[TonyLima]

Now that the FDIC has guaranteed all uninsured depositors, I wonder if it is time to explicitly gurantee all deposits, regardless of amount.  It will mean that banks banks' customers will have to pay more to the FDIC in insurance, and probably ought to be subject to more supervision, but if there is fundamentally no difference in how the FDIC treats uninsured and insured accounts, then we should probably say it out loud, shouldn't we?

BC

Fixed that for you.

But, yes, if there's going to be an unofficial (and probably extra-legal) policy that the FDIC and the Fed will ultimately back up all deposits, then just make that the official policy already.

Sorry. Only large banks pose systemic risk because large banks serve as de facto clearing houses for transactions by smaller banks. Letting a big bank go under could create a cascade of small bank failures. Since 1932, no regulator has been willing to take that chance. And therefore big banks get bailed out.

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Way back in 2021 some of us were predicting inflation. Larry Summers was among them. Fighting inflation always requires higher interest rates. It continues to amaze me that an obscure CA economist could forecast better than the Fed. I blame modern monetary theory. :)

[TonyLima]

Now that the FDIC has guaranteed all uninsured depositors, I wonder if it is time to explicitly gurantee all deposits, regardless of amount.  It will mean that banks banks' customers will have to pay more to the FDIC in insurance, and probably ought to be subject to more supervision, but if there is fundamentally no difference in how the FDIC treats uninsured and insured accounts, then we should probably say it out loud, shouldn't we?

BC

Fixed that for you.

But, yes, if there's going to be an unofficial (and probably extra-legal) policy that the FDIC and the Fed will ultimately back up all deposits, then just make that the official policy already.

Sorry. Only large banks pose systemic risk because large banks serve as de facto clearing houses for transactions by smaller banks. Letting a big bank go under could create a cascade of small bank failures. Since 1932, no regulator has been willing to take that chance. And therefore big banks get bailed out.

---

Way back in 2021 some of us were predicting inflation. Larry Summers was among them. Fighting inflation always requires higher interest rates. It continues to amaze me that an obscure CA economist could forecast better than the Fed. I blame modern monetary theory. :)