The bank's shareholders are getting wiped out. The depositors are protected. Banks -- who depend on the continued faith of the public -- chip in a little more in insurance. The taxpayer pays nothing.
A bunch of software companies get to succeed or fail now on the basis of whether their business models and execution make any sense, as opposed to whether their bank bought enough interest-rate swaps.
Small regional banks can continue to exist. This will not necessitate even more consolidation in American capitalism. And there will be no follow-on bank runs to jeopardize grandma's CDs.
Seriously, what is there to complain about? The government did its job here. It governed. Fairly and competently.
Money to cover deposits that didn't previously didn't exist, suddenly exists, and there are people like you trying to tell everyone else that everything is rosy and that it's not going to cost the taxpayers anything.
It sounds like a revolutionary system that you're working with and if it truly costs "nothing", may I ask where I can sign up to have my bad financial investments refunded for free?
FDIC insurance is paid for by FDIC members (i.e., by banks), via an insurance premium. In this case, the FDIC is providing extra coverage, and charging member banks an extra assessment to pay for it. So the money comes from all the other banks.
"The taxpayer will pay for it" only in the sense that maybe member banks will try to pass this on in the form of fees.
"Bad financial investments" are almost 100% not being "refunded" to the bank shareholders. Their shares are, I assume, going to zero. The only way in which they are being protected -- the "almost" -- is in the fact that their shares go only to zero, and do not become liabilities.
Let us also consider what the investments were that went bad: Government bonds. So you could say that value flowed from the bank to "the taxpayer" (or to "the government") the minute those bonds lost value, i.e., the minute the Fed devalued them by hiking rates on newly-issued bonds. In that sense, the bank was already the bagholder for the Fed ("the taxpayer").
The final decision was eminently reasonable.
The bank's shareholders are getting wiped out. The depositors are protected. Banks -- who depend on the continued faith of the public -- chip in a little more in insurance. The taxpayer pays nothing.
A bunch of software companies get to succeed or fail now on the basis of whether their business models and execution make any sense, as opposed to whether their bank bought enough interest-rate swaps.
Small regional banks can continue to exist. This will not necessitate even more consolidation in American capitalism. And there will be no follow-on bank runs to jeopardize grandma's CDs.
Seriously, what is there to complain about? The government did its job here. It governed. Fairly and competently.