02-21-2013, 08:27 PM
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#21
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Gator Country Gold
Join Date: Apr 2007
Posts: 20,995
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Quote:
Originally Posted by rivergator
I'm not sure the depositers are at fault here. Besides, with no FDIC, you get runs on banks because people get scared. And even a stable bank doesn't have enough cash on hand to return every deposit. So then what?
That did create a bit of a problem in 1929.
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Will you quit watching "It's A Wonderful Life" in reruns already. Things in the financial/banking world have improved a lot since the "run on banks" used to happen.
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02-21-2013, 08:34 PM
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#22
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Gator Country Silver
Join Date: Apr 2007
Posts: 10,945
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Quote:
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Originally Posted by Gatorrick22
Will you quit watching "It's A Wonderful Life" in reruns already. Things in the financial/banking world have improved a lot since the "run on banks" used to happen.
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"No, you don't understand. Your money is in Martini's house!"
Sent from my iPhone using GatorCountry
__________________
"Fredo, you're my older brother and I love you. But don't ever take sides with anyone against the family again. Ever."
-- Michael Corleone, "The Godfather"
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02-21-2013, 08:35 PM
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#23
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Gator Country Gold
Join Date: Apr 2007
Posts: 20,995
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Quote:
Originally Posted by BobK89
"No, you don't understand. Your money is in Martini's house!"
Sent from my iPhone using GatorCountry
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02-21-2013, 08:37 PM
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#24
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VIP Member
Join Date: Aug 2008
Posts: 1,302
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Without the FDIC banks could never make the investments they make today. I guess they could but word would get out and those banks wouldn't be in business for very long. Banks would be held accountable by their depositors not the government ( i know what a novel idea). But as it stands today no one cares, the depositors don't care, the banks don't care and the government doesn't care.
It would force people to be more educated about their money and we all know that personal accountability is bad.
The thing is if the government announced tomorrow that the FDIC was no longer in existence we probably would see a run on the banks.
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02-21-2013, 09:30 PM
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#25
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Heisman Candidate
Join Date: Apr 2007
Posts: 2,121
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Quote:
Originally Posted by Gatorrick22
Will you quit watching "It's A Wonderful Life" in reruns already. Things in the financial/banking world have improved a lot since the "run on banks" used to happen.
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That changed in 1998....bi-partisean vote at that....if you don't know what I'm writing about you shouldn't be commenting...
__________________
"Either you repeat the same conventional doctrines everybody is saying, or else you say something true and it will sound like it’s from Neptune." Noam Chomsky
"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that justifies it." Frederic Bastiat
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02-21-2013, 09:53 PM
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#26
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Gator Country Gold
Join Date: Apr 2007
Posts: 15,066
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Quote:
Originally Posted by Burke
After the FDIC, they only had to worry about the interest rate, because the FDIC was guaranteeing their deposits.
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But with this in mind, does a lower interest rate mean your bank made less risky investments? Who could prove that to us? Should we seek low interest returns because we presume they made safer loans? If a complete systemic failure were imminent would money in a bank that were not immediately exposed to the failure of other banks hold value longer- give you time to react?
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02-21-2013, 10:13 PM
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#27
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Heisman Candidate
Join Date: Oct 2011
Posts: 2,237
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Quote:
Originally Posted by Burke
Before the FDIC, bank depositors needed to wonder about 2 things when picking a bank to put their money in: how safe their money would be in the bank they chose and what interest rate they would be getting.
After the FDIC, they only had to worry about the interest rate, because the FDIC was guaranteeing their deposits.
In order to pay high interest rates, banks must get higher interest rates on the loans they make. In order to get higher interest rates, they must make riskier loans.
Is it necessary for me to explain that this is a recipe for disaster?
Something else. The FDIC is funded by all banks which must pay into a pool to repay depositors of failed banks.
This means that in times of real trouble, when a lot of banks are failing, these bad banks can drag good banks down with them. I might add that good banks are forced to make risky loans to compete with bad banks for customers, a fact that makes it harder for good banks to stay in business.
This is called a systemic failure.
And guess who picks up the tab for that?
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Where do you people come from?
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02-21-2013, 10:22 PM
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#28
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Heisman Candidate
Join Date: Apr 2007
Posts: 2,445
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Banking moral hazard= nothing.
Accounts are insured and banks are bailed out. Either way the taxpayers subsidize the mess.
Canadian and Swiss banking practices are far superior.
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02-21-2013, 11:03 PM
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#29
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Premium Member
Join Date: Apr 2007
Posts: 10,304
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Quote:
Originally Posted by T3goalie
Banking moral hazard= nothing.
Accounts are insured and banks are bailed out. Either way the taxpayers subsidize the mess.
Canadian and Swiss banking practices are far superior.
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http://www.fdic.gov/bank/individual/.../banklist.html
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02-22-2013, 03:47 AM
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#30
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Premium Member
Join Date: Jun 2009
Posts: 6,389
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When a business enterprise fails, it goes bankrupt. Its assets are gathered and paid to its creditors according to priorities contained in the bankruptcy laws.
And life goes on.
It should be that way for banks just as for any other business.
