weren't as stringent as the banks. It's easy and understandable to conflate banks and other financial institutions because often they're inter-related, but they are separate, and to really understand what happened requires taking these differences into account. Please don't read this as some sort of apologia for the financial industry: it's not. In my opinion there are systemic problems. I do take issue with landing this at the feet of the FDIC.

skookumchuck 9y ago
> Can you point to where the FDIC as an institution is responsible for this? The most obvious is to look at bank buildings built before the FDIC and after. Before they were massive stone edifices with spectacular vault doors inside very visible to the customers. https://upload.wikimedia.org/wikipedia/commons/f/f8/U.S._National_Bank_Building_-_Portland%2C_Oregon.jpg https://upload.wikimedia.org/wikipedia/commons/f/f8/U.S._Nat... https://upload.wikimedia.org/wikipedia/commons/thumb/8/87/WinonaSavingsBankVault.JPG/300px-WinonaSavingsBankVault.JPG https://upload.wikimedia.org/wikipedia/commons/thumb/8/87/Wi... After, they were cheap insubstantial buildings in strip malls. The corner Radio Shack here has morphed into a Wells Fargo branch :-) This one looks like a gas station: http://www.jeffarchitect.com/images/projects/exp-websterbank.jpg http://www.jeffarchitect.com/images/projects/exp-websterbank...
- grzm 9y ago
  Churches have undergone similar changes in architecture. The local roller rink is now a church. I included a lot more in my comments which is more substantial. If this is what you're going to continue with, it's hard to imagine the conversation is likely to improve. Best wishes and I hope you enjoy the rest of your day.
  - skookumchuck 9y ago
    Very few monumental churches were built in the US. The monumental ones in Europe date from eras where the church was able to forcibly extract funds to build them - not volunteer donations. It's a very different dynamic.
skookumchuck 9y ago
> I frankly do take into account bank reputation As a proxy for soundness isn't the same thing as soundness. Consider that none of a modern banks promotional/marketing materials say anything about soundness. Customers don't care about that because of FDIC.