Should FDIC insurance limits be raised?

[spidey07]

Interesting stat I heard from head in an interview with a economic professor who appeared to have no agenda. Apparently the FDIC only has the money to insure about 1% of all the money it insures. :shocked:

 

[redgtxdi]

Originally posted by: spidey07
Interesting stat I heard from head in an interview with a economic professor who appeared to have no agenda. Apparently the FDIC only has the money to insure about 1% of all the money it insures. :shocked:

Comforting, eh??

 

[Genx87]

Originally posted by: Darwin333

Originally posted by: Genx87
I dont really care either way but is this a big deal? How many people have 100K laying around in a bank account? I mean honestly? In our nation the avg retirement savings is about 90K. This will only affect a few people at the top.

From what I gather, this is just to prevent runs on banks. The avg joe has no reason to yank his money out of the bank if they think its going to fail. Some still do in a panic but so far the FDIC has came through on its obligations. 1 guy yanking a million out of a bank hurts that bank a lot more than 50 people yanking out 5K.

I can see that but then again this is only for the top. Secondly wouldnt a guy with that kind of cash pay some kind of insurance for the difference between fdic and what he has in the bank? Third the other entities I can see benefit from this is small business. Who may have that kind of cash in the bank.

Again I want to reiterate this isnt a big deal to me either way. Just trying to figure out how this become a topic within the scope of this bailout.

 

[jonks]

Originally posted by: Cattlegod
100K in 1933 = 1M in 2008.

The 100k limit wasn't set in 1933.

Raise it, don't raise it, who cares except those with over 100k in a savings account. How many people are there with such an asset? The idea that this will help more than 1% of americans seems silly, but if someone has the stats to show it affects more than that I'd like to see em.

 

[jonks]

Originally posted by: Mani

Originally posted by: smack Down

Originally posted by: fallout man
I was told that a single money-market account was insured 100k per beneficiary (as in 3 beneficiaries equals 300k FDIC protection). I smell bullshit. Anyone here familiar with that kind of thing? It really smells bad.

I don't think money market accounts are protected at all by the FDIC

Nope, they are not.

Yes, they are.

Are my Citibank money market accounts safe?

Yes?rest assured that your Citibank money market accounts are safe. That's because, like other savings accounts, they are insured by the FDIC (Federal Deposit Insurance Corporation) for up to $100,000 per depositor per bank. That means if a bank goes out of business, your money will still be there. To learn more, including how to maximize your FDIC insurance coverage, read the FDIC's Guide to Deposit Insurance. You may also go to www.fdic.gov or call (877) 275-3342.

In contrast, money market funds are securities, not deposit accounts insured by the FDIC. They are mutual funds that invest in short-term instruments that usually mature in 13 months or less.

 

[jonks]

Originally posted by: redgtxdi

Originally posted by: spidey07
Interesting stat I heard from head in an interview with a economic professor who appeared to have no agenda. Apparently the FDIC only has the money to insure about 1% of all the money it insures. :shocked:

Comforting, eh??

Unless you are dumb, it's perfectly comforting. Do you think a life insurance company could pay out on every single insured person if they all died at once? Do you think a medical insurance company could pay the hospital bills if every single insured person needed cancer treatments?

Insurance works at all because the payouts are far, far, far less than the premiums coming in.

If every single bank in the US failed at the same time, no, the FDIC couldn't cover all the savings. Guess what? You'd have bigger problems. Like finding fresh water and surviving the riots.

 

[Darwin333]

Originally posted by: Genx87

Originally posted by: Darwin333

Originally posted by: Genx87
I dont really care either way but is this a big deal? How many people have 100K laying around in a bank account? I mean honestly? In our nation the avg retirement savings is about 90K. This will only affect a few people at the top.

From what I gather, this is just to prevent runs on banks. The avg joe has no reason to yank his money out of the bank if they think its going to fail. Some still do in a panic but so far the FDIC has came through on its obligations. 1 guy yanking a million out of a bank hurts that bank a lot more than 50 people yanking out 5K.

I can see that but then again this is only for the top. Secondly wouldnt a guy with that kind of cash pay some kind of insurance for the difference between fdic and what he has in the bank? Third the other entities I can see benefit from this is small business. Who may have that kind of cash in the bank.

Again I want to reiterate this isnt a big deal to me either way. Just trying to figure out how this become a topic within the scope of this bailout.

No doubt about it, this is for businesses and the people at the top. I am not sure of any non-government insurance you can get on bank deposits and I am not sure I would trust an insurance company offering it anymore then the bank. Especially considering we just had to bail out the countries largest insurance company to the tune of $85B. The FDIC is one thing that people still trust when it comes to their money. Instead of private insurance I think the FDIC can just charge people over the base limit a certain percentage and eliminate the middle man who we would probably be bailing out anyway.

As to your final question, I am not sure it would help at this point in time but in theory it could prevent a bank from failing due to panic driven runs on it. So I guess you could argue that it has something to do with the current problem. On the other hand, could someone please explain what the hell "Mental Health parity" has to do with the bailout??? Or the AMT? Or renewable energy tax credits?

