this post was submitted on 13 Dec 2024
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Remember that scene at the beginning of It's a Wonderful Life, where people are all desperately trying to get into the bank because if it fails before they get in, they lose their money? That's what the FDIC prevents.

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[–] voracitude@lemmy.world 51 points 1 week ago* (last edited 1 week ago) (12 children)

Remember that scene at the beginning of It’s a Wonderful Life, where people are all desperately trying to get into the bank because if it fails before they get in, they lose their money? That’s what the FDIC prevents.

Yeah. FDIC insurance is the only reason each of us will be left with up to ~~100k~~ 250k per bank account, if our banks go under. And most of us have less than 100k in savings, so it's basically the US government saying

Don't worry, even if shit hits the fan, you will still have your money.

I can't even be bothered to hear how his minions are going to defend this one. It's indefensible.

[–] cheese_greater@lemmy.world 1 points 1 week ago* (last edited 1 week ago) (2 children)

What backs or gurantees the FDIC?

[–] voracitude@lemmy.world 24 points 1 week ago* (last edited 1 week ago) (1 children)

That's a little hard to parse, but if you're asking "What guarantees the FDIC has the money to pay back Americans who lose their savings because of a bank collapse?": The FDIC does. From https://www.fdic.gov/about/what-we-do:

The FDIC receives no Congressional appropriations - it is funded by premiums that banks and savings associations pay for deposit insurance coverage. The FDIC insures trillions of dollars of deposits in U.S. banks and thrifts - deposits in virtually every bank and savings association in the country.

FDIC insurance is a selling point for many retail banking products (like checking and savings accounts), so those institutions pay for the insurance so people will have confidence to bank there. More importantly, they buy it because it's required by law currently.

If the FDIC were abolished, the void would be filled by unregulated entities that would charge higher premiums and cover less, and there would probably be kickbacks involved - while the government watches with its popcorn - to disincentivise real free market competition.

That's if there were any kind of deposit insurance at all, I mean. The idea might be to encourage the American people to put their savings into a form they can retain control over - like precious metals, land, or digital currencies.

[–] silence7@slrpnk.net 9 points 1 week ago

There's also an implicit guarantee that the federal government would step in an make deposits good if there were a bank failure large enough to wipe out the FDIC

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