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There’s a theory that if there was such a bank, all money would flow to it making all of the other ones insolvent, in turn the financial system would collapse,
by kevinak 4y ago
There’s a theory that if there was such a bank, all money would flow to it making all of the other ones insolvent, in turn the financial system would collapse, since no bank has enough. The whole industry is just a house of cards.
There was actually a recent case where one bank (Custodia) tried to do this - they wanted to charge fees instead of gambling with their clients money. But the FED denied their application. They say it’s because they wanted to service crypto companies - but how would that even be a problem if they’ve always got all the deposits at hand. It smells fishy.
- SketchySeaBeast 4y agoWhy would all the money flow there? Assuming the $250k insurance level remained the majority of Americans could happily keep their money in riskier banks and earn interest instead of paying fees.
- kevinak 4y agoMost of the money in the system is well in excess of $250k accounts though. And the FEDs insurance fund is laughably small. Not a lot of people have to move there money to cause a major cascade (see SVB for example).