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Deposit Insurance

twocupcakes
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1/4/2015 1:19:44 PM
Posted: 1 year ago
I don't understand why people (some people) want to eliminate deposit insurance. Though, aspects of deposit insurance create a moral hazard, the benefits to society are enormous.

Bank Runs, are a self fulfilling prophecy that leads to more people withdrawing money, which results in more and more banks going bust and a depressed economy with lots of unemployment. Deposit Insurance fixes this issue. Bank Runs were more common before deposit insurance and resulted in worse depressions.

The average American is not able to constantly monitor there banks risk policies and even if they could, bank runs start at "bad" banks but can spread to good banks also. It is unfair for a hard working family to lose their life savings because of a bank run.

There are plenty of other policies the government can implement to reduce the moral hazard of banks. I do not see how anybody (even the most conservative) can be for eliminating deposit insurance.
YYW
Posts: 36,391
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1/4/2015 6:54:08 PM
Posted: 1 year ago
At 1/4/2015 1:19:44 PM, twocupcakes wrote:
I don't understand why people (some people) want to eliminate deposit insurance. Though, aspects of deposit insurance create a moral hazard, the benefits to society are enormous.

Wait... people actually want to eliminate deposit insurance?
Tsar of DDO
Greyparrot
Posts: 14,325
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1/4/2015 8:06:51 PM
Posted: 1 year ago
Should the average consumer have federal insurance from putting your life savings in a house or car that turns out to be a lemon while the seller goes bankrupt too?

That happens more often than bank runs, So where is the federal insurance for that? (federal lemon laws?)

I mean.. if you have a lemon law for banks,,,, why not everything else you spend your money on?
twocupcakes
Posts: 2,750
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1/4/2015 8:55:52 PM
Posted: 1 year ago
At 1/4/2015 6:54:08 PM, YYW wrote:
At 1/4/2015 1:19:44 PM, twocupcakes wrote:
I don't understand why people (some people) want to eliminate deposit insurance. Though, aspects of deposit insurance create a moral hazard, the benefits to society are enormous.

Wait... people actually want to eliminate deposit insurance?

No one mainstream does. But it is a position taken many tea party, libertarian and conservative people.

Ron Paul does not believe in deposit insurance, and neither does this guy Peter Schiff.

I think there may be some people on DDO that do not agree either.
twocupcakes
Posts: 2,750
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1/4/2015 8:57:39 PM
Posted: 1 year ago
At 1/4/2015 8:06:51 PM, Greyparrot wrote:
Should the average consumer have federal insurance from putting your life savings in a house or car that turns out to be a lemon while the seller goes bankrupt too?

That happens more often than bank runs, So where is the federal insurance for that? (federal lemon laws?)

I mean.. if you have a lemon law for banks,,,, why not everything else you spend your money on?

A difference between houses cars is that bank runs can cause well run banks to go bust. Further, bank runs are contagious and self-fufilling in that one bank going bust cause many more to go bust.
YYW
Posts: 36,391
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1/4/2015 8:57:48 PM
Posted: 1 year ago
At 1/4/2015 8:55:52 PM, twocupcakes wrote:
At 1/4/2015 6:54:08 PM, YYW wrote:
At 1/4/2015 1:19:44 PM, twocupcakes wrote:
I don't understand why people (some people) want to eliminate deposit insurance. Though, aspects of deposit insurance create a moral hazard, the benefits to society are enormous.

Wait... people actually want to eliminate deposit insurance?

No one mainstream does. But it is a position taken many tea party, libertarian and conservative people.

Wierdos....

Ron Paul does not believe in deposit insurance, and neither does this guy Peter Schiff.

Peter Schiff is a crack pot...

I think there may be some people on DDO that do not agree either.

You're probably right.
Tsar of DDO
1harderthanyouthink
Posts: 13,102
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1/4/2015 8:59:55 PM
Posted: 1 year ago
At 1/4/2015 8:57:48 PM, YYW wrote:
At 1/4/2015 8:55:52 PM, twocupcakes wrote:
I think there may be some people on DDO that do not agree either.

You're probably right.
"It's awfully considerate of you to think of me here,
And I'm much obliged to you for making it clear - that I'm not here."

-Syd Barrett

DDO Risk King
KhaosMage
Posts: 1,475
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1/4/2015 10:21:06 PM
Posted: 1 year ago
At 1/4/2015 1:19:44 PM, twocupcakes wrote:
I don't understand why people (some people) want to eliminate deposit insurance. Though, aspects of deposit insurance create a moral hazard, the benefits to society are enormous.

