Why This Sign Is in Front of Banks | WSJ
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- Опубліковано 25 кві 2024
- The Federal Deposit Insurance Corporation was created from the Banking Act of 1933 to prevent the bank runs seen during the Great Depression. With Silicon Valley and Signature Banks, the FDIC is doing what it was designed to do-cover insured deposits.
But it’s taken its promise even further, saying it will protect even the uninsured. Here’s how the FDIC works.
0:00 What is a bank run?
1:38 How FDIC insurance works
2:53 Why SVB and Signature Bank’s collapse have been uniquely challenging
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#FDIC #SVB #WSJ
60 minutes had a piece on the fdic taking over heritage bank in Illinois..the fdic went in after the last customer left,then started counting money and going over the accounts then the white paper was put in the window..it was amazing..
🙏 Thanks for the recommendation
Most people when SVB failed: “ I need to take all my money out of my account I don’t trust the bank system”
Their bank: “ok… how would you like your $215.68? Small bills or large bills?”
Stocks are falling and bond yields are rising, but markets still don’t seem convinced the Federal Reserve will pursue plans to keep increasing interest rates until inflation is under control. I'm still at a crossroads deciding if to liquidate my $117k stocck portfolio, what’s the best way to take advantage of this bear market?
It’s precisely at times like these that investors need to be on guard against the next certainty. You don’t have to act on every forecast, hence i will suggest you get yourself a financial-advisor that can provide you with entry and exit points on the shares/ETF you focus on.
@@ardeand very true, I started investing before the pandemic and that same year I pulled a profit of about $600k with no prior investing experience, basically all I was doing was seeking guidance from a financial-advisorr, you can be passively involved with the aid of a professional.
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Thank you, FDR!
greatest president ever!
@@thabsor people throw around the A-word ("authoritarian") so casually nowadays. They clearly have not studied the ruthlessness with which the New Deal was implemented.
The Wall Street Journal makes the absolute best explainer videos on UA-cam. Concise, well edited visuals with awesome expert interviews
Except that they failed to mention the millions of costumers of small banks that are not protected.
@@neriofrio WSJ videos are high school level at best. Not saying they're bad, but leave a lot out.
And no long complicated wording
What's to stop the banks of doing risky business when they know the government will bail them out time and time again?
There were regulations placed after 2008 lehman failure but SVB lobbied to then Trump Admin to exempt them from these regulation because they're "small" bank.
What happened is money is printed and then you telling me I can't have it or able to obtain any dreams by buying up everything.
The bank is harmed by what people do with the money. Buying up every car, buying up every house. Eventually you have bought up the world that the next generation is leftover.
Absolutely nothing. They are literally spending YOUR money and drugs, prostitutes, and bonuses for people who are incompetent at their job.
SVB didn't get bailed out. Its depositors did.
I think a follow up video on the FDIC funding and whether it can support all insured deposits 🤔
No it can't. They're printing money to the bank just digging the hole deeper
It is backed by the full faith of the American Government so if they ran out of the money.. they tap on the government's shoulder and ask them for the money instead.
It can't, but doesn't mean much, since any shortfalls would be backstopped by the Fed. Customers of banks deemed too-big-to-fail effectively have unlimited FDIC coverage. This is an issue that many smaller to mid-size banks are seeking to be addressed. Unlimited FDIC insurance has been offered before, such as after 2008, so it can be done by utilizing the Fed. Some would characterize it as backdoor QE, since many banks are holding underwater U.S. bonds that the Fed will buy (with proceeds as a loan) at their par (face) value.
We just cannot insure ALL uninsured deposit. Eventually we all will be paying for it one way or the other. The bailout of SVB is basically middle class bailing out billionaire play money (VC/Tech). SVB is not your avg commercial loan in agri or manufacturing. It's a bubbly tech and VC-focused bank. One thing the video didn't mention is usually uninsured deposit gets back 85% on avg, so it's not like they'll lose everything. Creating a precedent on guaranteeing all deposit will just make bank behave more badly (cuz they know no matter what they will be bailed out) which makes the problems much much worse down the road.
That was very informative, thank you
Thank you for this video 🙂👍
Watching the events unfolding, I have lost trust in US regulators altogether. Why is it that rich depositors needed saving from FDIC? Had FDIC gone the extra mile when a similar situation happened at local community banks?
Anwer is a big NO. And why? Lobbying power, a sweet name of the Legal Corruption in the land
It's really good to know how to do this
WOW WE SHOULD STOP PAYING FOR CREDIT CARDS, FED WILL BAIL US OUT 100%
Put 250,000 in one bank, and 250,000 in another bank.
Once the banks collapses they're centralized
The bank doesn't give you the money. They domino it to a larger bank.
For personal banking thats fine, but this is unrealistic for companies.
