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Well, ultimately what you're saying is that you trust the FDIC more than you trust any given bank. That's nice, but it begs the question: - Will the FDIC fulfi
by byrneseyeview 15y ago
Well, ultimately what you're saying is that you trust the FDIC more than you trust any given bank. That's nice, but it begs the question:
- Will the FDIC fulfill its obligations at all times?
- How does the FDIC have the resources to do so?
- Does the presence of the FDIC lead to better or worse behavior among banks?
It's especially interesting to look at the issue of non-trustworthy people. When S&Ls were semi-deregulated in the early 80's, they got extra FDIC protection and were allowed to lend to a wider variety of projects. Suddenly, the credit decisions of the bank didn't matter, because the FDIC backstopped their deposits. And that attracted some really non-trustworthy people.
Wikipedia says the total cleanup cost was $87.9 billion, which discounts the opportunity cost from building pointless malls and empty offices. Can you imagine a BitCoin-based system ever hitting that level of losses?