Bank Runs, are a self fulfilling prophecy that leads to more people withdrawing money, which results in more and more banks going bust and a depressed economy with lots of unemployment. Deposit Insurance fixes this issue. Bank Runs were more common before deposit insurance and resulted in worse depressions.

The average American is not able to constantly monitor there banks risk policies and even if they could, bank runs start at "bad" banks but can spread to good banks also. It is unfair for a hard working family to lose their life savings because of a bank run.

There are plenty of other policies the government can implement to reduce the moral hazard of banks. I do not see how anybody (even the most conservative) can be for eliminating deposit insurance.

Are they saying that deposit insurance is a bad thing, or that it shouldn't be funded by the government? There is a world of difference.

I see no reason why the bank cannot buy insurance for its depositors and/or depositors buy insurance to back their deposits.
Greyparrot
Posts: 14,325
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1/4/2015 11:17:03 PM
Posted: 1 year ago
At 1/4/2015 10:21:06 PM, KhaosMage wrote:
At 1/4/2015 1:19:44 PM, twocupcakes wrote:
I don't understand why people (some people) want to eliminate deposit insurance. Though, aspects of deposit insurance create a moral hazard, the benefits to society are enormous.

Bank Runs, are a self fulfilling prophecy that leads to more people withdrawing money, which results in more and more banks going bust and a depressed economy with lots of unemployment. Deposit Insurance fixes this issue. Bank Runs were more common before deposit insurance and resulted in worse depressions.

The average American is not able to constantly monitor there banks risk policies and even if they could, bank runs start at "bad" banks but can spread to good banks also. It is unfair for a hard working family to lose their life savings because of a bank run.

There are plenty of other policies the government can implement to reduce the moral hazard of banks. I do not see how anybody (even the most conservative) can be for eliminating deposit insurance.

Are they saying that deposit insurance is a bad thing, or that it shouldn't be funded by the government? There is a world of difference.

I see no reason why the bank cannot buy insurance for its depositors and/or depositors buy insurance to back their deposits.

this....

Do we really need federal insurance for everything? (even health?)
twocupcakes
Posts: 2,750
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1/5/2015 4:44:39 PM
Posted: 1 year ago
At 1/4/2015 10:21:06 PM, KhaosMage wrote:
At 1/4/2015 1:19:44 PM, twocupcakes wrote:
I don't understand why people (some people) want to eliminate deposit insurance. Though, aspects of deposit insurance create a moral hazard, the benefits to society are enormous.

Bank Runs, are a self fulfilling prophecy that leads to more people withdrawing money, which results in more and more banks going bust and a depressed economy with lots of unemployment. Deposit Insurance fixes this issue. Bank Runs were more common before deposit insurance and resulted in worse depressions.

The average American is not able to constantly monitor there banks risk policies and even if they could, bank runs start at "bad" banks but can spread to good banks also. It is unfair for a hard working family to lose their life savings because of a bank run.

There are plenty of other policies the government can implement to reduce the moral hazard of banks. I do not see how anybody (even the most conservative) can be for eliminating deposit insurance.

Are they saying that deposit insurance is a bad thing, or that it shouldn't be funded by the government? There is a world of difference.

I see no reason why the bank cannot buy insurance for its depositors and/or depositors buy insurance to back their deposits.

Banks/Depositors cannot buy deposit insurance because banks runs affect many financial institutions and grow once they happen.

Who will they buy insurance from? And who is insuring their insurance? And who is insuring the person insuring their insurance.

In the 2007 crisis all the banks had insurance on their Mortages so they thought they were fine. However, the people insuring their Mortgages did not have enough money to pay. And it got complicated as many banks were insuring other banks who were insuring banks.

If a Bank Run happens the only person who can offer insurance is the Government.
twocupcakes
Posts: 2,750
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1/5/2015 4:45:31 PM
Posted: 1 year ago
At 1/4/2015 11:17:03 PM, Greyparrot wrote:
At 1/4/2015 10:21:06 PM, KhaosMage wrote:
At 1/4/2015 1:19:44 PM, twocupcakes wrote:
I don't understand why people (some people) want to eliminate deposit insurance. Though, aspects of deposit insurance create a moral hazard, the benefits to society are enormous.

Bank Runs, are a self fulfilling prophecy that leads to more people withdrawing money, which results in more and more banks going bust and a depressed economy with lots of unemployment. Deposit Insurance fixes this issue. Bank Runs were more common before deposit insurance and resulted in worse depressions.

