FDIC At Risk

[DaisyDay]

https://www.reuters.com/business/finance/trump-advisers-seek-shrink-or-eliminate-bank-regulators-wsj-reports-2024-12-13/

Trump advisers and officials from the newly established Department of Government Efficiency (DOGE) inquired about the possibility of abolishing the Federal Deposit Insurance Corp (FDIC), according to the newspaper.

Advisers have asked the nominees under consideration for the FDIC, as well as the Office of the Comptroller of the Currency, if deposit insurance could be absorbed into the Treasury Department, the Journal said adding that any proposal to eliminate the FDIC or any agency would require congressional action.​

Hopefully, Congress will have the sense and fortitude to resist the elimination of the FDIC.

 

[Say it aint so]

https://www.reuters.com/business/finance/trump-advisers-seek-shrink-or-eliminate-bank-regulators-wsj-reports-2024-12-13/

Trump advisers and officials from the newly established Department of Government Efficiency (DOGE) inquired about the possibility of abolishing the Federal Deposit Insurance Corp (FDIC), according to the newspaper.​

​

Advisers have asked the nominees under consideration for the FDIC, as well as the Office of the Comptroller of the Currency, if deposit insurance could be absorbed into the Treasury Department, the Journal said adding that any proposal to eliminate the FDIC or any agency would require congressional action.​

Hopefully, Congress will have the sense and fortitude to resist the elimination of the FDIC.

If one doesn't learn from history, one is doomed to repeat it.

 

[DaisyDay]

If one doesn't learn from history, one is doomed to repeat it.

Who said "History doesn't repeat, it rhymes"?

 

[HTacianas]

https://www.reuters.com/business/finance/trump-advisers-seek-shrink-or-eliminate-bank-regulators-wsj-reports-2024-12-13/

Trump advisers and officials from the newly established Department of Government Efficiency (DOGE) inquired about the possibility of abolishing the Federal Deposit Insurance Corp (FDIC), according to the newspaper.​

​

Advisers have asked the nominees under consideration for the FDIC, as well as the Office of the Comptroller of the Currency, if deposit insurance could be absorbed into the Treasury Department, the Journal said adding that any proposal to eliminate the FDIC or any agency would require congressional action.​

Hopefully, Congress will have the sense and fortitude to resist the elimination of the FDIC.

Based on all of that why would you oppose eliminating the FDIC?

 

[DaisyDay]

Based on all of that why would you oppose eliminating the FDIC?

Because I have money in bank accounts and CDs that I would rather not simply disappear.

 

[tampasteve]

Because I have money in bank accounts and CDs that I would rather not simply disappear.

The proposal is not to get rid of the actual insurance, but the FDIC. It clearly says they wish to absorb it into the Treasury Department. Your money would still be insured.

 

[DaisyDay]

The proposal is not to get rid of the actual insurance, but the FDIC. It clearly says they wish to absorb it into the Treasury Department. Your money would still be insured.

They have proposed two options, eliminating it or folding it into the Treasury Dept.

 

[tampasteve]

They have proposed two options, eliminating it or folding it into the Treasury Dept.

I am sorry, but you are mistaken in thinking they are eliminating the insurance. Yes, there are two proposals being floated and one is to eliminate the FDIC and fold it into the Treasury, but eliminating the FDIC does not mean eliminating the insurance part of the FDIC, hence the fold into the Treasury. The other proposal is to combine parts of the FDIC, OCC and Treasury to eliminate duplicate functions, in particular the bank regulatory functions.

The goal is to eliminate duplicate functions that are wasteful, in particular that all three agencies have bank regulatory duties. The FDIC does more than just provide insurance on your deposit.

 

[keith99]

Because I have money in bank accounts and CDs that I would rather not simply disappear.

I don't have enough to cause any pain if it were to vanish.

It seems many here do not understand the issues involved. While actually insuring funds is important. The confidence that created is more important still. No bank ever keeps enough money on hand to pay all the depositors if they all showed up wanting all of their money. Heck it isn't even close to 10%. The money is invested or loaned. This is how banks make money. If all they did was keep it safe they would CHARGE depositors for the service.

Folding the FDIC into Treasury would go a long way towards eroding confidence that funds will be there. And such erosion can start a run on a bank when things are entirely sound.

I would not get hurt in the slightest by the primary issues. But things would spread out like ripples in a pond when one throws a rock into the water. But unlike ripples in a pond which get smaller is they spread, in this case they would get larger.

