Bank failures and financial crisis have flooded our news in the past months. That's not really news anymore. But at least, people count on FDIC insurance to trust that our money in banks really is safe. Or is it really? According to the head of the FDIC, Sheila Bair, she warned that unless FDIC is shored up somehow (i.e. more fees, loan from the Treasury, something), FDIC will not have sufficient funds to cover our money in banks. This is one of the articles I've read (there are others... but very small, obviously to not alarm the public, probably).
The thing is, as scary as this sounds, it makes sense. If all banks fail, and if everyone has to rely on the safety net, yes, that safety net will be stretched and may be gone. But that safety net is there so that we don't have the public running to the bank, pull money out, and cause even more bank failures. If that happens, would having our money under our bed really help? Probably not. That may lead to hyper-inflation and paper money could become valueless.
So really, even if our money may not be safest in the bank, the only hope is to keep our money in the bank and do what it takes to make sure that banks survive. Hopefully, by then, FDIC will also be a much stronger safety net because banks would stop failing. Definitely interesting times to be living through... and may we all rise to the occasion!
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