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And without it you get occasional massive runs on banks since they don't have actual full backing. Moreover the government will bail banks out if needed providi
by marcinzm 4y ago
And without it you get occasional massive runs on banks since they don't have actual full backing. Moreover the government will bail banks out if needed providing another but non-guaranteed layer of protection.
Maybe a better way to say it would have been that banks are safer because they're backed by the government including FDIC, bailouts, regulations, oversight, etc.
- unmole 4y ago> And without it you get occasional massive runs on banks FDIC doesn't prevent runs on banks. It only pays out after a bank is declared insolvent and there's nobody willing to buy the bank. Banks are regulated for good reasons which make them safer. But at the end of the day banks are in the business of transmuting unsafe long term debt into safe demand deposits.