The average American is not able to constantly monitor there banks risk policies and even if they could, bank runs start at "bad" banks but can spread to good banks also. It is unfair for a hard working family to lose their life savings because of a bank run.

There are plenty of other policies the government can implement to reduce the moral hazard of banks. I do not see how anybody (even the most conservative) can be for eliminating deposit insurance.

Are they saying that deposit insurance is a bad thing, or that it shouldn't be funded by the government? There is a world of difference.

I see no reason why the bank cannot buy insurance for its depositors and/or depositors buy insurance to back their deposits.

this....

Do we really need federal insurance for everything? (even health?)

Not everything but it makes sense for deposit insurance and health.
FaustianJustice
Posts: 6,239
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1/6/2015 12:43:51 AM
Posted: 1 year ago
At 1/4/2015 8:06:51 PM, Greyparrot wrote:
Should the average consumer have federal insurance from putting your life savings in a house or car that turns out to be a lemon while the seller goes bankrupt too?

That happens more often than bank runs, So where is the federal insurance for that? (federal lemon laws?)

I mean.. if you have a lemon law for banks,,,, why not everything else you spend your money on?

If its sitting in a bank, you haven't actually spent it. If you want to talk about cars, houses, etc, thats fine, but sitting in a savings account I think is a far cry from either of those.
Here we have an advocate for Islamic arranged marriages demonstrating that children can consent to sex.
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Greyparrot
Posts: 14,325
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1/6/2015 12:56:46 AM
Posted: 1 year ago
At 1/6/2015 12:43:51 AM, FaustianJustice wrote:
At 1/4/2015 8:06:51 PM, Greyparrot wrote:
Should the average consumer have federal insurance from putting your life savings in a house or car that turns out to be a lemon while the seller goes bankrupt too?

That happens more often than bank runs, So where is the federal insurance for that? (federal lemon laws?)

I mean.. if you have a lemon law for banks,,,, why not everything else you spend your money on?

If its sitting in a bank, you haven't actually spent it. If you want to talk about cars, houses, etc, thats fine, but sitting in a savings account I think is a far cry from either of those.

It's the same principle. You have a contract with the bank just like any other contract. Lemon laws provide remedies for bad faith breeches of contract.
slo1
Posts: 4,361
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1/6/2015 8:50:54 AM
Posted: 1 year ago
At 1/4/2015 1:19:44 PM, twocupcakes wrote:
I don't understand why people (some people) want to eliminate deposit insurance. Though, aspects of deposit insurance create a moral hazard, the benefits to society are enormous.

Bank Runs, are a self fulfilling prophecy that leads to more people withdrawing money, which results in more and more banks going bust and a depressed economy with lots of unemployment. Deposit Insurance fixes this issue. Bank Runs were more common before deposit insurance and resulted in worse depressions.

The average American is not able to constantly monitor there banks risk policies and even if they could, bank runs start at "bad" banks but can spread to good banks also. It is unfair for a hard working family to lose their life savings because of a bank run.

There are plenty of other policies the government can implement to reduce the moral hazard of banks. I do not see how anybody (even the most conservative) can be for eliminating deposit insurance.

There is no reason why it could not be privatized although the onus would have to be on the bank to purchase private insurance and pass costs to customer versus onus on depositors as they would just choose not to buy insurance.

If anyone is advocating a system which there would be no protection for depositors is just a quack. Anyone who believes they could predict when a bank would go under by evaluating it and could choose a safe bank is a crack pot. Not only do they discount the fact that banks are involved in other businesses than savings and loans which can put the banks assets at risk, they completely miss the boat by assuming they could have good information to make a good decision.
KhaosMage
Posts: 1,475
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1/6/2015 8:59:02 AM
Posted: 1 year ago
At 1/5/2015 4:44:39 PM, twocupcakes wrote:
At 1/4/2015 10:21:06 PM, KhaosMage wrote:
At 1/4/2015 1:19:44 PM, twocupcakes wrote:
I don't understand why people (some people) want to eliminate deposit insurance. Though, aspects of deposit insurance create a moral hazard, the benefits to society are enormous.

Bank Runs, are a self fulfilling prophecy that leads to more people withdrawing money, which results in more and more banks going bust and a depressed economy with lots of unemployment. Deposit Insurance fixes this issue. Bank Runs were more common before deposit insurance and resulted in worse depressions.

The average American is not able to constantly monitor there banks risk policies and even if they could, bank runs start at "bad" banks but can spread to good banks also. It is unfair for a hard working family to lose their life savings because of a bank run.