If depositors lose, too bad. They chose the bank. It was no different in principle than any other investment decision. Making others who made wiser decisions pay for their mistake is no different than making others pay for, say, a bad stock market decision.
But the govt has effectively made the banking industry a racket in some ways. In order to continue to perpetuate this racket, it's necessary for it to "save" depositors from
their mistakes.
By making responsible, productive banks pay for the mistakes of irresponsible, unproductive ones.
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02-22-2013, 07:45 AM
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#31
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Junior
Join Date: Sep 2008
Posts: 495
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Quote:
Originally Posted by gator10010
Without the FDIC banks could never make the investments they make today. I guess they could but word would get out and those banks wouldn't be in business for very long. Banks would be held accountable by their depositors not the government ( i know what a novel idea). But as it stands today no one cares, the depositors don't care, the banks don't care and the government doesn't care.
It would force people to be more educated about their money and we all know that personal accountability is bad.
The thing is if the government announced tomorrow that the FDIC was no longer in existence we probably would see a run on the banks.
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Of course they don't care when it's not their money! That is the point Burke is making! Lol helloooo.
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02-22-2013, 07:58 AM
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#32
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VIP Member
Join Date: Aug 2008
Posts: 1,302
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Quote:
Originally Posted by surfn1080
Of course they don't care when it's not their money! That is the point Burke is making! Lol helloooo.
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Very thoughtful contribution to the conversation surf. You obviously missed my point. We would be better off without the FDIC but abolishing the FDIC would be a sure way to create a run on the banks and I don't think anyone would really think that a run on the banks would be good for this country. Lol helloooo.
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02-22-2013, 08:10 AM
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#33
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Junior
Join Date: Sep 2008
Posts: 495
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Quote:
Originally Posted by gator10010
Very thoughtful contribution to the conversation surf. You obviously missed my point. We would be better off without the FDIC but abolishing the FDIC would be a sure way to create a run on the banks and I don't think anyone would really think that a run on the banks would be good for this country. Lol helloooo.
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That was not really meant at you. I picked your post to respond to this thread because it went well with my thoughts.
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02-22-2013, 09:04 AM
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#34
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Gator Country Diamond
Join Date: Apr 2007
Posts: 25,606
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Quote:
Originally Posted by T3goalie
Banking moral hazard= nothing.
Accounts are insured and banks are bailed out. Either way the taxpayers subsidize the mess.
Canadian and Swiss banking practices are far superior.
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doesn't Canada have the CDIC?
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02-22-2013, 09:08 AM
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#35
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Heisman Candidate
Join Date: Oct 2011
Posts: 2,237
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Quote:
Originally Posted by rivergator
doesn't Canada have the CDIC?
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Shhh, don't let the facts get in the way, this guy is on a roll.
http://www.cdic.ca/Pages/default.aspx
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02-22-2013, 09:13 AM
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#36
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Heisman Candidate
Join Date: Apr 2007
Posts: 2,445
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Quote:
Originally Posted by gator10010
Without the FDIC banks could never make the investments they make today. I guess they could but word would get out and those banks wouldn't be in business for very long. Banks would be held accountable by their depositors not the government ( i know what a novel idea). But as it stands today no one cares, the depositors don't care, the banks don't care and the government doesn't care.
It would force people to be more educated about their money and we all know that personal accountability is bad.
The thing is if the government announced tomorrow that the FDIC was no longer in existence we probably would see a run on the banks.
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You are defining the lack of Moral Hazard. They are playing with monopoly $$... and we pay for all losses through shared risk (FDIC/Bank bailouts).
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02-22-2013, 09:39 AM
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#37
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Sub-optimal Poster
Join Date: Apr 2007
Location: Orlando, FL
Posts: 16,758
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"Moral Hazard" isnt always intolerable. Insurance has to deal with a certain level of it, but that's why there is also underwriting and risk assesment. That's why the FDIC has capitalization standards. Its not insuring deposits at any old bank. If it did, then that would be an intolerable level of moral hazard.
__________________
"The things we admire in men, kindness and generosity, openess, honesty, understanding and feeling, are the concomitants of failure in our system. And those traits we detest, sharpness, greed, acquisitiveness, meaness, egotism and self-interest, are the traits of success." 
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02-22-2013, 10:33 AM
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#38
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Premium Member
Join Date: Jun 2009
Posts: 6,389
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Wgb,
How bad would things have to get for you to decide that the free market is best?
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02-22-2013, 10:50 AM
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#39
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Gator Country Diamond
Join Date: Apr 2007
Posts: 25,606
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Quote:
Originally Posted by Burke
Wgb,
How bad would things have to get for you to decide that the free market is best?
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I'm not sure many people consider that having depositers lose their money when a bank fails is really "best."
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02-22-2013, 10:55 AM
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#40
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I'm your huckleberry
Join Date: Apr 2007
Location: In my prime
Posts: 11,092
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Quote:
Originally Posted by rivergator
I'm not sure the depositers are at fault here. Besides, with no FDIC, you get runs on banks because people get scared. And even a stable bank doesn't have enough cash on hand to return every deposit. So then what?
That did create a bit of a problem in 1929.
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That's enough common sense out of you.
__________________
Credat Judaeus Apella, non ego.
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