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>With a 0.75% coverage ratio I do worry what happens in the case of more bank failures. Hypotheticals like this are detached from reality. Under what scenario
by itsoktocry 4y ago
>With a 0.75% coverage ratio I do worry what happens in the case of more bank failures.
Hypotheticals like this are detached from reality.
Under what scenario would the entire depositor base try to withdraw all of their funds? What would be happening in the world for that to happen? People "lose faith" in banks? Okay, where are they now putting their money, under their mattress?
- lowkey 4y agoIt wouldn’t need to be the entire depositor base. If only 2% of banks by deposits were to fail then FDIC would itself be bankrupt and require a bailout.
- balderdash 4y agoYou’re forgetting the ~ 10% of tier 1 capital, and even more in other buckets…
- seanw444 4y agoPlus, every time you think a social issue "would never ever happen," it happens.
- xur17 4y agoOnly if 2% of banks lost all of their money. It would more likely be something like 10% of banks by deposits lost 20% of their money.
- lowkey 4y agoI disagree with your numbers. Based on current bank reserves, if ~20% of a banks deposits were to be withdrawn the bank would be insolvent. You don't need to withdraw 100% of deposits to have a run on the bank.