undefined | Better HN

0 pointsncallaway6y ago0 comments

> FDIC and NCUA are not bottomless pits of money

"FDIC insurance is backed by the full faith and credit of the United States government." [1]

Given that FDIC insurance is backed by the United States government, if the FDIC system is unable to cover its losses, wouldn't that represent the United States defaulting on its obligations?

I'm not saying that's impossible, but it seems like FDIC could represent a...pretty large bit of money.

[1] From: https://www.fdic.gov/deposit/deposits/faq.html

0 comments

AgloeDreams6y ago

I mean the FEd is currently considering what will amount to a near $1T aid Package as well, so I don't know how much the fed has on hand bit it really can't be much much more than 2T or so. So maybe.

mech12346y ago

Try not to confuse the Federal Reserve (the Fed) with the Federal Government.

nybble416y ago

The FDIC can get as much currency as they need from the Treasury to cover their obligations, so in that very technical sense they aren't likely to default. However, in the event this were ever actually tested they might as well have defaulted since the resulting inflation would be so high that currency would be worthless. Going from "can't get your money out of the bank" to "your money can't buy anything" isn't exactly an improvement.

ncallawayOP6y ago

(I realize this is pretty old, but I just came back to look at this, sorry)

> However, in the event this were ever actually tested they might as well have defaulted since the resulting inflation would be so high that currency would be worthless. Going from "can't get your money out of the bank" to "your money can't buy anything" isn't exactly an improvement.

While I could see this being true, I don't see how pulling cash from my bank and storing it under a mattress helps this scenario at all. Inflation hurts every dollar equally, regardless of whether it's stored in my bank, under my mattress, or is sent to me from the FDIC.

j / k navigate · click thread line to collapse