Deposit Insurance: Keeping Dead Banks Walking | Douglas E. French

Presented by Douglas French at "Will the Decline Continue?," the Mises Circle in Seattle; sponsored by James M. Wolfe, and hosted by the Ludwig von Mises Institute. Recorded Saturday, 12 September 2009.

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[vsaldanas]

FDIC only has 2 cents for every One dollar they suppose to insure? That means 2 billion dollars out of 100 billions is that right? that means 98 billion is not covered by the FDIC.

[Chainedorlo]

Great lecture as always.

[tirmen8er]

@vsaldanas...

no it means that they will be forced to borrow or print 98 cents on the dollar. You know they don't have the political will to default on FDIC insurance.

[Snowflake70]

these meetings - the people in the know - meet outside the realm of the public view - studies say less than 15% of the population is outside their homes after 7 PM.... Eyes Wide Shut - -was there a national new team present? If it weren't for YouTube would you have known about this?... think ---no, deeply ponder this - it IS important.

[pleasent73]

Yes, and the FDIC has fallen below the 2% deposit rate. Right now they have $30,000,000,000 in deposits, but have $1,000,000,000,000 out in mortgages , that is 75% of all loans in the USA. This is going to result in another massive bail out and an even weaker dollar.

(I purposely wrote out the numbers on for dramatic effect)

[modelmark]

they do not assume all banks go bankrupt. I think you would find this standard procedure with all insurers. They also do not assume all planes crash and only have assets for a small part of planes crashing.

The problem is that accidents should be not correlated. Since there is a central bank and a central government, there failure is now synchronised. It is like all planes crashing at the same time.

[D4Shawn]

A deposit IS a loan. Most people just don't know or care about this fact. I'm sure if the bank forced people to read the fine print, or gave customers a lecture on how the banking system works, every time they opened a bank account, the customers eyes would glaze over, or they'd pass out and start snoring.

The fact is, that modern fractional reserve banks are essentially loan brokers.

If people think the bank is warehousing their money, then they are just wrong/ignorant/apathetic.

[grraadd]

Thank You

James M. Wolfe, and Ludwig von Mises Institute.

[becauseicare2]

looking over a recent report from a local bank stock that I own. I noticed they paid a special assessment to the FDIC this period in the amount of $216,000..which reduced earnings by 70%. I also read the recent accouncement that they are concluding the program to protect money market funds on Sept 18th. According to the news release it cost taxpayers nothing but earned $1 billion in fees...who in the hell do they thinjk pays that?? Have you looked at money market rates?? near zero to negative