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> While it sounds astounding that you have hundreds of forced bank closings, this is actually a well regulated market working as it should. I am not sure that t

> While it sounds astounding that you have hundreds of forced bank closings, this is actually a well regulated market working as it should. I am not sure that todays hyper-consolidated megabanks are a better implementation of a well regulated market. Who do you think runs the FDIC? Former chair: https://en.m.wikipedia.org/wiki/Jelena_McWilliams https://en.m.wikipedia.org/wiki/Jelena_McWilliams > In December of 2021, McWilliams announced her resignation from the FDIC.[11] Following the election of President Joe Biden, Democrats controlled all the seats on the FDIC except for the one she held.[12] She resigned after expressing her frustrations in an essay published in the Wall Street Journal with what she called the erosion of agency norms at the FDIC and a "hostile takeover" by the other directors. The FDIC is a captured entity. It is used as a political weapon and as a weapon for industry since it’s inception. These “inspections” enabled the hostile take over by other banks. The FDIC sells the assets and those assets are purchased by the mega banks for cheap. Who runs the FFIC? Former employees from these mega banks.

Shank 4y ago
- dmurray 4y ago
  I work in the financial sector and would never consider I needed to disclose that on HN when discussing something in banking. Also, I work in the technology sector and would never consider I needed to disclose that on HN when discussing, say, Google. Either is just far too big a field to expect that a conflict of interest is inevitable.
  - yieldcrv 4y ago
    This is useful to me because it gives more insight. So, I think your conclusions are wrong as the FDIC was brokering the sells of failing banks for a long time, otherwise people would have actually lost their money above the insurance limit or would have had to wait an unknown amount of time for the insurance reimbursement, and the same result would have occurred with the bigger more capitalized bank getting those customers and consolidating banking anyway. The fire sales are better, but this is just them having the data and getting on the phone to make it happen, Congress never asked them to do that but its a better outcome. I also think the FDIC does too much outside of its congressional mandate, so I can see how it is annoying to deal with as an institution.
- yieldcrv 4y ago
  No conflict = no interest
- lettergram 4y ago
  Lol what? I don’t have any obligation to disclose anything, nor is it “prudent”. Take my comment as you will, from a random person on the internet. I provided context in the quotes and citations I left — none of which you commented on..? To the point, what are you adding to the discussion with this? Not trying to come across snarky, but I don’t understand.
pintxo 4y ago
There will always be tension between the regulated and the regulator. How will we be able to have knowledgeable regulators without being able to employ people from the industry?
- lettergram 4y ago
  The FDIC shouldn’t be regulating, it’s insurance. It should or could be ran by accountants from accounting firms. Probably would be more suited anyway.
  - pintxo 4y ago
    a) Any insurance has a regulating effect on the market. As the insurer is interested in minimizing payouts. b) How would you take over (especially short term) ownership of a bank without having any idea about how banks work? Don’t get me wrong, the revolving doors between regulators and regulated are a problem. But I fail to see how just removing the door altogether is a successful fix.
    - lettergram 4y ago
      I don’t think an execs at a megacorp are all that qualified anyway lol. An accountant can be equally qualified to put stuff up to auction or assess risk. Second, they aren’t insuring only. In fact, they are typically liquidating. I think that’s part of the issue, it’s not a regulator body or an insurance body. It’s a liquidator that works, in part, at the behest of big banks and politicians.
yieldcrv 4y ago
Thats… a… perspective. The FDIC pretty much never uses the “deposit insurance” because the banks never get to that point of failure when the FDIC can instead just be a broker to a larger bank. That means you and I never really have to simulate how many $250,000 balance bank accounts to actually open for our cash millions. Even in 2008-2009 with the wave of bank failures, the insurance wasnt pulled. And so the behavior of the director composition doesn’t seem to have influence there.
- Spooky23 4y ago
  It always amazing to me that there is always someone in the woodwork upset about any organization.
kasey_junk 4y ago
A different comment posted the FDIC failed bank list: https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/ https://www.fdic.gov/resources/resolutions/bank-failures/fai... It goes a long way to refute your claim (unless you count the buckeye state bank as a mega bank).
- lettergram 4y ago
  My point wasn’t that the failed banks were megacorps, it’s that banking commissions just say “you’re insolvent”, then the FDIC steps in and sells to the highest bidder. The highest bidder is naturally a mega bank, which the members of the FDIC worked at previously.
  - bobthepanda 4y ago
    The acquiring institutions are also listed, which is what the commenter is saying; they're not really megacorps either. For a failure like WaMu, it was, but WaMu was the sixth biggest bank in the country, so really anyone acquiring its deposits would have to be in the top 5. --- the FDIC does two things; it makes sure that depositors are made whole, and it is supposed to stop bank runs from being contagious. Selling to another bank instead of taking it over makes both of those things much easier, because the FDIC does a good job of making sure the acquiring institution can actually handle it (unlike the EU counterparts, where sometimes the acquisition schemes ended up tanking the acquiring bank too); and because the acquiring bank exists and has money available, depositors have pretty much uninterrupted access to their deposits. (It's also not quite a sale, in that the FDIC voluntells the acquiring bank that they're about to take over a bank: https://www.npr.org/2009/03/26/102384657/anatomy-of-a-bank-takeover https://www.npr.org/2009/03/26/102384657/anatomy-of-a-bank-t...) One thing to note is that while FDIC does insure deposits, it takes a while for them to get everything sorted, so you could be waiting weeks to get your deposits back. Given that a majority of households survey cannot handle a $400 surprise financial emergency, this outcome is still pretty bad for bank depositors.

