2 ms·
Just because the government insures deposits to keep public trust in banks does not mean that it justifies banker's high wages. It's actually the opposite - th
by briancaw2 13y ago
Just because the government insures deposits to keep public trust in banks does not mean that it justifies banker's high wages. It's actually the opposite - the fact that bankers require government insurance 1) takes risk away from them (meaning the risk that "earns" them money according to economists isn't as high) and 2) they should be paying more money for insurance or using profits to mitigate risk instead of paying themselves. Insuring deposits has resulted in the opposite - it encourages risk and overpayment.
- waps 13y agoMy point is that you're wrong. It's not (or at least it was not) the banks that demand the government take the risk away from banks, it was voters, you and me. And I'm positive that today, a vote would turn out the same. So this whole too much risk followed by bailouts process is exactly what the average voter wants (in the sense that it's what he'll vote for). Sure they'll complain about the bailouts but faced with the prospect of losing their savings (as they will naturally be when a bailout is proposed) ...
- briancaw2 13y ago"Banks require government insurance" doesn't mean they demand it, it means they need it or people won't trust them. Both banks and people demand the insurance, because without it everyone fails.