Does it also protect us from paying for the bailout with our future taxes? That would be neat.
taxes won't have to go up because the Fed can simply print money thanks to the strongest-in-recent-memory dollar.
If I had to guess, the token mentioned in the comments, even though it’s claimed to be backed by amazon, is a huge scam. I’d wager bezos wouldnt need bots to sling his token
The FDIC and Central Bank need to ask each other... What happens when we jack up interest rates rapidly, like we did throughout 2022-3 ??? We can't afford another economic slaughter house...
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when these small banks fails, the big ones will just gobble them up and get bigger
Already happening. Eventually, especially if FDIC unlimited coverage isn't extended to all banks, there will only be a dozen or so big banks left serving most of the country.
The FDIC cannot handle a run of any real size. They couldn't at a 250,000 limit and they can't at the new infinity level.
Depositeors are going to end up getting bailed in when they want to get out.
Its there so you don't have to do your due diligence on your bank's solvency, like you should...
It is common sense that all those having more than 250,000 should withdraw their deposits in any case.
Good
SVB: the first bank run organized on Slack.
10 pots but with only 1 lid. We need ChatGPT to tell us which one to cover. 😆👌
When "your" bank fails, when will mine fail? Thanks.
FDIC fund got only approx 125 billion liquidity backing over 9.5 trillion bank deposits, which provides only 0.03% cover. Doesn't seems enough. in case of bank run, Govt cant provide full deposit cover to all accounts and Fed need to start money printer.
and start the money printer they did. Fed has a new facility which now effectively backstops every dollar deposited in this country.
They tryna save the markets every chance they can lol
BRING CASH HOME.
First Republic Bank has already used up the TBTF banks "injected" liquidity and also lost 99% market cap. from its peak.
Do the TBTF banks have enough LIQUIDITY for their own use !?!
In this inflation are bank runs going to happen everywhere !?!
What's next !?!
The title was changed. It was "How FDIC protects our money when banks fail". I don't know why the change made.
The rules are there to follow. 250k is 250k. Why save the companies that are the venture capitals investments from taxpayer money?
Was it $250,000 since FDR or was it ever readjusted for inflation? Would have been helpful to mention in the video.
It was $2,500 back in 1933, with a few raises over the years. The last time the limit was raised was 2006 to the current $250,000 limit.
Perhaps it might be time to insure higher-value accounts but have higher fees directly tied to them rather than a blanket fee for all accounts under a certain limit. That way those who do not meet the current $250K threshold aren't paying higher rates for those with larger accounts.
So perhaps banks pay a certain amount for accounts under $250K, a bit more for those between $250K to a million, and so on.
@@JuanWayTrips you mean like an actual insurance with different tiers of coverage that are based on a home or a car value?
Also $250k per account! Not just what you haver under your name
@@JuanWayTrips it should be 400k limit for today ……
@@JuanWayTrips Actually, the banks pay a fee to the FDIC.
Wait. I thought the banks are the ones paying for the insurance for our accounts knowing their are making so much money and give so little back to depositors as interest. And why did it fail is something you avoid mentioning… CEO gets paid and run away with millions and selling their stocks offload the risk to the depositors. Fail like this as a business needs to be investigated and regulated.
You are right, but when the bank ran away with money, the government did not make a corresponding solution
Hmmm higher bank fees for holding an open account, or hold my own assets in a decentralized wallet for no cost? Such a hard choice.
yes but crypto collapsed 2021👍😂
Or just keep the majority of it in a safe at home and just leave a small portion in the bank for checking purposes.
thank you FDIC. people need to stop panicking and start drawing their money out for no reason 🤣
credit Suisse just bankrupt, and you are saying people should stop panicking?
It's not for no reason.
It looks like not everyone can detect sarcasm.
How long do they have to pay you back.?????????????
How much at a time ???????????????????/
RIGHT 10 years ?
Where is the crime/corruption they stoled funds for bonuses the day before?? They should be jailed and charged with robbery crimes committed by taking funds to line their pockets of bonuses for failures on their part??? Someone better get their act together and make them pay back with penalties and interest
$250k is no where near where it needs to be for organizations. Some companies have millions so are they supposed to have 100 accounts??
If you add beneficiaries to your account it increases the limit. You can have up to 5 beneficiaries and be covered for up to $1.25mil. WHY DO SO FEW KNOW THIS???
FDR was a wise man.
Q) will USA's Stanford University be suing these Law Professors……Q) will Drug Cartels/ Mafia bosses be sending their children there and SPY AGENCIES using MLK-ULTRA start sending their kids to The University 🎓 of Malta on courses to become Billionaires and start Wars??
