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The Big 5 banks have unlimited FDIC coverage because they're "too big to fail" and they scoop up the remains after the FDIC swoops in. Everyone else has the $25

The Big 5 banks have unlimited FDIC coverage because they're "too big to fail" and they scoop up the remains after the FDIC swoops in. Everyone else has the $250k per depositor. That is why the CRE loans are such a huge problem. Their debt is owed to regional banks, not the big ones. That said, the FDIC ignored their playbook and rules to try to calm things down last March. A few more banks went down but not the numbers people expected. That means we're in uncharted territory.. will the FDIC follow their own rules next time or do whatever they want? We don't know.

JumpCrisscross 3y ago
> Big 5 banks have unlimited FDIC coverage because they're "too big to fail" Less than one year! We had three banks fail—the second, third and fourth largest in our nation’s history—less than one year ago [1]! None were TBTF, let alone big five. Every deposit was covered. I get that the headline reads hysterically to a lay reader, but less than one year! [1] https://en.m.wikipedia.org/wiki/List_of_largest_bank_failures_in_the_United_States https://en.m.wikipedia.org/wiki/List_of_largest_bank_failure...
- Ocha 3y ago
  They were largest failures not largest banks failing.
  - jcranmer 3y ago
    Going by https://www.federalreserve.gov/releases/lbr/current/ https://www.federalreserve.gov/releases/lbr/current/ and JumpCrisscross's link, the banks that failed would have been around ~16th largest US bank at the time of failure. I don't know how large Washington Mutual was at the time failure compared to other banks, but just doing straightforward inflation adjustment would put it at #10, and I suspect it's closer to #5 or #6.
  - JumpCrisscross 3y ago
    > were largest failures not largest banks failing Correct. The comment I responded to claimed unlimited coverage was limited to the Big 5. We're less than a year from non-TBTF (we let them fail for god's sake) non-big-five banks (a) failing and (b) receiving unlimited depositor coverage.
    - caseysoftware 3y ago
      On paper, yes. Which is why I also said: > That said, the FDIC ignored their playbook and rules to try to calm things down last March. There's the SOP and there's what they did, there was no relation between the two which means we have no clue what they might do next time.

JumpCrisscross 3y ago

> Big 5 banks have unlimited FDIC coverage because they're "too big to fail" Less than one year! We had three banks fail—the second, third and fourth largest in our nation’s history—less than one year ago [1]! None were TBTF, let alone big five. Every deposit was covered. I get that the headline reads hysterically to a lay reader, but less than one year! [1] https://en.m.wikipedia.org/wiki/List_of_largest_bank_failures_in_the_United_States https://en.m.wikipedia.org/wiki/List_of_largest_bank_failure...

Ocha 3y ago
They were largest failures not largest banks failing.
- jcranmer 3y ago
  Going by https://www.federalreserve.gov/releases/lbr/current/ https://www.federalreserve.gov/releases/lbr/current/ and JumpCrisscross's link, the banks that failed would have been around ~16th largest US bank at the time of failure. I don't know how large Washington Mutual was at the time failure compared to other banks, but just doing straightforward inflation adjustment would put it at #10, and I suspect it's closer to #5 or #6.
- JumpCrisscross 3y ago
  > were largest failures not largest banks failing Correct. The comment I responded to claimed unlimited coverage was limited to the Big 5. We're less than a year from non-TBTF (we let them fail for god's sake) non-big-five banks (a) failing and (b) receiving unlimited depositor coverage.
  - caseysoftware 3y ago
    On paper, yes. Which is why I also said: > That said, the FDIC ignored their playbook and rules to try to calm things down last March. There's the SOP and there's what they did, there was no relation between the two which means we have no clue what they might do next time.