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No, because the FDIC would collect higher fees commensurate with the increase in insured deposits. It would reduce profits for banks like SVB which have a large
by mikedouglas 4y ago
No, because the FDIC would collect higher fees commensurate with the increase in insured deposits. It would reduce profits for banks like SVB which have a large number of uninsured deposits and were able to take advantage of a "fed put".
- altairprime 4y agoThe FDIC just collected a fee from all remaining banks to make SVB depositors whole, so they are evidently willing to reduce profits in order to insure deposits.
- jacooper 4y ago> so they are evidently willing to reduce profits in order to insure deposits. Quite refreshing compared to the American Capitalism hellscape, though kind of expected because its a national corporation.
- rootusrootus 4y agoI wonder why the FDIC doesn't just offer tiered insurance, in that case.
- jhfdbkofdchk 4y agoBecause they want depositors to spread their deposits around and not concentrate them at any one institution.
- CityOfThrowaway 4y agoWhen all of the money is in one bank, the fees it would need to charge to insure the same deposits is much more. There are many ways that banks might fail. Most of those are idiosyncratic and unique to the bank's operations. When the money is spread across multiple institutions most of the risk the FDIC is taking is uncorrelated, therefore costing less to insure.