Shank 4y ago

dmurray 4y ago
I work in the financial sector and would never consider I needed to disclose that on HN when discussing something in banking. Also, I work in the technology sector and would never consider I needed to disclose that on HN when discussing, say, Google. Either is just far too big a field to expect that a conflict of interest is inevitable.
- yieldcrv 4y ago
  This is useful to me because it gives more insight. So, I think your conclusions are wrong as the FDIC was brokering the sells of failing banks for a long time, otherwise people would have actually lost their money above the insurance limit or would have had to wait an unknown amount of time for the insurance reimbursement, and the same result would have occurred with the bigger more capitalized bank getting those customers and consolidating banking anyway. The fire sales are better, but this is just them having the data and getting on the phone to make it happen, Congress never asked them to do that but its a better outcome. I also think the FDIC does too much outside of its congressional mandate, so I can see how it is annoying to deal with as an institution.
yieldcrv 4y ago
No conflict = no interest
lettergram 4y ago
Lol what? I don’t have any obligation to disclose anything, nor is it “prudent”. Take my comment as you will, from a random person on the internet. I provided context in the quotes and citations I left — none of which you commented on..? To the point, what are you adding to the discussion with this? Not trying to come across snarky, but I don’t understand.

pintxo 4y ago

There will always be tension between the regulated and the regulator. How will we be able to have knowledgeable regulators without being able to employ people from the industry?

lettergram 4y ago
The FDIC shouldn’t be regulating, it’s insurance. It should or could be ran by accountants from accounting firms. Probably would be more suited anyway.
- pintxo 4y ago
  a) Any insurance has a regulating effect on the market. As the insurer is interested in minimizing payouts. b) How would you take over (especially short term) ownership of a bank without having any idea about how banks work? Don’t get me wrong, the revolving doors between regulators and regulated are a problem. But I fail to see how just removing the door altogether is a successful fix.
  - lettergram 4y ago
    I don’t think an execs at a megacorp are all that qualified anyway lol. An accountant can be equally qualified to put stuff up to auction or assess risk. Second, they aren’t insuring only. In fact, they are typically liquidating. I think that’s part of the issue, it’s not a regulator body or an insurance body. It’s a liquidator that works, in part, at the behest of big banks and politicians.

yieldcrv 4y ago

Thats… a… perspective. The FDIC pretty much never uses the “deposit insurance” because the banks never get to that point of failure when the FDIC can instead just be a broker to a larger bank. That means you and I never really have to simulate how many $250,000 balance bank accounts to actually open for our cash millions. Even in 2008-2009 with the wave of bank failures, the insurance wasnt pulled. And so the behavior of the director composition doesn’t seem to have influence there.

Spooky23 4y ago
It always amazing to me that there is always someone in the woodwork upset about any organization.

kasey_junk 4y ago

A different comment posted the FDIC failed bank list: https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/ https://www.fdic.gov/resources/resolutions/bank-failures/fai... It goes a long way to refute your claim (unless you count the buckeye state bank as a mega bank).

lettergram 4y ago
My point wasn’t that the failed banks were megacorps, it’s that banking commissions just say “you’re insolvent”, then the FDIC steps in and sells to the highest bidder. The highest bidder is naturally a mega bank, which the members of the FDIC worked at previously.
- bobthepanda 4y ago
  The acquiring institutions are also listed, which is what the commenter is saying; they're not really megacorps either. For a failure like WaMu, it was, but WaMu was the sixth biggest bank in the country, so really anyone acquiring its deposits would have to be in the top 5. --- the FDIC does two things; it makes sure that depositors are made whole, and it is supposed to stop bank runs from being contagious. Selling to another bank instead of taking it over makes both of those things much easier, because the FDIC does a good job of making sure the acquiring institution can actually handle it (unlike the EU counterparts, where sometimes the acquisition schemes ended up tanking the acquiring bank too); and because the acquiring bank exists and has money available, depositors have pretty much uninterrupted access to their deposits. (It's also not quite a sale, in that the FDIC voluntells the acquiring bank that they're about to take over a bank: https://www.npr.org/2009/03/26/102384657/anatomy-of-a-bank-takeover https://www.npr.org/2009/03/26/102384657/anatomy-of-a-bank-t...) One thing to note is that while FDIC does insure deposits, it takes a while for them to get everything sorted, so you could be waiting weeks to get your deposits back. Given that a majority of households survey cannot handle a $400 surprise financial emergency, this outcome is still pretty bad for bank depositors.