The bottom line answer is its probably just a carrot stuck in the bill to sway a few more people to vote for it.

 

[JS80]

Originally posted by: Mani

Originally posted by: smack Down

Originally posted by: fallout man

Originally posted by: JS80

Originally posted by: fallout man

Originally posted by: Fern
Raise it why?

For the convenience of rich people?

If you've got $300,000 to put in the bank, just get 3 accounts each with no more $100k in them.

It's the account that insured (and thus has the limit), not the person.

I don't see why anyone would have that much $ in a bank account. If I had more than $100k I would be putting it in short-term treasuries etc; the term being dependant upon my expected cash-flow needs. I suppose large companies might need more $100K in their payroll account for some minimum period of time, but otherwise I don't see the need really.

Fern

I was confused about this as well.

Apparently, the FDIC guarantee is up to $100,000 per account holder per bank. If you split your money into multiple accounts, it doesn't matter--you're still only insured for $100,000.

If you split your savings into multiple accounts at separate banks, you're insured up to $100k per bank.

Having multiple accounts at the same bank DOES NOT COUNT.

I think that this is fucking stupid, but I guess that it prevents the FDIC from going bankrupt after every shit-hole podunk bank fails.

You NEED to have you money put into separate banks, with each account having <100k in order to have FDIC security.

this is correct. a lot of fucktards that had their money with indymac got reamed ITB because the bank reps told them this false info.

With regard to my other "private issue" thread:

I was told that a single money-market account was insured 100k per beneficiary (as in 3 beneficiaries equals 300k FDIC protection). I smell bullshit. Anyone here familiar with that kind of thing? It really smells bad.

I don't think money market accounts are protected at all by the FDIC

Nope, they are not.

Money market FUNDS are not, "Money market accounts" which is just a marketing name for higher deposit savings IS FDIC insured.

 

[jman19]

Temporarily, I think it's an OK idea to try and restore some confidence in the financial system. In the long term, no.

 

[jman19]

Originally posted by: Cattlegod
100K in 1933 = 1M in 2008.

It should be increased to at least 500k IMHO.

Fail, FDIC didn't insure 100k in 1933.

 

[jman19]

Originally posted by: Fern
Raise it why?

For the convenience of rich people?

If you've got $300,000 to put in the bank, just get 3 accounts each with no more $100k in them.

It's the account that insured (and thus has the limit), not the person.

I don't see why anyone would have that much $ in a bank account. If I had more than $100k I would be putting it in short-term treasuries etc; the term being dependant upon my expected cash-flow needs. I suppose large companies might need more $100K in their payroll account for some minimum period of time, but otherwise I don't see the need really.

Fern

Per depositor per bank, not per account.

 

[JS80]

Originally posted by: jman19
Temporarily, I think it's an OK idea to try and restore some confidence in the financial system. In the long term, no.

Plus people are not dumb. Even if the limit was $1 million, if the FDIC had no way of covering that anyway, people will treat that $1 million limit as $0 and it would not prevent any bank runs.

 

[jman19]

Originally posted by: JS80

Originally posted by: jman19
Temporarily, I think it's an OK idea to try and restore some confidence in the financial system. In the long term, no.

Plus people are not dumb. Even if the limit was $1 million, if the FDIC had no way of covering that anyway, people will treat that $1 million limit as $0 and it would not prevent any bank runs.

This. Like I said, it might quell a short term panic, where people don't seem to think with their heads anyway, but long term it would be fail because it isn't too hard to do the math and realize that this wouldn't work if the banking system suffered a total collapse.

 

[Mani]

Originally posted by: jonks

Originally posted by: Mani

Originally posted by: smack Down

Originally posted by: fallout man
I was told that a single money-market account was insured 100k per beneficiary (as in 3 beneficiaries equals 300k FDIC protection). I smell bullshit. Anyone here familiar with that kind of thing? It really smells bad.

I don't think money market accounts are protected at all by the FDIC

Nope, they are not.

Yes, they are.

Are my Citibank money market accounts safe?

Yes?rest assured that your Citibank money market accounts are safe. That's because, like other savings accounts, they are insured by the FDIC (Federal Deposit Insurance Corporation) for up to $100,000 per depositor per bank. That means if a bank goes out of business, your money will still be there. To learn more, including how to maximize your FDIC insurance coverage, read the FDIC's Guide to Deposit Insurance. You may also go to www.fdic.gov or call (877) 275-3342.

In contrast, money market funds are securities, not deposit accounts insured by the FDIC. They are mutual funds that invest in short-term instruments that usually mature in 13 months or less.

Wasn't paying much attention when I typed the response and read it as money market funds - my bad.

 

[morkinva]

Don't worry about every account being paid up to 250k, the senate version of the bailout gives the fdic unlimited borrowing from the treasury - reuters - problem solved! HAHA so funny.