Q) what do the Ralph M. Parsons Professor of Law and Business at Stanford Law School,
And the William W. and Gertrude H. Saunders Professor of Law at Stanford Law School have in common? ( Interesting that the parents of both Elizabeth Holmes and Sam Bankman Fried have collectively put into disrepute Stanford University)
"PRACTICE WHAT YOU PREACH">
indicted for fraud>Elizabeth Holmes,Ramesh "Sunny" Balwani,Alan Joseph Bankman ,Barbara Fried,Christian Rasmus Holmes IV,Noel Anne,
The parents of both Elizabeth Holmes and Sam Bankman Fried are 100% involved in the moneylaundering of the "LOST MONEY"
Q) follow the trail of money of these parents, the timeliness…. This would be automatically done to any USA Citizens who are suspected of premeditated fraud even in much smaller amounts,let alone qualified STANFORD University Law Lecturers LAWYERS, CEO's and The USA political lobbyists
Considering money is just numbers on a screen, what's the big deal about just giving digital money to all the people who lost money in a bank failure with the simple push of a computer buttons? Banks make money out of thin air all the time!
Fr we also got rid of the gold standard in 71 so it’s makes no sense to have the same situation like in the Great Depression because it was back by actual gold/ silver/ copper . They can just do a reset and give refunds and adjustments lol
"when your banks fail" hahahaha
I heard the FDIC only has 1.3% of the amount of money it is covering. What happens when that runs out.
Backed up by the full faith and credit of the United States government. In other words our taxes. So we are insuring ourselves,
You forget leman brothers 4 largest bank money despair overnight
If big banks buy small failed banks, then whose money would it be from the big banks?
Where are the Libertarians during this bank crisis? They should be advocating for abolishing the FDIC but they are nowhere to be found.
The fees of the normal people go up while the assets, salary and benefits of the idiot executives continue to increase. Just as the system was meant to work.
I made sure to pull my money out of the banks. If the federal government in taking action, run.
Sounds like the tax payer would eventually pay for those uninsured deposits
The only insurance I trust is Bitcoin!
Not discussing moral hazard is a huge ommision. Also, factually incorrect. It was not implemented as designed. Guaranting all deposits is completely different from 250k
Yep...FED failed investing banks...period...hello Powell!!
And how the IRS keeps your stimulus check and your past 3 refunds......
faith and credit, lol
The government only had so much money….
In my opinion, I don’t think the government can keep throwing money at people if ALL the banks fail it’s only a matter of time before the bubble bursts, because right now the stock market and economy are like a very fragile bubble, and we are about to POP!!!!
How about that! A Democratic president that actually passed a law to protect hard working Americans and not major campaign donors.
The graph for the banking bosses pay cheques heads in a 30 to 45 degree upward trajectory. Meanwhile, society is going the other direction.
The bank should NOT invest client’s money, they should be investing JUST their profits!
then there wont be any bank
its like saying we shld not eat anything instead jst create our own food like plants do
Don't use any bank thet sucker. Typical underclass yelling like a fool.
Are you not aware of how a bank works 😂
They (the bosses or whoever) can be winning a lot of money by doing what they are doing and then they can go to governments when things go south to cry (which I think that is not a capitalist thing to do), or they can use just their profits. They charge basically for everything so they would be afloat for sure!!!
I’m aware that they are NOT working properly and that things have to change
If it wasn’t for Europe I’d NOT feel that my money is safe in the bank but as we are in a capitalist system and we are paying a lot of fees to the banks they should not be rescued when they are mismanaged. As we are the clients (we are paying for them to hold our money, it is not for free), they should be paying back what they owe us if they fail, (not governments)
Having read A History of the United States in Five Crashes, I didn't think I would ever see a bank run like the 1920s, and yet here we are, 2023 acting like its 1920 all over again.
They let the future pay the bill. The future happen.
They stopped the bank run pretty early and relatively limited. Unlike in the 1920s, the U.S. isn't on the gold standard. Can easily create money via the Fed. Which is basically what happened with SVB. The Fed bought underwater U.S. bonds at par (face) value to cover SVB's shortfall and essentially allow them to cover all accounts with unlimited FDIC coverage.
It SHOULD NOT fail, in the first place
Same here DGIC in India
Their will be many more bank failures in the future as soon AI gets a grip onto things- the insurance policy in my eyes will be Bitcoin. NOT Financial Advice.
I remember learning this in school.
Did it mention that it was all a lie.
Love how we get capitalism and the rich get socialism
Better to at least self-custody some of ur money in crypto. 😒 DO NOT TRUST ANYONE!
Because of transparency banks are failing in United States otherwise it won't
Now you get to insure large accounts too.
That's how the little guy gets to pay the bill again.
250k was the right amount.
Open multiple accounts
The AWS33X is showing the finger to governments, systems, big banks and all these who make us work way too hard for nothing. Yes this is not the best space to talk about it but if I reach even one human it was worth it, that's why I post
Sure FDIC covers up to $250K. What happens when the rules suddenly change to cover deposits over $250K?