There are plenty of other policies the government can implement to reduce the moral hazard of banks. I do not see how anybody (even the most conservative) can be for eliminating deposit insurance.

Are they saying that deposit insurance is a bad thing, or that it shouldn't be funded by the government? There is a world of difference.

I see no reason why the bank cannot buy insurance for its depositors and/or depositors buy insurance to back their deposits.

Banks/Depositors cannot buy deposit insurance because banks runs affect many financial institutions and grow once they happen.

Who will they buy insurance from? And who is insuring their insurance? And who is insuring the person insuring their insurance.

In the 2007 crisis all the banks had insurance on their Mortages so they thought they were fine. However, the people insuring their Mortgages did not have enough money to pay. And it got complicated as many banks were insuring other banks who were insuring banks.

If a Bank Run happens the only person who can offer insurance is the Government.

The "insurance" they had was government agencies (freddie and fannie), due to government regulations (quotas), and thus, government aided this crisis of the housing boom.

Tell me, do millionaires not have insurance for their deposits at banks?
The FDIC only covers $250K, so I'm sure there is a market for them, and, let's be honest, most damage of a bank run would be from them.
Greyparrot
Posts: 14,325
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1/6/2015 10:07:09 AM
Posted: 1 year ago
What would be funny is if people found out it was much cheaper to rent a security box than to pay for bank insurance (even through taxes).

Loans would be extremely hard to get then!
KhaosMage
Posts: 1,475
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1/6/2015 10:12:33 AM
Posted: 1 year ago
At 1/6/2015 10:07:09 AM, Greyparrot wrote:
What would be funny is if people found out it was much cheaper to rent a security box than to pay for bank insurance (even through taxes).

Did you know you can deduct the cost of a security box at the bank?
Difficult to qualify for, but can happen.
Greyparrot
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1/6/2015 10:20:23 AM
Posted: 1 year ago
At 1/6/2015 10:12:33 AM, KhaosMage wrote:
At 1/6/2015 10:07:09 AM, Greyparrot wrote:
What would be funny is if people found out it was much cheaper to rent a security box than to pay for bank insurance (even through taxes).

Did you know you can deduct the cost of a security box at the bank?
Difficult to qualify for, but can happen.

Most people don't realize they are making a risky investment contracting with a bank. Holding your money and providing debitcard and checking services isn't "free."
KhaosMage
Posts: 1,475
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1/6/2015 10:24:09 AM
Posted: 1 year ago
At 1/6/2015 10:20:23 AM, Greyparrot wrote:
At 1/6/2015 10:12:33 AM, KhaosMage wrote:
At 1/6/2015 10:07:09 AM, Greyparrot wrote:
What would be funny is if people found out it was much cheaper to rent a security box than to pay for bank insurance (even through taxes).

Did you know you can deduct the cost of a security box at the bank?
Difficult to qualify for, but can happen.

Most people don't realize they are making a risky investment contracting with a bank. Holding your money and providing debitcard and checking services isn't "free."

In case it wasn't clear, that was a deduction on taxes.

Anyway, I don't think it is THAT risky of an investment, as the debit card is how they make money, and the fact they lend it out. So, it is largely "free" for personal checking, and as far as an actual investment goes, I'd rather own stocks or bonds.
twocupcakes
Posts: 2,750
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1/6/2015 6:08:05 PM
Posted: 1 year ago
At 1/6/2015 8:59:02 AM, KhaosMage wrote:
At 1/5/2015 4:44:39 PM, twocupcakes wrote:
At 1/4/2015 10:21:06 PM, KhaosMage wrote:
At 1/4/2015 1:19:44 PM, twocupcakes wrote:
I don't understand why people (some people) want to eliminate deposit insurance. Though, aspects of deposit insurance create a moral hazard, the benefits to society are enormous.

Bank Runs, are a self fulfilling prophecy that leads to more people withdrawing money, which results in more and more banks going bust and a depressed economy with lots of unemployment. Deposit Insurance fixes this issue. Bank Runs were more common before deposit insurance and resulted in worse depressions.

The average American is not able to constantly monitor there banks risk policies and even if they could, bank runs start at "bad" banks but can spread to good banks also. It is unfair for a hard working family to lose their life savings because of a bank run.

There are plenty of other policies the government can implement to reduce the moral hazard of banks. I do not see how anybody (even the most conservative) can be for eliminating deposit insurance.

