Re:Big Banks Agree to Historic $30B Deposit Injection in Fir...
by Dalewyn on Friday March 17, 2023 @08:51AM
(#35196435)
>It's basically the exact opposite of the VCs telling each other to get their money out of SVB; it's a bunch of banks putting their own money into FRB. A "hold the line" move.
It's interesting to remember that banking, at least from the perspective of the commons (depositors), is an issue of trust.
The more the commons say to withdraw their deposits, the more deposits will be withdrawn and the more banks will collapse; and the more banks will collapse the more the commons will say to withdraw their deposits, the more deposits will be withdrawn and the more banks will collapse.
The opposite also holding true.
Objectively, there is simply no value in giving one's money to a bank other than the ostensible claim that they will keep your money safer than if you just stash it under your bed.
Given that, the FRB, FDIC, and banks et al. pulling out all the stops to reinforce depositor confidence is not surprising. It's a natural response to fear making the rounds in the commons.
It's interesting to remember that banking, at least from the perspective of the commons (depositors), is an issue of trust.
The more the commons say to withdraw their deposits, the more deposits will be withdrawn and the more banks will collapse; and the more banks will collapse the more the commons will say to withdraw their deposits, the more deposits will be withdrawn and the more banks will collapse.
The opposite also holding true.
Objectively, there is simply no value in giving one's money to a bank other than the ostensible claim that they will keep your money safer than if you just stash it under your bed.
Given that, the FRB, FDIC, and banks et al. pulling out all the stops to reinforce depositor confidence is not surprising. It's a natural response to fear making the rounds in the commons.