[IncPen]

"This is the result of the FDIC. If the bankers were personally on the hook for the loss (and the angry customers) this would never happen... One lynch mob and it would all be taken care of. Tax payers, taking it in the shorts." FDIC insurance is $250k per customer within a bank. He would have to be dealing with 44 banks to be insured this way.

Plus, I believe the FDIC insurance is for the customer against bank failure. The insurance money would go to the customer, not the bank.

Or are you talking about some other deal that I'm missing?

Yes, the depositors are protected when a bank fails, but the taxpayers are on the hook for this 'guarantee' (see: 1980s, Savings and Loan 'crisis').

My point is that the banks hand fiduciary responsibility over to the government, and thus have free reign to behave like jackasses.

It would be a better world if the bankers feared the depositors. And if the politicians feared the electorate.

[MV=PY]

"Yes, the depositors are protected when a bank fails, but the taxpayers are on the hook for this 'guarantee' (see: 1980s, Savings and Loan 'crisis'). My point is that the banks hand fiduciary responsibility over to the government, and thus have free reign to behave like jackasses. It would be a better world if the bankers feared the depositors. And if the politicians feared the electorate. "

Ah. I agree.

In fact, I don't like it at all when someone deals with another person's money (e.g. taxes). It's a market distortion.

Still, I think the banks are on the hook for this money (unless they fold). Someone will get in trouble and they'll make adjustments.