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Ok but that's a bad policy that makes no sense and I'm glad the fed, Treasury, and FDIC are stepping in to change it. Sad that congress hasn't done anything ove

Ok but that's a bad policy that makes no sense and I'm glad the fed, Treasury, and FDIC are stepping in to change it. Sad that congress hasn't done anything over the past few years, but better the problem be solved than letting faith in our financial system collapse.

rashkov 4y ago
It does seem like a weird loophole and charade to have to split money among many banks. Just give businesses a way to store their money without earning interest and with no risk. As far as I know that’s not an option under our banking system
- amalcon 4y ago
  It's neither a loophole nor a charade: it's diversification to reduce exposure to risk. Bank failures are somewhat coordinated, sure. Still, it's much more likely that one bank fails than N>1 banks. Since you are exposed to less risk, your insurer (FDIC) is also exposed to less risk. It makes complete sense for the insurer to incentivize this sort of behavior.
  - ProjectArcturis 4y ago
    But what it really incentivizes is putting all your money in a too-big-to-fail bank. That's much easier and just as safe as opening a dozen, or hundreds of accounts. And it results in there being 3 banks in the whole country.
    - politician 4y ago
      There is, in truth, only one “bank” in this country. The Federal Reserve Banks that hold the master ledger for the official US Dollar market. Everything else downstream is basically redundant legacy infrastructure from a time before pervasive broadband network infrastructure.
      - ProjectArcturis 4y ago
        That would be news to anyone who actually works in finance.
harimau777 4y ago
Personally, seeing the government bail out corporations is what causes me to loose faith in our financial system.
- mgraczyk 4y ago
  This isn't a bailout (unless you also consider FDIC a bailout). And fortunately most people don't see it that way, so this was the right move.
  - hypothesis 4y ago
    I dunno, but POTUS appears to be fine with this being described as bailout. [0] https://mobile.twitter.com/POTUS/status/1635080376572956672 https://mobile.twitter.com/POTUS/status/1635080376572956672

rashkov 4y ago

It does seem like a weird loophole and charade to have to split money among many banks. Just give businesses a way to store their money without earning interest and with no risk. As far as I know that’s not an option under our banking system

amalcon 4y ago
It's neither a loophole nor a charade: it's diversification to reduce exposure to risk. Bank failures are somewhat coordinated, sure. Still, it's much more likely that one bank fails than N>1 banks. Since you are exposed to less risk, your insurer (FDIC) is also exposed to less risk. It makes complete sense for the insurer to incentivize this sort of behavior.
- ProjectArcturis 4y ago
  But what it really incentivizes is putting all your money in a too-big-to-fail bank. That's much easier and just as safe as opening a dozen, or hundreds of accounts. And it results in there being 3 banks in the whole country.
  - politician 4y ago
    There is, in truth, only one “bank” in this country. The Federal Reserve Banks that hold the master ledger for the official US Dollar market. Everything else downstream is basically redundant legacy infrastructure from a time before pervasive broadband network infrastructure.
    - ProjectArcturis 4y ago
      That would be news to anyone who actually works in finance.

harimau777 4y ago

Personally, seeing the government bail out corporations is what causes me to loose faith in our financial system.

mgraczyk 4y ago
This isn't a bailout (unless you also consider FDIC a bailout). And fortunately most people don't see it that way, so this was the right move.
- hypothesis 4y ago
  I dunno, but POTUS appears to be fine with this being described as bailout. [0] https://mobile.twitter.com/POTUS/status/1635080376572956672 https://mobile.twitter.com/POTUS/status/1635080376572956672