Are they saying that deposit insurance is a bad thing, or that it shouldn't be funded by the government? There is a world of difference.

I see no reason why the bank cannot buy insurance for its depositors and/or depositors buy insurance to back their deposits.

Banks/Depositors cannot buy deposit insurance because banks runs affect many financial institutions and grow once they happen.

Who will they buy insurance from? And who is insuring their insurance? And who is insuring the person insuring their insurance.

In the 2007 crisis all the banks had insurance on their Mortages so they thought they were fine. However, the people insuring their Mortgages did not have enough money to pay. And it got complicated as many banks were insuring other banks who were insuring banks.

If a Bank Run happens the only person who can offer insurance is the Government.

The "insurance" they had was government agencies (freddie and fannie), due to government regulations (quotas), and thus, government aided this crisis of the housing boom.

Tell me, do millionaires not have insurance for their deposits at banks?
The FDIC only covers $250K, so I'm sure there is a market for them, and, let's be honest, most damage of a bank run would be from them.

Many financial institutions offered insurance on mortages, and went Bankrupt. The point is, in a financial crisis many financial institutions go bankrupt so insurance does not insure anything as chances are the party insuring the mortgage will go bust. The only party that can effectively insure mortgages is the government.

People with more than $250K in cash, can open another account and have $250K insured. These millionaires make up a small proportion of all deposits (so will not greatly cause a bank run) and will still be okay should a bank run happen.
twocupcakes
Posts: 2,750
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1/6/2015 6:11:32 PM
Posted: 1 year ago
At 1/6/2015 10:20:23 AM, Greyparrot wrote:
At 1/6/2015 10:12:33 AM, KhaosMage wrote:
At 1/6/2015 10:07:09 AM, Greyparrot wrote:
What would be funny is if people found out it was much cheaper to rent a security box than to pay for bank insurance (even through taxes).

Did you know you can deduct the cost of a security box at the bank?
Difficult to qualify for, but can happen.

Most people don't realize they are making a risky investment contracting with a bank. Holding your money and providing debitcard and checking services isn't "free."

Having your money in the Bank is not risky at all, if it is below $250K. Because anything below $250K is insured by the government.
twocupcakes
Posts: 2,750
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1/6/2015 6:17:11 PM
Posted: 1 year ago
At 1/6/2015 8:50:54 AM, slo1 wrote:
At 1/4/2015 1:19:44 PM, twocupcakes wrote:
I don't understand why people (some people) want to eliminate deposit insurance. Though, aspects of deposit insurance create a moral hazard, the benefits to society are enormous.

Bank Runs, are a self fulfilling prophecy that leads to more people withdrawing money, which results in more and more banks going bust and a depressed economy with lots of unemployment. Deposit Insurance fixes this issue. Bank Runs were more common before deposit insurance and resulted in worse depressions.

The average American is not able to constantly monitor there banks risk policies and even if they could, bank runs start at "bad" banks but can spread to good banks also. It is unfair for a hard working family to lose their life savings because of a bank run.

There are plenty of other policies the government can implement to reduce the moral hazard of banks. I do not see how anybody (even the most conservative) can be for eliminating deposit insurance.

There is no reason why it could not be privatized although the onus would have to be on the bank to purchase private insurance and pass costs to customer versus onus on depositors as they would just choose not to buy insurance.

If anyone is advocating a system which there would be no protection for depositors is just a quack. Anyone who believes they could predict when a bank would go under by evaluating it and could choose a safe bank is a crack pot. Not only do they discount the fact that banks are involved in other businesses than savings and loans which can put the banks assets at risk, they completely miss the boat by assuming they could have good information to make a good decision.

The reason it can not be privatized is because of systematic risk. If a crisis did happen, chances are the party insuring the deposits will also go bust. The only party that can safely insure deposits is the government.
slo1
Posts: 4,361
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1/7/2015 9:02:04 AM
Posted: 1 year ago
At 1/6/2015 6:17:11 PM, twocupcakes wrote:
At 1/6/2015 8:50:54 AM, slo1 wrote:
At 1/4/2015 1:19:44 PM, twocupcakes wrote:
I don't understand why people (some people) want to eliminate deposit insurance. Though, aspects of deposit insurance create a moral hazard, the benefits to society are enormous.

Bank Runs, are a self fulfilling prophecy that leads to more people withdrawing money, which results in more and more banks going bust and a depressed economy with lots of unemployment. Deposit Insurance fixes this issue. Bank Runs were more common before deposit insurance and resulted in worse depressions.

