Re:Robinhood Will Retool Checking Product Following Scrutiny
by dragonwriter on Sunday December 16, 2018 @12:10PM
(#18693925)
> In the US, FDIC is primarily funded by fees banks are required to pay, and there is an actual fund held by the FDIC to cover this. However, if the fund is exhausted the FDIC is backstopped by the federal government, which would step in and cover any losses.
Moreover, it's “frontstopped” by the government facilitating takeovers of failing banks by healthy banks that will cover deposits.
> In the US, some portion of the funds would indirectly come from the central bank printing more money, but only to the extent that it would not cause that sort of spike in inflation
That's true to the extent that large bank failures are likely to be correlated with (and may contribute to) the broader economic conditions which would promote easier money policies at the Fed, but a major point of independent central banking is creating separation between government fiscal needs (like paying off deposit insurance claims) and monetary policy.
Moreover, it's “frontstopped” by the government facilitating takeovers of failing banks by healthy banks that will cover deposits.
> In the US, some portion of the funds would indirectly come from the central bank printing more money, but only to the extent that it would not cause that sort of spike in inflation
That's true to the extent that large bank failures are likely to be correlated with (and may contribute to) the broader economic conditions which would promote easier money policies at the Fed, but a major point of independent central banking is creating separation between government fiscal needs (like paying off deposit insurance claims) and monetary policy.