Yellen says no bailout :
This should be a lesson to anyone with these types of funds sitting in a bank to make sure it's FDIC insured & to diversify them between multiple accounts/banks backed by the FDIC.
Yellen says no bailout :
This should be a lesson to anyone with these types of funds sitting in a bank to make sure it's FDIC insured & to diversify them between multiple accounts/banks backed by the FDIC.
And the average person is thinking 250,000? That must be a nice problem to have.
Top 30% is nearly 100 million people- thats a huge percentage of the population with at least a quarter mil assuming that figure is accurate. Considering nearly 1/10 are Millionaires now there are a ton of average people out there with 250k.
Again, that's 30% with a quarter mil *in retirement accounts*. Those aren't (or shouldn't be) just sitting in a bank account but are in 401ks and IRAs which aren't really relevant to this discussion. In fact, I doubt even millionaires (which is more like 8%, not 1/10) have $250k just sitting in bank accounts. Most of the wealthy don't rely on liquidity just sitting around.
The $250k limit is only an issue for the elites in the US. For the vast majority of us, it's more than enough.
Even if I liquidated every asset I own (house, two cars, retirement accounts) and put it all in same the bank, I still wouldn't have $250,000.
I can't imagine I'm the only person that's true for. A lot of people are worse off than I am.
I would be shocked if more than 15% had penalty-free liquid assets of at least $250,000. Net worth, sure, but liquid assets? Seems very unlikely.
Signature Bank goes down with it, government had to step in at this point as there's clearly a systemic risk. Crazy times.
Looks like some kind of bailout might be in place. Futures are awfully green atm.
Do you believe her?
Also, the whole insured deposit thing is now a moot point because the Fed is going to cover 100% of every account. And how are they going to do that? By creating more money from thin air. The Fed has become schizophrenic. Meanwhile back at the ranch, what are we going to do about inflation?
Three dimensional shell game. It's will be a stealth bailout by the Fed.
Sure, but I was mainly replying to the idea that some huge percentage of people have over $250k sitting in a bank account.
Even in your example, if you are an individual and have more than $250k in any one bank account, you're a fool unless you can lose every dollar over that $250k without batting an eye. Even in a trust of substantial size (let's say $10 million), it's not likely that you should need to expose much of that to uninsured deposits. You're obviously not going to have accounts at 40 different banks for those funds, especially given that you wouldn't keep even a majority in direct cash assets.
Corporate/Business holdings are a little different given the small sum of money $250k represents in the business world. So if the argument is increase to $500k so businesses are better protected, I think that increase barely moves the needle.
Generally speaking any individual who needs protection by FDIC probably doesn't need anywhere near $250k protected.
Great question- where does the Fed go from here? Surely there is another solution besides jacking the rates into oblivion and it seems likely they'll have to pause at least temporarily now. Keep raising and risk the whole house of cards falling and the government can't bail out everything. That soft landing is looking like a crash landing.
The Fed really has no choice but to keep raising rates. Bank failures might damage the economy, but runaway inflation could end the country. Besides, this bank failure is exactly what needs to be happening. We have $8 trillion dollars that needs to be taken out of the economy to get inflation back to 2%. Some people are going to have a lot less money in 2 years than they have today...a lot less.
And by some people, I mean lots of people. $8 trillion is 1/3 of our entire money supply. That is how much damage Quantitative Easing did.
The huge majority of accounts with over $250k in a bank are not individuals or trusts. They are commercial accounts. I am a commercial banker and my customers generally average well over $250k in their accounts.
If businesses failed because their liquidity was wiped out due to a bank failing, it could be the spark of another recession or depression. The Fed is doing the right thing here by covering these deposit accounts.
You aren't. The median savings in 2019 was $5,300 and the average was $41,600, across the whole US. For the top 10% of income earners, the median in savings is $69,000 and the mean is $229,400. With the median being so much less than the mean, there is a very high positive skew - so you are probably looking at the top couple percent that have over $250k in a bank account.
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