tag:blogger.com,1999:blog-3758330678390419129.post4849159133145840102..comments2024-02-13T02:39:22.756-05:00Comments on EconomicPolicyJournal.com: Two Top FDIC Officials Departing Next WeekRobert Wenzelhttp://www.blogger.com/profile/14296920597416905488noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-3758330678390419129.post-84291097507279169372010-08-06T21:06:35.196-04:002010-08-06T21:06:35.196-04:00Without delving into it's history, I think it&...Without delving into it's history, I think it's safe to say it was the original intention of the FDIC to protect high net worth individuals (hence the original limits). But once the cat was out of the bag with money markets, I guess they figured they might as well grease the skids some more. Until there are dramatic consequences, this will sit in the closet just as subprime ARMS once Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-17286847487594082392010-08-06T20:49:11.872-04:002010-08-06T20:49:11.872-04:00Anonymous said:
'From a practical standpo...Anonymous said:<br /><br /> 'From a practical standpoint, why would the "super rich" want to deposit millions of dollars within an FDIC insured bank account? To get a little yield premium over treasuries with a slightly higher risk premium?<br /><br /> Maybe it's a lame loophole, but as far as being a practical tool for the uber-wealthy, I don't think so.'<br /><brjfpereznoreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-79784664496319748992010-08-06T19:04:20.023-04:002010-08-06T19:04:20.023-04:00I couldn't find the requirements for a bank to...I couldn't find the requirements for a bank to quality for CDARS, just the statement: "More than 3,000 financial institutions across the country participate in CDARS."Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-36825009294115400532010-08-06T18:35:39.592-04:002010-08-06T18:35:39.592-04:00I don't see the risk characteristics that peop...I don't see the risk characteristics that people are seeing. If a guy is putting $2 million into CDARs Cds, that money is taken in by the receiving bank and spread out to the other banks who agree on the rate. It's just an efficiency tool--that's the selling point.<br /><br />If you want to talk about deposit insurance, then sure, it shields bad banks from market forces (bank runs &Mike in Alaskahttps://www.blogger.com/profile/07138597511503404254noreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-207747071813967312010-08-06T18:26:27.471-04:002010-08-06T18:26:27.471-04:00I get the morale hazard point & just spent som...I get the morale hazard point & just spent some more time reading about the program. Yep, this does look like a taxpayer risk.<br /><br />I wouldn't use it, but I'm sure most people at this point are under the impression that an "FDIC" insured account is as good as cash in hand.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-55750649984255312452010-08-06T18:18:54.042-04:002010-08-06T18:18:54.042-04:00I think banks, especially community banks, promote...I think banks, especially community banks, promote them mostly as a customer relations service and to compete with money market mutual funds -- which I think went under Paulson in 2008 from zero federal insurance to unlimited insurance in the matter of a week or two -- although I am not sure how the politics of that worked out. Better keep a customer with only a $250K deposit than to lose him Jule Herberthttp://jherbert.comnoreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-18605653123463069562010-08-06T18:12:06.738-04:002010-08-06T18:12:06.738-04:00Of course, they do.
By insuring all the deposits...Of course, they do. <br /><br />By insuring all the deposits of the wealthy, it creates moral hazard. The wealthy investors need not care about the riskiness of a banks activities because they are insured. If they had exposure to losses, money would only flow to what the wealthy depositors saw as prudent banks (or they would demand higher interest). The flow to prudent banks would create more Robert Wenzelhttps://www.blogger.com/profile/12653378186315529211noreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-18324683291186971922010-08-06T17:59:50.720-04:002010-08-06T17:59:50.720-04:00Okay, so we have a use-case for ultra-short (in li...Okay, so we have a use-case for ultra-short (in lieu of a t-bill). Can you come up with something so we can make the argument that these deposits actually put the taxpayer at higher risk?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-19537789941769771942010-08-06T17:53:52.078-04:002010-08-06T17:53:52.078-04:00It is a relatively simple transaction, pays intere...It is a relatively simple transaction, pays interest, and has maturity dates as short as 14 days. I use them for holding funds in Section 1031 exchange transactions, which can take up to 180 days to complete.Jule Herberthttp://jherbert.comnoreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-66089228744100923922010-08-06T17:28:47.368-04:002010-08-06T17:28:47.368-04:00Maybe stupid ones.
Like a lot of programs, I don&...Maybe stupid ones.<br /><br />Like a lot of programs, I don't agree with it, but it's not like they are hiding the program, and it's not very practical.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-11816644713442085942010-08-06T17:16:58.462-04:002010-08-06T17:16:58.462-04:00@Anonymous
So are saying from a "practical s...@Anonymous<br /><br />So are saying from a "practical standpoint" that the creator of CDARS, Promontory Interfinancial Network, LLC, doesn't have any clients?Robert Wenzelhttps://www.blogger.com/profile/12653378186315529211noreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-10051609134401385462010-08-06T17:05:59.566-04:002010-08-06T17:05:59.566-04:00From a practical standpoint, why would the "s...From a practical standpoint, why would the "super rich" want to deposit millions of dollars within an FDIC insured bank account? To get a little yield premium over treasuries with a slightly higher risk premium? <br /><br />Maybe it's a lame loophole, but as far as being a practical tool for the uber-wealthy, I don't think so.Anonymousnoreply@blogger.com