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A comment on The SEC has told us it wants to sue us over Lend. We don’t know why. Parent comment

Re:The SEC has told us it wants to sue us over Lend. We don’... by imtringued on Wednesday September 08, 2021 @07:11AM (#28455451)
Banks want the deposit insurance to fail because once the government chips in they realized a profit on the bad loans they made. It's a well known moral hazard.
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Re:The SEC has told us it wants to sue us over Lend. We don’... by Denvercoder9 on Wednesday September 08, 2021 @07:23AM (#28455521)
No, they want deposit insurance to kick in and succeed (in your view). If the deposit insurance fails, that'll create a bankrun (because their value proposition, risk-free interest, no longer exists), and they'll go under as well.
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Re:The SEC has told us it wants to sue us over Lend. We don’... by pjc50 on Wednesday September 08, 2021 @09:23AM (#28456598)
Deposit insurance kicks in only after the bank has failed, and cannot be used to realise a profit. At least in the real world.
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Re:The SEC has told us it wants to sue us over Lend. We don’... by paulgb on Wednesday September 08, 2021 @07:24AM (#28455534)
Privatized gains/socialized losses is a moral hazard, but it doesn't follow that it's in banks' interest for FDIC to fail.

E.g. if I borrow $1,000 from you to bet on a roulette table, you suffer the downside if I lose and can't pay you back, but it's still in my interest to win.

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