Moral hazard. It is a simple concept.

Not simple enough for you to understand I suppose. For a bank to get FDIC insurance, it needs to follow a lot of regulations. Even during the financial crisis, look how many times the FDIC insurance was triggered. It worked exactly as intended and kept banks from messing with depositor money.

The moral hazard is the FDIC, which arguably helped perpetuate the crisis. Banks are insured by the fed, lender of last resort, and individual accounts are insured by FDIC. Insurance, or assurance in the case of the FDA, is the moral hazard which causes risky behavior.

Nope. The FDIC made sure they didn't do the crap they did with depositor money. It's the reason the FDIC insurance wasnt massively triggered during the crisis. The accounts that got screwed were investment accounts which were not insured by the FDIC.

Moral hazard is an objective term. From the FDIC website, https://www.fdic.gov/deposit/deposits/international/guidance... All you have to do is read the first sentence. And "The FDIC made sure they didn't do the crap they did" is nonsensical. Not to mention, I never once referred to the economic crisis.

Maybe you didn't follow the economic crisis then? One of the key differences between it and the great depression was the fact that depositor money was not at risk this time around thanks to the FDIC and the regulations surrounding it. There weren't wide spread bank runs wiping out savings accounts that are supposed to be risk free.

So simple it doesn't apply. This isn't automobile insurance.

You're no less risky with your money because the FDIC backs your bank account - in fact, you're more likely to leave it there with less risk.

Banks are more risky. Your right, this isn't a simple concept for some.

Banks are not more risky because there is corporate governance to curtail moral hazard.

I'm sorry for assuming you knew this, but as you say, it isn't simple for some.

The moral hazard is introduced by the insurance. So yes they are more risky. Corporate governance, as you said, helps curtail the moral hazard, but without the insurance, the moral hazard would not exist in the first place. Go troll somewhere else. Your just wrong!

Glad you finally agree about the FDIC. Maybe I'll create an account for each thread on HN and start calling people names, since that seems to be popular now.