Quote from: o_e_l_e_o on Today at 12:29:58 PM

Quote from: DaveF on March 31, 2023, 12:33:48 PM

You are assuming that the banks hold $0 when they go under so they FDIC has to cover everything. Most of the time the banks have MOST but not ALL of the money.

I don't think I made that assumption. Even if banks can cover 95% of deposits (which is a very generous estimate), FDIC insurance is still insufficient to cover the remainder. And often the money that the banks do have is prioritized for large corporations and entities, while average users (the exact ones who are holding amounts covered by the FDIC threshold) are the last in line to receive anything.

Picking on Signature the FDIC estimates it will cost them (FDIC) about $2.5 billion. That's a middle of the road number. If everything goes wrong it could cost them up to $5 billion. If everything goes perfectly they can actually come out ahead (not going to happen but the potential is there). Remember, they are selling off chunks of the bank. Some people my overbid on some things because they see a larger value then Signature did.

At the moment I really am more concerned with the smaller banks that most of us don't even know about that don't have any form of insurance. Remember, FDIC is not mandatory. And there are a lot of small banks in small town USA that are going to be in deep trouble soon. Too many people are over extended. And these were the places that loaned them money.

-Dave