We should probably just acknowledge that all bank deposits and deposits into money market funds are going to be fully insured by the government.
Yeah it's a bunch of bullshit, but it's way less bullshit to declare it upfront than pretending they aren't and then inevitably bailing them out when they fail. Acknowledge it, set up the fee structures accordingly, and move on.
The alternative is to actually follow the law. But if that were possible we would be doing it already, but we don't. So now what?
It's all monopoly money anyways, so why pretend it isn't?
Though if I put that aside I do believe things like insured cash sweep (which splits deposits into < $250k chunks and deposits them into a bunch of banks) is better from a risk management standpoint for both the depositor and the bank. Depositors get more guaranteed insurance, and the bank gets more depositors with smaller deposits for a given amount of overall deposit.
Here's a simple solution that I'm not sure why it's not already the standard: any bank that, in the assessment of the FDIC, would trigger a systemic failure of the banking system were it to collapse needs to insure all it's accounts.
We should probably just acknowledge that all bank deposits and deposits into money market funds are going to be fully insured by the government.
Yeah it's a bunch of bullshit, but it's way less bullshit to declare it upfront than pretending they aren't and then inevitably bailing them out when they fail. Acknowledge it, set up the fee structures accordingly, and move on.
The alternative is to actually follow the law. But if that were possible we would be doing it already, but we don't. So now what?
I think you’re right.
Ideally no bank should get a bailout when it fucks up. But that’s not the government we will ever have.
The only choice we have is : do we want megabanks decimating smaller banks?
It's all monopoly money anyways, so why pretend it isn't?
Though if I put that aside I do believe things like insured cash sweep (which splits deposits into < $250k chunks and deposits them into a bunch of banks) is better from a risk management standpoint for both the depositor and the bank. Depositors get more guaranteed insurance, and the bank gets more depositors with smaller deposits for a given amount of overall deposit.
Here's a simple solution that I'm not sure why it's not already the standard: any bank that, in the assessment of the FDIC, would trigger a systemic failure of the banking system were it to collapse needs to insure all it's accounts.
The FDIC would be bribed to make wrong assessments.
Great. Still benefits them. More bribes for the FDIC and less money banks control