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> FDIC should issue a statement guaranteeing beyond the $250K/depositor limit sooner rather than later in order to stem some of the outflow. is there precedent

by niij 4y ago

> FDIC should issue a statement guaranteeing beyond the $250K/depositor limit sooner rather than later in order to stem some of the outflow. is there precedent for that?

alex_young 4y ago
The current limit is the result of such action in 2008: https://archive.fdic.gov/view/fdic/3388 https://archive.fdic.gov/view/fdic/3388
- jpmattia 4y ago
  They went beyond it for several banks: To my knowledge, nobody lost money in the dozens of banks that the FDIC closed in the 2008 meltdown, despite several depositors being beyond the FDIC limits.
  - pyrale 4y ago
    Did they even have that power in 2008? I remember they issued a statement about how they could have avoided losses for creditors, had they properly liquidated Lehman Brothers [1]. [1]: https://www.fdic.gov/regulations/reform/lehman.html https://www.fdic.gov/regulations/reform/lehman.html
    - jpmattia 4y ago
      > Did they even have that power in 2008? I don't remember tbh, but IndyMac (in July 08) was before Lehman (in Sept) so I think the answer is yes.
  - SkyPuncher 4y ago
    My impression has always been the limit has been designed to accommodate a "worse case scenario" where many, many banks need to be saved. If it's only a handful, it's in the gov't interest to ensure that businesses and people don't loose their savings.
  - TMWNN 4y ago
    Not true. IndyMac customers got 50 cents on the dollar, even with the retroactive raising of the FDIC insurance limit to $250K.
jpmattia 4y ago
> is there precedent for that? Again, it would be better to have a comment from someone who banks for a living, but back in 2008 when the FDIC limit was $100K, ISTR Sheila Bair making a statement to that effect (IndyMac?). One large issue was that companies would regularly be above the limit in order to run their payrolls, and so got caught in a bad position. That started companies with other banks worrying about where they were parking money, contributing to a systemic issue.

by niij 4y ago

> FDIC should issue a statement guaranteeing beyond the $250K/depositor limit sooner rather than later in order to stem some of the outflow. is there precedent for that?

alex_young 4y ago

The current limit is the result of such action in 2008: https://archive.fdic.gov/view/fdic/3388 https://archive.fdic.gov/view/fdic/3388

jpmattia 4y ago
They went beyond it for several banks: To my knowledge, nobody lost money in the dozens of banks that the FDIC closed in the 2008 meltdown, despite several depositors being beyond the FDIC limits.
- pyrale 4y ago
  Did they even have that power in 2008? I remember they issued a statement about how they could have avoided losses for creditors, had they properly liquidated Lehman Brothers [1]. [1]: https://www.fdic.gov/regulations/reform/lehman.html https://www.fdic.gov/regulations/reform/lehman.html
  - jpmattia 4y ago
    > Did they even have that power in 2008? I don't remember tbh, but IndyMac (in July 08) was before Lehman (in Sept) so I think the answer is yes.
- SkyPuncher 4y ago
  My impression has always been the limit has been designed to accommodate a "worse case scenario" where many, many banks need to be saved. If it's only a handful, it's in the gov't interest to ensure that businesses and people don't loose their savings.
- TMWNN 4y ago
  Not true. IndyMac customers got 50 cents on the dollar, even with the retroactive raising of the FDIC insurance limit to $250K.

jpmattia 4y ago

> is there precedent for that? Again, it would be better to have a comment from someone who banks for a living, but back in 2008 when the FDIC limit was $100K, ISTR Sheila Bair making a statement to that effect (IndyMac?). One large issue was that companies would regularly be above the limit in order to run their payrolls, and so got caught in a bad position. That started companies with other banks worrying about where they were parking money, contributing to a systemic issue.