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Thinking that the proposal making the rounds that in the future all deposits be fully insured is not so crazy. Paid for by the banks (and subsequent fees) of co
by chkaloon 4y ago
Thinking that the proposal making the rounds that in the future all deposits be fully insured is not so crazy. Paid for by the banks (and subsequent fees) of course.
After this, cash sweeps will become VERY popular, making full insurance essentially the case anyway.
- HWR_14 4y agoEh, I have no idea why I should be forced to subsidize the banking practices of billion dollar corporations with fees on my money. At some point you have enough wealth you are responsible for managing it well. I understand the social benefits of making sure ordinary people using banks ordinarily are safe. But Roku can afford to manage its own risk.
- chkaloon 4y agoIf cash sweeps become ubiquitous, you will be subsidizing it whether you want to or not. This just makes it explicit.
- HWR_14 4y agoYou seem to be using cash sweep differently from how I do. Care to explain how you mean it?
- chkaloon 4y agoThe term meaning varies by brokerage, but my implied meaning here is a service that distributes a large virtual account across a network of banks to keep the individual actual accounts below the insured limit. If this becomes the norm, even large accounts will become effectively insured. They will pay a fee (or receive a lower return) for it for sure. You could argue that this is a free market way to adjust from this event, but this was already available yet the failure still happened. Making it explicit saves the system from future less savvy or inattentive depositors creating a mess again.
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- HWR_14 4y agoI don't see how this usage means that I will have to subsidize risks in the future. That usage implies the way to reduce exposure is literally for companies to spread their assets so any given bank run doesn't impact many of their assets. That is, they have to actually reduce their risk.
- chkaloon 4y agoBecause is increases dramatically the demand for FDIC insurance, which raises the fees on everyone.
- chkaloon 4y agoBased on the FDIC/Fed/Treasury actions this afternoon, they have effectively removed the $250K limit as a practical thing. If you have a deposit, you will be "bailed out", "backstopped", whatever. In their press release they said if they need extra funds to cover deposits, there will be a special assessment on all banks, passed on to you and me. So there you go.
- deleted 4y ago[deleted]
- ummonk 4y agoRight now it's the billion dollar corporations that are subsidizing your FDIC insurance, since the assessment base for FDIC insurance is proportional to its total liabilities, not to the amount insured.