A lesson in moral hazard.
Had there been no FDIC, I would have asked questions, sought answers, and depending on those answers possibly moved my money.
But asking questions, seeking answers, and moving all of your auto debits from one bank to another is costly. And the fact that there is an FDIC means that the individually rational decision for me is to sit tight, not incur the cost, and trust the FDIC.
Of course, the fact that people don't ask questions is how trouble like this gets started in the first place.
And yet, the notion of deposit insurance has always struck me as a pretty good deal for the banking public. How much would you be willing to pay to ensure that there is zero probability that you will lose money if your bank fails?
There are those who oppose FDIC on libertarian grounds. Fine. I understand the argument that it causes moral hazard and raises costs. I get that.
I get it, and I accept it. Always have and always will.
Thanks, FDIC.
Had there been no FDIC, I would have asked questions, sought answers, and depending on those answers possibly moved my money.
But asking questions, seeking answers, and moving all of your auto debits from one bank to another is costly. And the fact that there is an FDIC means that the individually rational decision for me is to sit tight, not incur the cost, and trust the FDIC.
Of course, the fact that people don't ask questions is how trouble like this gets started in the first place.
And yet, the notion of deposit insurance has always struck me as a pretty good deal for the banking public. How much would you be willing to pay to ensure that there is zero probability that you will lose money if your bank fails?
There are those who oppose FDIC on libertarian grounds. Fine. I understand the argument that it causes moral hazard and raises costs. I get that.
I get it, and I accept it. Always have and always will.
Thanks, FDIC.
On May 22, 2009, Citizens National Bank , Macomb, Illinois was closed by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.
Took some pics just for you and your readers. Click my name to view.
Also- I saw people use the ATM today to make a deposit.
I was a WAMU customer... now I am a Chase customer. When there was much publicized concern, I did not panic. The FDIC did there thing and it is comforting to know that they exist and I don't have to keep my money in the mattress.