 

[tampasteve]

Folding the FDIC into Treasury would go a long way towards eroding confidence that funds will be there.

Hmm, maybe I don't know enough, but I am happy to learn. Why would confidence be "eroded" if the insurance existed still, just not under the FDIC? IOW, instead of seeing a sign, logo, or document that said "FDIC Insured" it would be something like "Treasury Insured", how would most consumers or investors see it in a way that is less stable?

 

[Pommer]

The proposal is not to get rid of the actual insurance, but the FDIC. It clearly says they wish to absorb it into the Treasury Department. Your money would still be insured.

Without a corporation betwixt the government and the market, wouldn’t this be tantamount to socialism?

 

[keith99]

Hmm, maybe I don't know enough, but I am happy to learn. Why would confidence be "eroded" if the insurance existed still, just not under the FDIC? IOW, instead of seeing a sign, logo, or document that said "FDIC Insured" it would be something like "Treasury Insured", how would most consumers or investors see it in a way that is less stable?

Think of it as brand recognition. FDIC has been the face of protecting those with deposits at banks for decades. If the face is gone the trust is reduced. If just 10% lose faith in the system then a rumor would trigger a run on a bank.

It is also worth noting that the FDIC rules revolve around a single issue, protecting depositors. Instead that would be replaced by treasury which would have multiple concerns. That raises the significant possibility that at least some of the time the primary concern will not be the safety of depositors.

 

[HTacianas]

Because I have money in bank accounts and CDs that I would rather not simply disappear.

So why don't you explain to us how your money is going to disappear.

 

[Astrid]

Think of it as brand recognition. FDIC has been the face of protecting those with deposits at banks for decades. If the face is gone the trust is reduced. If just 10% lose faith in the system then a rumor would trigger a run on a bank.

It is also worth noting that the FDIC rules revolve around a single issue, protecting depositors. Instead that would be replaced by treasury which would have multiple concerns. That raises the significant possibility that at least some of the time the primary concern will not be the safety of depositors.

The loss of trust thing seems improbable, there being no
reason, and it being in nobody’s best interests to
sound some phony alarm.

To the extent that thread involves such invidious
behaviour, those involved might well ask themselves
what purpose they think it serves.

 

[DaisyDay]

So why don't you explain to us how your money is going to disappear.

FDIC: Historical Timeline

www.fdic.gov

 

[DaisyDay]

The loss of trust thing seems improbable, there being no
reason, and it being in nobody’s best interests to
sound some phony alarm.

I disagree that the alarm is "phony". Trump did propose it, however casually. What was the point of his doing that?

To the extent that thread involves such invidious
behaviour, those involved might well ask themselves
what purpose they think it serves.

I remember how when regulations are working well, they get deemed as no longer needed. Banks used to be forbidden to mix investment and commercial banking by the New Deal-era Glass-Steagall Act. When that got repealed, banks dove into risky investments which drove the mortgage crisis.

 

[Astrid]

I disagree that the alarm is "phony". Trump did propose it, however casually. What was the point of his doing that?

I remember how when regulations are working well, they get deemed as no longer needed. Banks used to be forbidden to mix investment and commercial banking by the New Deal-era Glass-Steagall Act. When that got repealed, banks dove into risky investments which drove the mortgage crisis.

Since the clearly stated intent is to fold the duties of
two agencies Into one, rather than change or eliminate
the duties and responsibilities of either, your
objections are moot.

There could be a bureau of alcohol, a bureau of
tobacco, a bureau of firearms and explosives.

If those existed, and, some president decided
to (shudder) consolidate them into one agency called
as it is, the BATF, so what?

 

[DaisyDay]

Better to nip it, the idea, in the bud. We know that Trump is bent on eliminating regulations.

 

[Always in His Presence]

If one doesn't learn from history, one is doomed to repeat it.

Because I have money in bank accounts and CDs that I would rather not simply disappear.

The proposal is not to get rid of the actual insurance, but the FDIC. It clearly says they wish to absorb it into the Treasury Department. Your money would still be insured.

Thank you for actually reading and properly comprehending the article.

Are we really arguing that there are some now who do not trust the Treasury Department with handling money? Really?

I think this is the beginning of four years of fear mongering and pearl clutching.

 

[rjs330]

I say eliminating waste is good. All tge banks could just replace thier FDIC stickers to Treasury sticker. Your money is now insured by the US Treasury. After a while no one will notice and life will go on and everyone's money will be insured.