5 ms·

Thats not what bank regulations have achieved.

davidw 9y ago
Compare and contrast to hypothetical banks with no regulations at all? Maybe they're not perfect right now, but it could be a lot worse, too.
- ethbro 9y ago
  I'd certainly agree that at least in the US, regulation has greatly increased banking transparency. There are still edge cases, but capital ratio requirements and accounting standards, compared to none? Huge difference.
quickben 9y ago
They have achieved trust is system. If my bank stops existing right now, I still have any money. If <exchange> gets hacked, tough luck.
- cmurf 9y ago
  It depends on the holdings, not everything you can have in a bank account is FDIC insured. Update: By "everything" I mean not all kinds of financial instruments are insured by the FDIC. They do not cover mutual funds, annuities, bonds, etc. They cover pretty much just cash and cash equivalents.
  - ceejayoz 9y ago
    It's fairly trivial to make sure everything's FDIC insured, and being wealthy enough to care about the per-account caps should mean you've got someone to advise you on doing so.
    - osteele 9y ago
      It doesn't even require a human advisor. Many banks participate in CDAR, which spreads large deposits across multiple accounts at other banks in the network. Fidelity isn't a bank, but their cash management feature includes checks, an ATM card, bill pay, and can send and receive ACH and wire transfers; they also implement this hack. None of this applies to securities. Presumably you could insure them. It's not obvious to me from first principles that the cost of insurance would wipe out any incremental appreciation value, but I've never heard of anyone doing this so probably it does.
      - koolba 9y ago
        Securities held at a broker are usually backed by SPIC protection.
  - quickben 9y ago
    True. But for average people at popular banks, it's very sufficient.
- conanbatt 9y ago
  Thats federally insured. You are paying taxes for your 'still have your money'. Not as clear cut as you think it is. If the government insured bitcoin 'for free' you would also see a major surge in confidence.
  - not_kurt_godel 9y ago
    The government insures bank deposits because it, and the vast majority of its citizens, has/have a vested interest in the stability of its currency. That's kind of the point of fiat currency. At the end of the day, there are dudes with guns that will back its value. Not so with Bitcoin. And good luck to any expecting that to change.
tootie 9y ago
There have been many notable failures of enforcement, but as someone who has been in and out of a few banks I can assure they take compliance extremely seriously most of the time. It's enough for people to have faith in the system.
abakker 9y ago
Are you sure of that? In many ways bank regulation has achieved exactly that. We have an SEC, we have mandatory filings, we have disclosure requirements, conflict of interest requirements, bank capital requirements, stress tests, and many rules about types of financial products which cannot be sold. Those create much more uniformity and trust in the system. (of course this comes with some cost, but, arguably the thing lost in the system is volatility more than anything else).
- SilasX 9y ago
  ... and then we had 2008, where you can violate all of that with reckless abandon and still get bailed out.
  - beavisthegenius 9y ago
    2008 was about over leverage and speculation.
    - demachina 9y ago
      It was also about mortgage fraud ... bond rating fraud ... multinational banks selling fraudulent mortgage backed securities based on the previous two frauds. Almost no one went to jail for any of it, the few who did were little fish. The SEC, Fed, Treasury and DOJ were asleep at the wheel before and during the crash and did almost nothing after other than reward the perpetrators: A. threw $700 billion in tax payer funds at them B. forced mergers that made some of them even bigger C. the Fed printed $4 trillion dollars and handed it to them to plow in to the stock market and juiced an 8 year bull market which enriched all of them. Cryptocurrencies certainly have their problems but the last 10 years have been a case study in how horrible fiat currencies and the current global financial system really is. Japan's central bank has printed so much money they own something like 65% of all the ETF's on the Nikkei. China, EU, U.S. and Japan have printed something like $16 trillion dollars since the crash. If banks leverage that at a conservative 12X that's $192 trillion. The world is awash in fantasy money.
      - 9y ago

Compare and contrast to hypothetical banks with no regulations at all? Maybe they're not perfect right now, but it could be a lot worse, too.

ethbro 9y ago
I'd certainly agree that at least in the US, regulation has greatly increased banking transparency. There are still edge cases, but capital ratio requirements and accounting standards, compared to none? Huge difference.

quickben 9y ago

They have achieved trust is system. If my bank stops existing right now, I still have any money. If <exchange> gets hacked, tough luck.

cmurf 9y ago
It depends on the holdings, not everything you can have in a bank account is FDIC insured. Update: By "everything" I mean not all kinds of financial instruments are insured by the FDIC. They do not cover mutual funds, annuities, bonds, etc. They cover pretty much just cash and cash equivalents.
- ceejayoz 9y ago
  It's fairly trivial to make sure everything's FDIC insured, and being wealthy enough to care about the per-account caps should mean you've got someone to advise you on doing so.
  - osteele 9y ago
    It doesn't even require a human advisor. Many banks participate in CDAR, which spreads large deposits across multiple accounts at other banks in the network. Fidelity isn't a bank, but their cash management feature includes checks, an ATM card, bill pay, and can send and receive ACH and wire transfers; they also implement this hack. None of this applies to securities. Presumably you could insure them. It's not obvious to me from first principles that the cost of insurance would wipe out any incremental appreciation value, but I've never heard of anyone doing this so probably it does.
    - koolba 9y ago
      Securities held at a broker are usually backed by SPIC protection.
- quickben 9y ago
  True. But for average people at popular banks, it's very sufficient.
conanbatt 9y ago
Thats federally insured. You are paying taxes for your 'still have your money'. Not as clear cut as you think it is. If the government insured bitcoin 'for free' you would also see a major surge in confidence.
- not_kurt_godel 9y ago
  The government insures bank deposits because it, and the vast majority of its citizens, has/have a vested interest in the stability of its currency. That's kind of the point of fiat currency. At the end of the day, there are dudes with guns that will back its value. Not so with Bitcoin. And good luck to any expecting that to change.

tootie 9y ago

There have been many notable failures of enforcement, but as someone who has been in and out of a few banks I can assure they take compliance extremely seriously most of the time. It's enough for people to have faith in the system.

abakker 9y ago

Are you sure of that? In many ways bank regulation has achieved exactly that. We have an SEC, we have mandatory filings, we have disclosure requirements, conflict of interest requirements, bank capital requirements, stress tests, and many rules about types of financial products which cannot be sold. Those create much more uniformity and trust in the system. (of course this comes with some cost, but, arguably the thing lost in the system is volatility more than anything else).

SilasX 9y ago
... and then we had 2008, where you can violate all of that with reckless abandon and still get bailed out.
- beavisthegenius 9y ago
  2008 was about over leverage and speculation.
  - demachina 9y ago
    It was also about mortgage fraud ... bond rating fraud ... multinational banks selling fraudulent mortgage backed securities based on the previous two frauds. Almost no one went to jail for any of it, the few who did were little fish. The SEC, Fed, Treasury and DOJ were asleep at the wheel before and during the crash and did almost nothing after other than reward the perpetrators: A. threw $700 billion in tax payer funds at them B. forced mergers that made some of them even bigger C. the Fed printed $4 trillion dollars and handed it to them to plow in to the stock market and juiced an 8 year bull market which enriched all of them. Cryptocurrencies certainly have their problems but the last 10 years have been a case study in how horrible fiat currencies and the current global financial system really is. Japan's central bank has printed so much money they own something like 65% of all the ETF's on the Nikkei. China, EU, U.S. and Japan have printed something like $16 trillion dollars since the crash. If banks leverage that at a conservative 12X that's $192 trillion. The world is awash in fantasy money.
    - 9y ago