FDIC has been taking in premiums to cover $250K. But plenty of entities have well more than $250K. Cover those above $250K, those entities are happy but drain FDIC. Stick to the rules and don’t cover over-$250K those entities go bust.
Enough bank runs, with new >$250K coverage rule, and the FDIC will have to get an infusion from somewhere. Ultimately that infusion has to come from the taxpayer. Everyone who pays taxes will have to back-stop fractional reserve banking.
We could potentially see a mass draining of every treasury everywhere in an unwinding of fractional reserve banking. That’s society-collapsing territory.
Or keep the rule of not covering >$250K and watch medium/large companies run the bank and shut the banks down. And the super-majority of companies who were too slow shutter. But, hey, the little people are covered, but most economic activity has stopped. Same collapse.
Btw, the FDIC only has enough to barely cover 1% of deposits, if everyone demanded their money simultaneously . However, in an avalanche type effect, extraordinary propaganda is absolutely required, in attempt to diffuse the extreme anxieties that will grip the masses.
“Elections have consequences”
Overspending = inflation
Inflation = high interest rates
High interest rates = bank failures
Simple stuff really. I seem to remember a certain group of people warning everyone about printing money and the damage it would cause.
I climbed on top of our local back here and started jogging on the roof. The police came to arrest me. I simply told them I heard there was going to be a run on this bank, so I was just practicing.
Practice your escape plan ahead of time, lol
What happens when the FDIC fails.
What happens why the sky becomes the ground and the ground becomes the sky? If you can answer that, then you have your answer.
@@kaym7704 you act like no government has ever failed...
@@NotKimiRaikkonen Well if you know the answer to that then you have the answer to the FDIC question this guy is asking lol.
It dont. They lied and keep lying
B
to the people complaining about the FDIC and paying for the insurance: do you complain when your auto insurance pays out someone else's totaled car even if you've never crashed? what about your health insurance paying someone else's ER bill while you only ever use it for office visits? insurance isn't an equitable distribution of funds, it's a backup policy where everyone contributes a little so we can all have a lot of peace of mind. oh, and if you don't like the FDIC, invest your money yourself, and you won't have to worry about bailing out the banks.
I am fully digesting the mighty AWS33X and my belly is going to be full now
So who pays for the insurance fund? That's right boys & girls, you do.
No no no no no. You don't get it. The government pays for it. They use the same fund they have to pay for free healthcare and free education and free lollipops.
Lucky those who have AWS33X right in time, unlucky those who think it's meaningless. There's a reason why so many would write about it no matter where you lookin' at
1
Big days ahead for AWS33X what about the rest of this community? Any heart here to live for a better world? If so then what are you waiting for?
When you cover svb accounts over 1 billion this all becomes meaningless pretty fast. It's amazing how fast the system works to shore up incompetent banks. So fast in fact that no one is held accountable and remain in place to commit the same blunders again.
Orrrr we move the goalpost ad hoc and have an unlimited insured deposit limit!
Not a Yank.That what, Your Biden, Your Secretary Yellen, Chair Powell, a supermajority of Fed governors & the FDIC governors did. Ad hoc without reguard to well establish rules, making rules on the fly, favouring presumptively their supporters/fund contributors, tossing out well establish rules in reguard to debt hiearchies, no concept of Fiducary duties to other parties like smaller community /Regional banks, unfair burden sharing as in relative lite rider syndrome.
What black moni. Un decleard
Imagine a scenario where an unscrupulous billionaire investor thought up a scheme to get the Fed to stop interest rate increases or start lowering them. Let's imagine he had an account at SVB.
SVB COLLAPSE: published in the Washington Examiner on 3/13/23 by Tech reporter Chris Hutton.
Propaganda but for a good cause
Try explaining this false impression that all is well, to those million who have lost and will continue to lose their money as small banks, who do not have the same protection as the biggest banks, begin to fail. It’s already happening and you no so carefully ignored these facts. Why would anyone with sizeable deposits, in their small bank, keep it in that small bank knowing they’re not protected. These people will and have began to take their money and secure it in a ‘government backed bank’ leasing to another run and domino effect on small banks. Good luck to each and every depositor and I hope those leaders pf big banks, those who withdrew billions of dollars of their own money/dividends/shares just days before the collapse of their bank, get whats truly deserved … prison time.
What do you mean the FDIC “worked”? Like everything else, it worked until it doesn’t. FDIC deposit covers infinite amount of deposit. ALL 19 trillion. It succeeded in creating a moral hazard
Socialism
Dudes you into AWS33X or too lazy as usual?
No money, no problems!
The rumors went wild with AWS33X and it's finally happening, launch day arrived fellas