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After Silicon Valley Bank, scrap the bank deposit insurance limit

9 points by MilnerRoute 4y ago

legitster 4y ago
I'm 50/50 on this. Obviously we can't risk the health of our economy on the next bank run. On the other hand, even a big business keeping that much money in a single bank account is ridiculous - there should be some sort of incentive against hoarding that much money. I say scrap the limit - but don't make everyone pay the FDIC insurance. Actually make the big accounts do the lion's share of insurance payments to the FDIC.
latchkey 4y ago
I don't think it should be scrapped, but it should be modified. The current system was put in place to encourage a decentralization of the banking system. You are forced to spread your funds across multiple banks. The issue is that this is a pain to manage. Yes, there are services that can manage it, but that just increases the costs and friction associated with it. So instead of scrapping it, these services should be made available to everyone, by default, and shouldn't cost anything.
- hakfoo 4y ago
  What we need is highly online modern banking with universal APIs. I should be able to run 50 lines of (insert preferred scripting language) that queried accounts at N banks, and then queued up transfers between them to redistribute the balances how I want (maybe prioritizing based on interest rates/incentive schemes or convenience to withdraw from). Put it as a cron job and let it run every night.
  - latchkey 4y ago
    this is a lot of what is being done right now in the defi ecosystem. i know hn likes to shit on crypto, but defi itself is pretty innovative in this regard. the concept of 'programmable money' isn't that far off.
    - hakfoo 4y ago
      The problem is that the things that might be interesting there are always coupled to a big load of iffy speculation and regulatory evasion. We don't need to give up on stuff like regulations and insurance to demand a half-decent API.
      - latchkey 4y ago
        People shout about regulations and then we have another traditional banking meltdown. Obviously it is more than just regulations. DeFi (primarily lending/borrowing markets) itself has performed quite well during these ups and downs and actually has very little to do with speculation or evasion.
bediger4000 4y ago
This would only benefit the wealthy. Again. Just like making SVB depositors whole, or 2008 bank bailouts. You want torches and pitchforks, this is a good step in that direction.
- cplusplusfellow 4y ago
  There are a lot of not-wealthy employees who got paid today who disagree with your assessment of who won.
ericpauley 4y ago
Better raise inflation target to 4% while we're at it...
- cplusplusfellow 4y ago
  So long as we are talking about wages Only, I’m ok with this.
scotty79 4y ago
> Specifically, Congress should say that when the deposit insurance fund is fully funded, banks’ deposit insurance fees go to the Treasury Department as fiscal revenue — rather than being waived as they are under current law. Waived? How does that make any sense whatsoever?
sashenka 4y ago
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9 points by MilnerRoute 4y ago

I'm 50/50 on this. Obviously we can't risk the health of our economy on the next bank run. On the other hand, even a big business keeping that much money in a single bank account is ridiculous - there should be some sort of incentive against hoarding that much money. I say scrap the limit - but don't make everyone pay the FDIC insurance. Actually make the big accounts do the lion's share of insurance payments to the FDIC.

latchkey 4y ago

I don't think it should be scrapped, but it should be modified. The current system was put in place to encourage a decentralization of the banking system. You are forced to spread your funds across multiple banks. The issue is that this is a pain to manage. Yes, there are services that can manage it, but that just increases the costs and friction associated with it. So instead of scrapping it, these services should be made available to everyone, by default, and shouldn't cost anything.

hakfoo 4y ago
What we need is highly online modern banking with universal APIs. I should be able to run 50 lines of (insert preferred scripting language) that queried accounts at N banks, and then queued up transfers between them to redistribute the balances how I want (maybe prioritizing based on interest rates/incentive schemes or convenience to withdraw from). Put it as a cron job and let it run every night.
- latchkey 4y ago
  this is a lot of what is being done right now in the defi ecosystem. i know hn likes to shit on crypto, but defi itself is pretty innovative in this regard. the concept of 'programmable money' isn't that far off.
  - hakfoo 4y ago
    The problem is that the things that might be interesting there are always coupled to a big load of iffy speculation and regulatory evasion. We don't need to give up on stuff like regulations and insurance to demand a half-decent API.
    - latchkey 4y ago
      People shout about regulations and then we have another traditional banking meltdown. Obviously it is more than just regulations. DeFi (primarily lending/borrowing markets) itself has performed quite well during these ups and downs and actually has very little to do with speculation or evasion.

bediger4000 4y ago

This would only benefit the wealthy. Again. Just like making SVB depositors whole, or 2008 bank bailouts. You want torches and pitchforks, this is a good step in that direction.

cplusplusfellow 4y ago
There are a lot of not-wealthy employees who got paid today who disagree with your assessment of who won.

ericpauley 4y ago

Better raise inflation target to 4% while we're at it...

cplusplusfellow 4y ago
So long as we are talking about wages Only, I’m ok with this.

scotty79 4y ago

> Specifically, Congress should say that when the deposit insurance fund is fully funded, banks’ deposit insurance fees go to the Treasury Department as fiscal revenue — rather than being waived as they are under current law. Waived? How does that make any sense whatsoever?

sashenka 4y ago

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