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Banks do not take money from other accounts to cover operating losses, lol, thats almost certainly several crimes. [citation needed]. > But banks still operate
by arcticbull 5y ago
Banks do not take money from other accounts to cover operating losses, lol, thats almost certainly several crimes. [citation needed].
> But banks still operate as described (and using some of their pool of assets to buy private insurance is functionally the same as just adjusting the balances of people it is compensating for losses and increasing risk to others by doing so, except it smooths things a bit over time at the expense of higher average cost.)
It's really not. Customer deposits are segregated from the operating accounts in accordance with applicable law. You're not suggesting they're taking payroll out of customer deposits are you?
- dragonwriter 5y ago> Banks do not take money from other accounts to cover operating losses Banks don't keep money segregated in accounts. Banks have reserves, and accounts basically record the right of people to draw money. When they cover a fraud loss from one account by increasing the balance for that account to make the owner whole, they are doing exactly what crypto.com would be doing. Neither involves taking balances from others accounts, but both increase the risk of inability to cover accounts (including those of other people) as a result. Now, yes, banks provide consumers with more protection against the risk this creates, and are regulated in ways which make them less likely to do it to an extent which would create as much risk as a hype driven crypto exchange in the first place, but in terms of the basic mechanics, it is not any different than what has been suggested. The model of money actually being held segregated in an account works for things like lawyers holding client funds and a very few other specific things, but it doesn't really capture what goes on with banks at all.