The average American is not able to constantly monitor there banks risk policies and even if they could, bank runs start at "bad" banks but can spread to good banks also. It is unfair for a hard working family to lose their life savings because of a bank run.

There are plenty of other policies the government can implement to reduce the moral hazard of banks. I do not see how anybody (even the most conservative) can be for eliminating deposit insurance.

There is no reason why it could not be privatized although the onus would have to be on the bank to purchase private insurance and pass costs to customer versus onus on depositors as they would just choose not to buy insurance.

If anyone is advocating a system which there would be no protection for depositors is just a quack. Anyone who believes they could predict when a bank would go under by evaluating it and could choose a safe bank is a crack pot. Not only do they discount the fact that banks are involved in other businesses than savings and loans which can put the banks assets at risk, they completely miss the boat by assuming they could have good information to make a good decision.

The reason it can not be privatized is because of systematic risk. If a crisis did happen, chances are the party insuring the deposits will also go bust. The only party that can safely insure deposits is the government.

that is why the insurance industry has developed insurance products for insurance companies. It is called reinsurance. There could be schemes to partially eliminate gov if private business does not want to insure the deposit insurers then gov could step in and play the role of re-insurer .

It surely is not beyond possibility to do it in a safe manner.
twocupcakes
Posts: 2,750
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1/7/2015 5:03:54 PM
Posted: 1 year ago
At 1/7/2015 9:02:04 AM, slo1 wrote:
At 1/6/2015 6:17:11 PM, twocupcakes wrote:
At 1/6/2015 8:50:54 AM, slo1 wrote:
At 1/4/2015 1:19:44 PM, twocupcakes wrote:
I don't understand why people (some people) want to eliminate deposit insurance. Though, aspects of deposit insurance create a moral hazard, the benefits to society are enormous.

Bank Runs, are a self fulfilling prophecy that leads to more people withdrawing money, which results in more and more banks going bust and a depressed economy with lots of unemployment. Deposit Insurance fixes this issue. Bank Runs were more common before deposit insurance and resulted in worse depressions.

The average American is not able to constantly monitor there banks risk policies and even if they could, bank runs start at "bad" banks but can spread to good banks also. It is unfair for a hard working family to lose their life savings because of a bank run.

There are plenty of other policies the government can implement to reduce the moral hazard of banks. I do not see how anybody (even the most conservative) can be for eliminating deposit insurance.

There is no reason why it could not be privatized although the onus would have to be on the bank to purchase private insurance and pass costs to customer versus onus on depositors as they would just choose not to buy insurance.

If anyone is advocating a system which there would be no protection for depositors is just a quack. Anyone who believes they could predict when a bank would go under by evaluating it and could choose a safe bank is a crack pot. Not only do they discount the fact that banks are involved in other businesses than savings and loans which can put the banks assets at risk, they completely miss the boat by assuming they could have good information to make a good decision.

The reason it can not be privatized is because of systematic risk. If a crisis did happen, chances are the party insuring the deposits will also go bust. The only party that can safely insure deposits is the government.

that is why the insurance industry has developed insurance products for insurance companies. It is called reinsurance. There could be schemes to partially eliminate gov if private business does not want to insure the deposit insurers then gov could step in and play the role of re-insurer .

It surely is not beyond possibility to do it in a safe manner.

So, you are proposing that having private companies insure deposits and having the government insure these private companies?

Is it not much more efficient to have the government insure the deposits directly. How does this add value to the economy?

Bank Failure rarely happen and when they do a lot of money is owed. No private company will have enough cash to bail out a bank (except a bank).

If a private entity is created all it will do is make money from the premiums it charges then, if a Bank Failure happens, the government will step in, and bail out the insurance company.

This insurance company (useless middle man) you are creating just acts as a tax on the economy.

Why would a bank buy insurance from a company the likely has much less cash then they do?

The private company adds no value at all to the economy. All this does is make the economy much less efficient.
twocupcakes
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1/7/2015 8:58:50 PM
Posted: 1 year ago
At 1/7/2015 8:42:05 PM, Greyparrot wrote:
if the cost health care is such a concern for you cupcake, why isn't there federal malpractice insurance for doctors?

I mainly want to discuss deposit insurance in this thread.
twocupcakes
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1/7/2015 8:59:28 PM
Posted: 1 year ago
At 1/7/2015 8:40:46 PM, Greyparrot wrote:
No fear of bank-runs ensures every badly run bank will be too big to fail.

As I showed above, while deposit insurance can be a moral hazard, it clearly is necesarry.