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There is a persistent misunderstanding here. The equity of the bank itself is not particularly interesting, given its usually a small fraction of deposits manag
by stefan_ 4y ago
There is a persistent misunderstanding here. The equity of the bank itself is not particularly interesting, given its usually a small fraction of deposits managed. No, the bailout part is them covering deposits over $250k, the limit plain to see for anyone that has ever entered a bank.
- khuey 4y agoIt's worth remembering that not every "bailout" wipes out equity holders. Citigroup and AIG were both bailed out during the financial crisis and their equity survived (although with heavy losses).
- colechristensen 4y agoThat is why those were bailouts and this is not. Shareholders are not being protected.
- stefan_ 4y agoMany things can be a bailout. I'm just calling it how I see it: this bank has assets that are likely less than the sum of its deposits. To make them whole despite this is a bailout, and particularly so when it's above the previously agreed on limit. Maybe you just have an unnatural aversion to the word or something.
- colechristensen 4y agoThe bank is gone, it’s not being bailed out it no longer exists. It has in entirely been taken by the fdic and will be parted up and sold for the benefit of those the former bank owed money to (to wit, those who deposited money with it)
- deleted 4y ago[deleted]
- the_optimist 4y agoNo. The banks are charged for that insurance. They provide the funds. There is no bailout. Using the equity buffer for coverage is _the whole point_.
- anon291 4y agoThe premium is set for 250k. Not unlimited. I'd have no problem with unlimited insurance schemes for deposits so long as the premiums are priced to reflect that
- the_optimist 4y agoThe FDIC has not identified any loss assistance required for the “unlimited” guarantee. That is: the equity buffer covered it.